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ACA’s nondiscrimination provision and the shifting tides of healthcare regulation

BY MARY M. BEARDEN and ALLISON SHELTON, Brown & Fortunato, P.C.

When the Affordable Care Act (ACA) passed in 2010, the federal government included a nondiscrimination provision that is codified in Section 1557 of the law. Section 1557 broadly prohibits discrimination in healthcare on the basis of race, color, national origin, sex, age, or disability. These categories of discrimination are based upon prohibitions found under other federal laws, such as Title VI (the Civil Rights Act), Title IX (the Sex Discrimination Act in the Education Amendments of 1972), the Age Discrimination in Employment Act, and Section 504 of the Rehabilitation Act, which prohibits employment discrimination on the basis of a disability.

On May 18, 2016, nearly six full years after the ACA was passed, the Department of Health and Human Services (HHS) published a final rule that was intended to clarify, codify, educate, and set new standards for compliance with Section 1557. The final rule has placed significant and burdensome requirements on entities covered by the law, including healthcare providers that accept Medicare or Medicaid.

Under the final rule, covered entities must take reasonable steps to provide meaningful access to healthcare for individuals with limited English proficiency. To do so, providers must make available qualified interpreters or video remote interpreting that meets certain standards. The final rule further requires that covered entities ensure that communications with individuals with disabilities are as effective as communications with other persons. To do so, providers must offer access to services or activities that are provided through electronic and information technology, interpretation services, auxiliary aids, and services for persons with impaired sensory, manual, or speaking skills.

Covered entities must adopt grievance policies and post notices regarding the entity’s nondiscrimination policy, grievance process, free auxiliary aids, and interpretation services. Furthermore, the notices must include taglines in the top 15 non-English languages spoken in the state that explain the availability of language assistance. Such notices must be included in an entity’s “significant publications,” which may include a provider’s Notice of Privacy Practices and consent forms. Finally, entities with 15 or more employees must identify a compliance coordinator who enforces the policies and addresses grievances.

One of the most controversial aspects of the final rule was the rule’s definition of “sex discrimination.” Specifically, the rule defined sex discrimination to include discrimination based on “gender identity” or “termination of pregnancy.” This definition caused private healthcare providers and eight states to file suit against HHS in the U.S. District Court for the Northern District of Texas and to seek a preliminary injunction against enforcement of the final rule. In Franciscan Alliance, Inc. v. Burwell, the plaintiffs claimed that the final rule would require insurers and healthcare providers to cover and provide abortions and gender transition services regardless of the providers’ religious beliefs or medical judgment. Further, the plaintiffs argued that HHS exceeded its authority in adopting the final rule. Judge Reed O’Connor agreed, stating that HHS’s interpretation of sex discrimination “violates the Administrative Procedure Act . . . by contradicting existing law and exceeding statutory authority.” As a result, the court issued a nationwide injunction on December 31, 2016, which prohibited HHS’s enforcement of the final rule’s provisions relating to “gender identity” and “termination of pregnancy.”

In response to the injunction, HHS moved for a voluntary remand and stay on May 2, 2017. HHS wants the agency, instead of the district court, to “assess the reasonableness, necessity, and efficacy of the two aspects of the regulation that are challenged.” If the motion is granted, HHS plans to initiate rulemaking proceedings. In general, the rulemaking process consists of the agency publishing a proposed rule, allowing for a period of public comment on the rule, analyzing and responding to comments received, and drafting and publishing a final rule.

The direction that HHS will take in the proposed rulemaking is unclear. HHS could focus on fixing and reworking the two provisions that the court addressed. On the other hand, HHS might conclude that the rule is overly burdensome and could overhaul the entire rule. Alternatively, based upon direction from the Trump administration, the rule could be eliminated altogether.

Section 1557’s final rule, and the path it has taken is indicative of the challenging regulatory environment of the healthcare industry. The uncertainty in regulations places healthcare providers in an all too familiar, awkward, and difficult position. Healthcare providers are forced to adopt and adapt business operations based upon the vast array of rules and regulations promulgated by the government. A regulation that becomes final one day could be overruled, re-written, or completely discarded the next. Rules and regulations can be expected to change with almost every major political election. As of today, nobody can predict the future of the ACA or what any replacement legislation is going to look like or the impact such legislation will have on the industry. In summary, healthcare will continue to be one of the most regulated industries in this country. Healthcare regulation, and compliance with such regulation, is a dynamic, moving target. In order to be successful, healthcare providers need to be educated and prepared to deal with the ever-changing regulatory tides. Perhaps, the future for Section 1557’s final rule holds true for the industry as a whole—it’s anybody’s guess.