Mid-Atlantic Health Law TOPICS

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What is Section 1557?

One paragraph embedded in the Affordable Care Act (ACA), Section 1557, may drastically increase the number of discrimination cases brought against health care insurers and providers, assuming, of course, that it or the entire ACA is not repealed by Congress. Prior to Section 1557, prohibitions against discrimination in health care were narrowly construed, resulting in limited litigation.

While Congress only provided one paragraph, a recent regulatory rule from the Department of Health and Human Services (HHS) and the HHS Office for Civil Rights (OCR) provided a lengthy explanation of the types of discrimination prohibited by Section 1557, and the methods individuals may use to contest potential discrimination based on race, color, national origin, religion, disability, or sex in the health care context.

The new regulation protects people from exclusions from participation in, denial of benefits of, or discrimination by any health program or activity that receives certain federal funds. Those subject to the new law include all health insurance issuers that receive credits or subsidies under the ACA, providers that accept Medicaid or Medicare Part A, but not Part B (meaning that hospitals are covered, but doctors who do not participate in Medicaid are not covered), clinical laboratories and home health agencies, and employers that receive federal financial assistance to fund their employee health benefit programs and health services. 

This article focuses on how the regulation impacts health care providers.

A. Sex as a Protected Class

Many other federal laws, such as the Civil Rights Act of 1964, have already been applied in the health care context for decades to prohibit discrimination based on race, color, or national origin, so the regulation does not create any drastic changes in those areas. However, the regulation is the first provision that explicitly prohibits sex discrimination in health care, and the first to provide protections for transgender individuals. For example, the regulation extends the protections of Title IX of the Education Amendments of 1972 beyond educational institutions to health care providers for the first time.

HHS’ position on sex discrimination prohibits the denial of care based on a patient’s pregnancy status, termination of pregnancy, childbirth or related medical conditions, sex stereotyping, described below, and gender identity. 

Single sex programs, where only members of a particular sex can participate, are allowed only where a covered entity offers an “exceedingly persuasive justification.” This legal standard, which HHS borrowed from court cases addressing sex discrimination in other areas, requires that programs must show that limiting participation to a single sex relates to specific, important health or science based objectives. Covered entities should clearly identify these objectives prior to implementing any single-sex program.

The broad protection of Section 1557 most prominently impacts members of the LGBTQ community. Under previous guidance, HHS described sex stereotyping, which includes assuming that people will identify with a particular gender and an expectation that outward presentation, including appearance and mannerisms, will conform to traditional ideas of masculinity and femininity that correspond with a particular sex.

The regulation states that HHS will determine if claims of discrimination based on sexual orientation amount to the type of sex stereotyping that Section 1557 prohibits. HHS stopped short of stating that claims of sexual orientation discrimination independently trigger Section 1557, but made clear that the agency supports protecting people of different sexual orientations, and is open to future legal developments.

The final rule also clarifies that Section 1557 covers transgender people. This includes allowing people to access health care facilities and programs based on their gender identity, rather than their assigned sex at birth. Providers must address patients by their chosen name and gender pronoun, and cannot deny medically necessary care to transgender patients.
Also, the regulation does not create any religious exemption to Section 1557. If religious health care providers plan to conscientiously object to complying with any of these provisions, they will have to make their claim under the existing protections in the Federal Religious Freedom Restoration Act (RFRA). This may increase the amount of litigation in this area as some providers attempt to reconcile their religious beliefs with the explicit provisions of the law.

B.  Individuals with Limited English Proficiency

The regulation also clarifies covered entities’ responsibilities when ensuring that patients with limited English proficiency have access to services. The regulation emphasizes that covered entities must use “qualified” interpreters when providing translation services. While providers have been required to offer some kind of interpretation services for years, many use bilingual staff members or the patient’s family, even minor children, to meet this requirement.

Prior HHS regulations only required interpreters to be “competent”, and though the new regulation does not require the interpreter to meet any specific licensure standards, HHS indicates that professional interpreters should be used unless there is an emergency or the patient requests a family member translator. The interpreter should also be familiar with specialized vocabulary and ethical principles associated with translating in the medical setting.

Entities must also provide notice of their adherence to nondiscriminatory practices as well as taglines offering translation services. These taglines must be printed in the top 15 non-English languages most commonly spoken in the state where services are provided, but entities only need to have two non-English translations of less frequently used documents. OCR provides sample notices and taglines on their website that would comply with these requirements.

C.  Litigation Impact

Perhaps the biggest development from the regulation is HHS’ interpretation that Section 1557 provides a private cause of action for a disparate “impact” claim in the health care context. Prior to the implementation of this rule, private parties, such as patients or interest groups that litigate to advance a particular cause, did not have the ability to bring this kind of claim.

Individuals were limited to asserting that intentional discrimination occurred, an argument known as a disparate treatment claim. In this type of litigation, a person alleges that he or she was actually treated differently compared to other similarly positioned patients or individuals because of their affiliation with a protected class, such as race, age or gender. In contrast, a disparate impact claim lets litigants challenge a policy or practice that appears to be neutral, but when applied results in a disproportionate impact on members of the classes protected by Section 1557.

Before the regulation, only OCR could bring a disparate impact claim, but its limited resources made this type of litigation rare in the health care setting. The regulation further empowers patients by providing for compensatory damages under Section 1557.

The bulk of the regulation interpreting Section 1557 went into effect in July of 2016, and lawsuits have already been filed that will test these new provisions, particularly relating to sex discrimination. Also, in its budget request for 2017, OCR emphasized the “transformative” nature of Section 1557, and sought funds to expand its staff to handle the increase in litigation.

It is too early to tell the full impact of Section 1557, but between the new potential for private litigation, expanded requirements and protections, and increased scrutiny from OCR, it looks like Section 1557 could have a major impact on discrimination lawsuits in health care. Accordingly, covered entities should now take steps to cause both their policies and procedures to respect the requirements described in the new Section 1557 regulation.