News & Events

HHS Office for Civil Rights Announces Controversial Anti-Discrimination Regulations for ACA Section 1557

September 22, 2015

The Affordable Care Act is significantly increasing the influence of federal discrimination law on health care. A key element of this new regime is ACA Section 1557, which applies four pre-existing laws prohibiting discrimination based on race, color and national origin, sex, disability, and age to health programs that receive Federal financial assistance. Under new proposed rules1 that were issued by the Department of Health and Human Services Office for Civil Rights (HHS-OCR) on September 8, 2015, both payors and providers who operate health programs that receive Federal financial assistance, including insurers who sell Qualified Health Plans (QHPs) on the exchanges, will be required to comply with these four laws. Additionally, covered insurers will be required to comply not only for their QHPs, but also for other insurance plans they offer and also plans where they merely act as a third-party administrator (TPA).

Many of the anti-discrimination provisions in the proposed rules simply repeat provisions in HHS' existing regulations for the four incorporated discrimination laws. One change is that HHS-OCR now defines sex discrimination to include discrimination based on gender identity. Plans and providers cannot refuse services merely because an individual's current sexual identity differs from the individual's sexual identity at birth.

Another development is that the proposed rules prohibit discriminatory health plan cost-sharing and design terms. Prior case law prohibited discrimination in access to services provided by a benefit program, but there, case law did not appear to specifically require that coverage itself be nondiscriminatory. So plans were free, for example, to impose greater dollar and number limits on mental health than physical health services. The proposed rules are not entirely clear, but they could be understood to prohibit such terms.

An important concern is the administrative burden posed by the new rules on small providers. Covered entities include "almost all licensed physicians," in addition to home health agencies, dialysis centers, clinics, laboratories, and other providers that receive Federal financial assistance. The rules exclude entities with less than 15 employees from some administrative rules but will still pose a significant new burden on many smaller providers.

Who Is Required to Comply with the Proposed Rules?

The proposed rules define covered entities to include: HHS itself; entities established under Title I of the ACA—i.e., state and Federally-facilitated Exchanges; and entities that operate a health program or activity "any part of which" receives Federal financial assistance. This last group is very large and includes payors, providers, and ACA-related actors such as Navigators.

Payor entities include health plans that offer plans under Medicare Advantage or Medicaid, as well as QHPs sold on the state and Federally-facilitated marketplaces. Importantly, the preamble to the proposed rules states that by offering a QHP, an issuer must additionally become Section 1557 compliant for its off-exchange plans, as well as all employer-sponsored plans where the issuer acts as a TPA. The proposed rules are openly ambiguous about whether Section 1557 applies to separate but related legal entities, such as affiliates and subsidiaries of a covered issuer.2

Covered providers include those that receive Medicaid, "meaningful use" and other federal payments—ranging from large research institutions to individual physicians in private practice.3 The preamble states that the rules "likely cover[] almost all licensed physicians," in addition to a long list of other provider types. The proposed rules do contain a limited exception to some of its administrative requirements for covered entities with less than 15 employees. However, these entities are still required to comply with the anti-discrimination rules.     

New Administrative Burdens on Providers and Plans Under the Proposed Rules

The proposed rules place significant administrative obligations on covered entities regarding information technology (IT) accessibility, language assistance services, and internal administrative system and public notices. 

IT Accessibility Requirements

The proposed rules require covered entities to ensure that electronic and information technology be accessible to individuals with disabilities -- unless such access would impose an undue financial or administrative burden, or result in a fundamental alteration in the nature of the health program. For example, if a covered insurer offers tools on its website to apply for and compare coverage, these must be accessible to individuals that are blind or suffer from low vision such that these individuals are able to have an equal opportunity to benefit from it. While it is not stated directly, it is implied that the website itself must be modified to be able to be accessed by such disabled individuals. In the event that modifying the site presents an undue burden or fundamentally alters the program, the insurer must provide the information in an alternative (non-electronic) format. Covered entities must also provide access to auxiliary aids and services, including alternative formats and sign language interpreters, unless one of the exemptions noted above is met. 

Language Assistance Requirements

The proposed rules require that covered entities take reasonable steps to provide meaningful access to health programs and activities for individuals with limited English proficiency, including providing interpreters under certain circumstances. In the preamble, OCR explains that the language assistance requirements are flexible and intended to vary based on factors such as the nature of the covered entity's operation, its capacity, and the prevalence of the primary language, and this flexibility is reflected in Section 92.201(b ), which explains that the OCR Director assesses compliance based on case-by-case evaluations. Subject to this assessment, covered entities must provide interpreter services when "oral interpretation is a reasonable step to provide meaningful access" for people with limited English proficiency.  

Organizational and Public Notice Requirements

Covered entities that have 15 or more employees must designate an employee to coordinate Section 1557 compliance, including investigations of alleged noncompliance. They also must adopt internal grievance procedures, including due process standards, to resolve complaints. The proposed rules also require a covered entity to submit a written assurance to HHS that it is complying with Section 1557. 

Covered entities must publish English-language notices on their websites, in significant publications, and in conspicuous physical locations stating: that they do not discriminate on race, color, national origin, sex, age, or disability; that they provide language assistance and other auxiliary aids and services and providing directions to this aid; and explaining how to file internal grievances and OCR discrimination complaints. They must also post "taglines" in the top 15 languages, apart from English, spoken nationwide in the same locations informing members and the public that language assistance services are available. 

Different Rules for Different Types of Discrimination

ACA Section 1557 applies Title VI, Title IX, Section 504 of the Rehabilitation Act, and the Age Discrimination Act, existing laws which already prohibit discrimination in programs that receive Federal financial assistance, specifically to health programs that receive Federal financial assistance.4 And under the proposed rules, covered entities must comply with HHS's affirmative anti-discrimination rules in its prior regulations for these four statutes. 

The affirmative rules prohibit covered entities from excluding individuals from participation in a program on discriminatory grounds.5 But they vary on other matters, such as the extent to which programs can provide separate services to certain beneficiaries: The rules on race discrimination contain strong prohibitions on separate treatment of different ethnic groups; the sex discrimination rules prohibit "different" benefits and treatment, but contain exceptions that permit such things as separate housing; and the disability discrimination rules permit separate services to be provided to disabled persons if this is necessary to provide services to the disabled that are as effective as those provided to the nondisabled.    

The proposed rules provide that these exceptions in HHS' prior rules on race, disability and age discrimination will apply to health programs as well. The exceptions for race and disability are for federal programs aimed at particular groups, such as Native Americans. The exceptions for age are broader, and include where age is a factor necessary to the normal operation of the program, or where the program provides special benefits to the elderly or children. This would permit, for example, a program to continue to use age-rating for QHP premiums—to the extent permitted by the ACA. 

HHS-OCR held off applying the exceptions in HHS' prior IX regulations to health programs. Title IX only prohibits sex discrimination in education programs. HHS' prior regulations for Title IX focused on the education setting, and did not deal expansively with health care services or coverage. HHS' prior regulations also permitted some single-sex education programs that HHS-OCR was unsure should be applied to health benefits. The preamble states that the HHS-OCR intends to continue to permit separate toilet, locker room and shower facilities as provided in its prior regulations, but seeks comment on what other sex-based distinctions should be allowed—such as women-only clinics, or counseling centers for male victims of domestic violence.    

The Expansion of Sex Discrimination to Include Discrimination Regarding Gender Identity—But Not Sexual Orientation

In the most publicized deviation from its prior regulations, the proposed rules expand the definition of discrimination "on the basis of sex." HHS' prior Title IX regulation uses a traditional two-gender understanding of "sex."6 The proposed rules define discrimination "on the basis of sex" to include discrimination based on "sex stereotyping and gender identity."

The proposed rules provide that covered insurers may not: deny services because a person's current sex differs from the person's birth sex; categorically exclude services related to gender transition; or limit coverage for services related to gender transition if this results in discrimination against a transgender individual. The preamble explains that these rules are not intended to "affirmatively require covered entities to cover any particular procedure or treatment for transition-related care; nor do they preclude a covered entity from applying neutral standards" for coverage. Rather, the rules prohibit a plan from denying an otherwise covered service because it is sought for gender transition.

Notably, the definition of discrimination "on the basis of sex" does not include discrimination on the basis of sexual orientation. The preamble states that, as a matter of policy, HHS-OCR supports banning discrimination based on sexual orientation. It could not find sufficient support in case law to cover discrimination on sexual orientation in its proposed rules, but depending on case law or legislative developments, such a ban could make it into the final rule. 

How the Proposed Rule Would Affect Health Plan Coverage and Administration

In addition to rules for all covered entities, the proposed rules contain special provisions for health plans. These rules appear to deviate from prior case law on the impact of the four incorporated civil rights acts on health benefits. Federal courts have held, for example, that Section 504 of the Rehabilitation Act requires health plans to provide meaningful access to whatever benefits a program provides. However, it does not require plans to provide equal benefits to all classes of disabled persons.7 Courts have thus held it is not discrimination for plans to impose greater numerical and dollar limits on coverage for some conditions than on others, even if this means that some persons with disabilities receive less coverage or incur greater cost-sharing than other persons.

The proposed rules may break new ground by prohibiting discrimination in both access to plan benefits and in benefit design. Health plans may not "limit" coverage, "impose additional cost sharing or other limitations or restrictions" or employ "benefit designs" that discriminate based on race, sex, age, or disability. The proposed rules, however, do not provide any further explanation as regards when these standards would be deemed to be violated.

A further potential landmine is that the proposed rule applies to covered entities when they merely administer health plans for third parties—regardless of the terms of the plan itself.  While most TPAs administer plans for employers who are subject to their employment discrimination laws, there is still a potential for conflict. It would make sense for a TPA not to be held liable when its actions merely apply a plan term. But as written, the proposed rules do not make that clear.


HHS-OCR has been taking complaints and engaging in enforcement actions under Section 1557 for several years. Applying the text of Section 1557, the regulations provide that the enforcement mechanisms available under the statutes and regulations for the four incorporated acts apply here as well.8

The underlying statutes and regulations provide that complainants can bring an enforcement action before HHS-OCR, or they may file an action in District Court. The goal of HHS-OCR enforcement is generally to bring a covered entity into compliance. As the ultimate penalty, HHS-OCR can exclude a covered entity from participation in a program from which it receives Federal financial assistance.

What Should Covered Plans and Providers Do Next?

It took HHS-OCR five years after the enactment of the Affordable Care Act to issue these proposed rules. The preamble makes it clear that HHS-OCR knows it still has a lot of work to do. Payors and providers that are concerned about the new rules still have time to express their concerns to HHS-OCR and have problems ironed out in the final version. Interested parties may submit comments on or before November 9, 2015, and we invite those who are interested in filing comments to let us know.

The Section 1557 regulations will not go into effect until 60 days after the final rule is issued. Covered providers and payors should still consider the need for earlier compliance, since the proposed rules are likely to influence court decisions in the Section 1557 litigation. HHS-OCR has also already been applying some of these proposed rules, such as the prohibition on exclusion for services to transgendered persons, in recent enforcement actions.

1 HHS, Nondiscrimination in Health Programs and Activities, 78 Fed.Reg. 54172 (Sept. 8, 2015) (to be codified at 45 C.F.R. pt. 92) (available at:

2 The preamble states that when the TPA is a legally separate entity from the issuer that receives Federal financial assistance, OCR will make a case by case analysis as to whether that separate entity is nevertheless subject to Section 1557.

3 The preamble notes that Medicare Part B payments to physicians do not render the physicians covered entities, because HHS-OCR does not consider Medicare Part B payments to physicians be Federal financial assistance.

4 Title IX is limited to education programs that receive federal financial assistance.

5 45 C.F.R. § 80.3(b)(1)(i), (vi); § 84.4(b)(1); §86.31(b)(1), (3); and § 90.12(b)(1). 

6 See, e.g., 45 C.F.R. § 86.2(s) (referring to "both sexes").

7 Alexander v. Choate, 469 U.S. 287 (1985).

8 The proposed rules state that the enforcement regulations for Title VI also apply to cases of sex and disability discrimination. The prior rules for Title IX and Section 504 have the same provision. 

For more information, please contact the professional(s) listed below, or your regular Crowell & Moring contact.

Crowell & Moring LLP is an international law firm with offices in the United States, Europe, MENA, and Asia that represents clients in litigation and arbitration, regulatory and policy, and transactional and corporate matters. The firm is internationally recognized for its representation of Fortune 500 companies in high-stakes litigation and government-facing matters, as well as its ongoing commitment to pro bono service and diversity, equity, and inclusion.

View Desktop Site | Mobile Sitemap |

Contact | Subscribe | Terms of Use | Privacy Statement | Alumni

© Crowell & Moring LLP 2022
Attorney advertising - prior results do not guarantee a similar outcome.