A Full Service Employee Benefit and Compliance Solution for Employers

By Dorothy M. Cociu, RHU, REBC, GBA. RPA
OCAHU VP Communications, COIN Editor 2016-17

Published by The Orange County Association of Health Underwriters (OCAHU) and posted with permission of OCAHU

HHS Finalizes Rule to Improve Health Equity Under the Affordable Care Act

The Final Rule, issued May 2016, prohibits discrimination based on race, color, national origin, sex, age or disability; enhances language assistance for individuals with limited English profi-ciency; and protects individuals with disabilities. Covered enti-ties, which include many employers offering group benefit pro-grams, must comply with the rules effective July 18, 2016, with many requirements due no later than October 17, 2016, includ-ing required notices and taglines, which will be described below. Plan design changes, however, if needed, are required with plan year renewals on or after January 1, 2017.

Summary of Final Rule
The Department of Health and Human Services (HHS) issued a final rule to advance health equity and reduce health care dis-parities on May 13, 2016. Under the rule, individuals are pro-tected from discrimination in health care on the basis of race, color, national origin, age, disability and sex, including discrimi-nation based on pregnancy, gender identity and sex stereotyp-ing. In addition to implementing Section 1557’s prohibition on sex discrimination, the final rule also enhances language assis-tance for people with limited English proficiency and helps to ensure effective communication for individuals with disabilities. The protections in the final rule and Section 1557 regarding indi-viduals’ rights and the responsibilities of many health insurers, hospitals, and health plans administered by or receiving federal funds from HHS build on existing federal civil rights laws to ad-vance protections for underserved, underinsured, and often excluded populations.
Section 1557 is the first Federal civil rights law to prohibit dis-crimination on the basis of sex in all health programs and activi-ties receiving Federal financial assistance. It has been in effect since enactment of the ACA in 2010 and the HHS Office of Civil Rights (OCR) has been enforcing the provision since it was enact-ed.
The rule covers:
Any health program or activity, any part of which receives funding from HHS (such as hospitals that accept Medi-care or doctors who accept Medicaid);
Any health program that HHS itself administers;
Health insurance Marketplaces and issuers that participate in those Marketplaces.
This rule is effective July 18, 2016. However, to allow health plans time to prepare, health plans that require changes in ben-efits design are required to comply on the first day of the plan or
policy year beginning on or after January 1, 2017.

The broad application of this final rule will affect the federal and state Marketplaces, all health care providers and health insurance issuers and employers that receive federal finan-cial assistance. Financial assistance from HHS includes Medi-care Part A, student health plans, advanced premium tax credits and many other programs.
The final rule is broad in scope. Any entity that is subject to the nondiscrimination requirements must also ensure that its own employer-sponsored plans are compliant. I will provide additional information below.

The Nondiscrimination in Health Programs and Activities final rule implements Section 1557 of the Affordable Care Act, which is the first federal civil rights law to broadly pro-hibit discrimination on the basis of sex in federally funded health programs. Previously, civil rights laws enforced by HHS’s Office for Civil Rights (OCR) broadly barred discrimina-tion based only on race, color, national origin, disability, or age.

“A central goal of the Affordable Care Act is to help all Amer-icans access quality, affordable health care. Today’s an-nouncement is a key step toward realizing equity within our health care system and reaffirms this Administration’s com-mitment to giving every American access to the health care they deserve,” said HHS Secretary Sylvia M. Burwell on May 13, 2016 in the first press release related to the release of the Final Rule.

According to HHS, the final rule helps consumers who are seeking to understand their rights and clarifies the responsi-bilities of health care providers and insurers that receive federal funds. The final rule also addresses the responsibili-ties of issuers that offer plans in the Health Insurance Mar-ketplaces. Among other things, the final rule prohibits mar-keting practices or benefit designs that discriminate on the basis of race, color, national origin, sex, age, or disability. The final rule also prohibits discriminatory practices by health care providers, such as hospitals that accept Medi-care or doctors who participate in the Medicaid program.

The final rule prohibits the sex discrimination in health care including by:
Requiring that women must be treated equally with men in the health care they receive. Other provi-sions of the ACA bar certain types of sex discrimina-tion in insurance, for example by prohibiting wom-en from being charged more than men for cover-age. Under Section 1557, women are protected from discrimination not only in the health coverage they obtain but in the health services they seek from providers.
Prohibiting denial of health care or health coverage based on an individual’s sex, including discrimina-tion based on pregnancy, gender identity, and sex stereotyping.
It also includes important protections for individuals with disabilities and enhances language assistance for people with limited English proficiency including by:
Requiring covered entities to make electronic infor-mation and newly constructed or altered facilities accessible to individuals with disabilities and to pro-vide appropriate auxiliary aids and services for indi-viduals with disabilities.
Requiring covered entities to take reasonable steps to provide meaningful access to individuals with lim-ited English proficiency. Covered entities are also encouraged to develop language access plans.
While the final rule does not resolve whether discrimination on the basis of an individual’s sexual orientation status alone is a form of sex discrimination under Section 1557, the rule makes clear that OCR will evaluate complaints that allege sex discrimination related to an individual’s sexual orienta-tion to determine if they involve the sorts of stereotyping that can be addressed under 1557. HHS stated that it sup-ports prohibiting sexual orientation discrimination as a mat-ter of policy and will continue to monitor legal developments on this issue.

The final rule states that where application of any require-ment of the rule would violate applicable Federal statutes protecting religious freedom and conscience, that applica-tion will not be required.
The final rule on Section 1557 does not include a religious exemption; however, the final rule does not displace existing protections for religious freedom and conscience.

Defining Covered Entities Under the ACA Nondiscrimination Rules
Are Employers sponsoring health plans a covered entity un-der the ACA nondiscrimination rules? According to the Pre-amble of the regulations, as well as the FAQ’s put out by HHS, covered entities (those that have to comply with the law) are entities receiving HHS funding, Medicare Part D, Marketplaces, and all plans offered by issuers that partici-
pate in marketplaces, plus TPA’s, providers, such as hospi-tals, health clinics, health insurance issuers, Medicaid agen-cies, community health centers, physician practices, and home health care agencies. The inclusion of health insur-ance “ issuers” makes the application interesting, to say the least. For the most part, fully insured employers with plans that purchase coverage through a carrier that participates in federal or state exchanges are considered covered entities, and are required to comply. Self-funded employers, howev-er, usually will not be considered covered entities, although their TPA’s may be. According to Marilyn Monahan, attor-ney from Monahan Law Offices, an employer with a self-funded health plan is subject to the prohibitions of the ACA nondiscrimination rules only if it receives federal funds from HHS. If the employer does not receive federal funds from HHS, and therefore does not qualify as a covered entity under the rules, the employer’s self-funded health plan is NOT subject to the rules. What happens if an employer uses as their TPA an issuer that is a covered entity? That alone does not turn the self-funded plan into a covered entity, according to Marilyn Monahan.
“If the employer uses a TPA that is a TPA that is an issuer/covered entity”, questioned Marilyn Monahan, “could that TPA ever be liable for violating the nondiscrimination regula-tions?” Marilyn’s answer to her own question was “Yes. But, the potential liability is limited. Since the TPA does not control plan terms, the TPA would not be liable if it adminis-tered the plan according to its terms and the terms were discriminatory. However, if in administering the plan the TPA made a discriminatory decision (denied a claim based on someone’s ethnicity, for example), then the TPA could be liable.” This analysis came from pages 31431 -31433 of the Federal Register (the preamble).
Some self-funded health plans have decided to voluntarily comply with the law, since their practices are already non-discriminatory, and they do not want to be at a hiring disad-vantage by not posting the required taglines (discussed be-low) that potential applicants may be looking for.

Procedural Requirements – What Covered Entities Must Provide
The final rule implementing Section 1557 requires covered entities with 15 or more employees to have a grievance pro-cedure and a compliance coordinator. The final rule includes an Appendix that provides a model grievance procedure for covered entities. Entities with fewer than 15 employees are not required to have a grievance procedure or compliance coordinator.

The final rule requires that covered entities post notices of nondiscrimination and taglines that alert individuals with limited English proficiency to the availability of language assistance services. To reduce burden and costs, OCR has translated a sample notice and taglines for use by covered entities into 64 languages. For translated materials, visit www.hhs.gov/civil-rights/for-individuals/section-1557/translated-resources/index.html.

The final rule requires each covered entity to post taglines in at least the top 15 non-English languages spoken in the State in which the entity is located or does business. Those re-quirements are modified for small sized significant communi-cations such as postcards: for these, the final rule requires entities to post a nondiscrimination statement and taglines in at least the top two non-English languages spoken by indi-viduals with limited English proficiency in the State.
When do the notices have to go out?

The rule is effective 60 days after publishing in the Federal Register, or July 18, 2016, and it allows additional time for posting notices of consumer rights and taglines, as well as making plan design changes, if necessary. In general, plan design changes are due with plan years on or after January 1, 2017.

According to Section 92.8, Notice Requirement, within 90 days of the effective date of this part, each covered entity shall post taglines in at least the top 15 languages spoken by individuals with limited English proficiency of the relevant State or States; and , post taglines in at least the top two languages spoken by individuals with limited English profi-ciency of the relevant State or States. In general, they must be prepared and posted in a conspicuously-visible font size in communications targeted to beneficiaries, enrollees, appli-cants, and members of the public, except for significant publications and significant communications that are small-sized, such as postcards and tri-fold brochures; in conspicuous physical locations where the entity interacts with the public; and in a conspicuous location on the covered entity’s Web site accessible from the home page of the covered entity’s Web site.

Again, although PLAN DESIGN changes are not required until plan year renewals on or after January 1, 2017, the majority of these requirements are required within 90 days of the effective date of July 18, 2016, which would mean, for the most part, notices, taglines, etc. are required by mid-October, 2016 (October 17, 2016 specifically).

Small Employer Applications
Does a small employer have to do anything? Again, all covered entities must comply at any size, but only employers with 15+ employees must provide a grievance procedure and an employee designated to coordinate compliance.

The existing enforcement mechanisms under Title VI, Title IX, Section 504 and the Age Act apply for redress of violations of Section 1557. These mechanisms include: requiring covered entities to keep records and submit compliance reports to
OCR, conduction compliance reviews and complaint investi-gations, and providing technical assistance and guidance.
Regarding benefit design in health coverage plans, OCR re-viewed comments that issuers would need time to come into compliance with the requirement prohibiting discrimination in benefit design. The applicability date of the first day of the first plan year (in the individual market, policy year) be-ginning on or after January 1, 2017. ##
Reference Sources (Public Reference Sources Published by the Department of Health & Human Services (HHS):
Federal Register, Volume 81, Number 96, Wednesday, May 18, 2016, including Preamble of regulations
Press Release, HHS Office for Civil Rights in Action, May 13, 2016, “HHS Finalizes Rule to Improve Health Equity under the Affordable Care Act”
Summary: Final Rule Implementing Section 1557 of the Affordable Care Act, HHS, May 13, 2016
Fact Sheets on Key Provisions of Section 1557, HHS, May 13, 2016
FAQs on Final Rule, Section 1557, HHS, May 13, 2016
Eye on Washington: Health Care Reform Update, ADP, LLC, Updated May 20, 2016

> Read the full Sep/Oct 2016 OCAHU COIN (County of Orange Insurance News) here.