Background

In 2022, OCR and CMS issued a Notice of Proposed Rulemaking (NPRM) to reinterpret Section 1557 of the ACA, which prohibits discrimination on the basis of race, color, national origin, sex, age, or disability in, among other things, a health program or activity for which any part receives federal financial assistance. The NPRM proposed restoring and strengthening civil rights protections for patients under federally funded health programs and HHS programs, which were limited by regulatory revisions in 2020. Specifically, the 2020 changes restricted Section 1557’s application to fewer programs and services and limited nondiscrimination protections for individuals by eliminating many of the protections outlined in the original 2016 rule, particularly those related to gender identity, gender expression, sex stereotyping, and termination of pregnancy.

The Final Rule becomes effective on July 5, 2024, 60 days after it was published in the Federal Register on May 6, 2024. Once in effect, the Final Rule imposes various timeframes for complying with certain requirements, as discussed in more detail below.

Key Changes

Among other updates, the 2024 Final Rule solidifies protections against discrimination on the basis of sex, including sexual orientation and gender identity consistent with the U.S. Supreme Court’s 2020 decision in Bostock v. Clayton County in which the Court concluded that the plain meaning of “because of sex” in Title VII of the Civil Rights Act of 1964 includes discrimination because of sexual orientation or gender identity.  The Final Rule also includes regulatory revisions clarifying that discrimination on the basis of sex includes discrimination based on sex characteristics (including intersex traits), pregnancy or related conditions, and sex stereotypes.

The Final Rule applies to health programs or activities that receive HHS funding, health programs or activities administered by HHS (such as the Medicare Part D program), the health insurance Marketplaces, and all plans offered by issuers that participate on the Marketplaces and receive Federal financial assistance—this covers both the Federally-facilitated Marketplace and the State-based Marketplaces. Those subject to the Final Rule can include hospitals, health clinics, health insurance issuers, state Medicaid agencies, community health centers, physicians’ practices, and home health care agencies.

Other important changes and new requirements imposed by the Final Rule include:

• Scope. The Final Rule makes it unlawful for health care providers that receive Federal financial assistance, to refuse to treat—or to otherwise discriminate against—an individual on the basis on their race, color, national origin, sex, age, or disability, with comparable requirements for health insurance issuers that receive Federal financial assistance as well as the health insurance Marketplaces. This brings health insurance insurers back within the ambit of the Section 1557 regulations. HHS also clarifies that Section 1557 applies to both in-person and telehealth care. Health insurance coverage that was not subject to Section 1557 regulatory requirements as of the date of publication of the Final Rule must comply with such requirements by the start of the first plan year beginning on or after January 1, 2025. In addition, HHS will now consider Medicare Part B payments as a form of Federal financial assistance for purposes of triggering civil rights laws it enforces. This reflects a reversal of HHS’s long-standing interpretation, which had previously been that Part B funding does not meet the definition of “Federal financial assistance” for purposes of the nondiscrimination laws. The agency’s revised interpretation is effective as of the effective date of the Final Rule, but will have a one-year delayed applicability date for entities whose Federal program participation has been limited exclusively to Part B.

• Patient Care Decision Support Tools. The Final Rule applies the nondiscrimination principles under Section 1557 to use of new and broadly defined “patient care decision support tools” in clinical care and requires those subject to the rule to identify and mitigate discrimination when they use patient decision support tools, including automated and non-automated tools, mechanisms, methods, and technology to provide patient care. Covered entities are required to begin compliance with the new patient care decision support tool requirements within 300 days of the Final Rule’s effective date. Under the Final Rule, covered providers also have an ongoing responsibility to identify their patient care decision support tools that directly measure race, color, national origin, sex, age, or disability, and to make reasonable efforts to mitigate the risk of discrimination from their use of these tools. The Final Rule’s preamble also clarifies that “predictive decision support interventions” (Predictive DSIs) as defined by the Office of the National Coordinator for Health Information Technology (ONC) is a subset of “patient care decision support tools.” While ONC’s requirements for predictive DSIs apply to health information technology developers, Section 1557’s requirements apply to covered entity users of patient care decision support tools, including Predictive DSIs. Further, OCR clarified that users of AI systems that have received authorization from the U.S. Food & Drug Administration (FDA) are not excluded from the scope of the rule.

• Notice. Covered entities are required to provide a notice of nondiscrimination to participants, beneficiaries, enrollees, applicants of their health programs and activities, and to members of the public. The Final Rule outlines specific content and form requirements, such as that the notice must include: a statement that the entity does not discriminate on the basis of race, color, national origin (including limited English proficiency and primary language), sex, age, or disability; that the entity provides reasonable modifications for individuals with disabilities and appropriate auxiliary aids and services, free of charge and in a timely manner; how to obtain reasonable modifications, appropriate auxiliary aids and services, and language assistance services; contact information for the entity’s compliance coordinator; the availability of the entity’s grievance procedure and how to file a grievance; details on how to file a discrimination complaint with OCR; and how to access the entity’s website (if it has one) that provides the required information. Entities are required to comply within 120 days of the effective date. The notice must be provided on an annual basis and upon request, and be posted in a conspicuous location on the entity’s website and at physical locations.

• Accessibility. Increasing protections for and requirements related to individuals with disabilities or LEP, the Final Rule requires effective communication, including through provision of appropriate auxiliary aids and services; establishes standards for accessibility of buildings and facilities; requires that health programs provided through electronic and information technology be accessible; requires those covered to make reasonable modifications to their policies, procedures, and practices to provide individuals with disabilities access to health programs and activities; and requires health insurance coverage to be provided in the most integrated setting appropriate to the needs of qualified individuals with disabilities. Entities are required to comply within one year of the effective date.

• Language Services. At no cost to patients, entities are required to proactively inform people of language assistance services and auxiliary aids in English and at least the 15 most common languages spoken by people with LEP in the states served. To minimize this burden, HHS has prepared sample notices in English and 47 other languages that can be used, though providers are free to create their own notices. Covered entities must begin complying with this requirement starting within one year of the Final Rule’s effective date.

• Policy Updates and Employee Training. The Final Rule requires covered entities to update their policies and procedures to comply with the Final Rule within one year of the Final Rule’s effective date and train their staff on these updated policies and procedures. This includes effective communication procedures describing processes for communications with individuals with disabilities as well as language access procedures describing the entity’s process for providing language assistance services to individuals with LEP when required. The Final Rule provides flexibility in what procedures may be adopted to comply, taking into consideration factors such as the nature and importance of the health program and the communication at issue. The Final Rule also accounts for other relevant considerations, such as whether an entity has developed and implemented an effective language access plan appropriate to its circumstances.

• Grievance Procedures and Coordinator. Covered entities with 15 or more employees are required to have a civil rights grievance procedure and an employee designated to coordinate compliance with the Final Rule. They are required to identify the coordinator within 120 days of the effective date of the Final Rule. Coordinators may serve in other capacities and have other responsibilities in addition to their Section 1557 Coordinator role.

Carve Outs

The Final Rule does not require a specific standard of care or course of treatment for any individual, minor or adult. Providers do not have an affirmative obligation to offer any health care, including gender-affirming care or abortion services, that they do not think is clinically appropriate or if religious freedom or conscience protections apply. HHS has a general practice of deferring to a clinician’s judgment about whether a particular service is medically appropriate for an individual. The Final Rule does not require those covered, including state Medicaid agencies, to cover a particular health care service, for example, to provide for the treatment of gender dysphoria for any individual, minor or adult. Rather, it prohibits health insurance issuers, state Medicaid agencies, and other covered entities from excluding coverage of categories of services in a discriminatory way. Coverage must be provided in a neutral and nondiscriminatory manner.

The Final Rule also reiterates that an entity may rely on applicable Federal protections for religious freedom and conscience. It also includes an administrative process for recipients to seek an assurance of exemption, in writing, from the application of a provision of Section 1557 under existing Federal religious freedom and conscience laws.

Next Steps

Among other things, the Final Rule recognizes the growing importance of telehealth and patient care decision support tools in the health care marketplace —including artificial intelligence and machine learning— and applies nondiscrimination protections to the use of these technologies. In its press release, HHS noted that the Final Rule’s clarification that nondiscrimination protections apply to uses of AI, clinical algorithms, predictive analytics, and other tools serves as one of the key pillars of HHS’s response to the President’s Executive Order on Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence. HHS and its Divisions are expected to continue to release updates, guidance, and requirements related to uses of these technologies in health care.

In addition to monitoring for new developments focused on emerging technologies, organizations can evaluate whether they are affected by these updates, and if so, take steps to comply with new and revised requirements. Such steps include:

• Assessing compliance with expanded nondiscrimination requirements;
• Implementing processes to comply with new notice, communication, and accessibility requirements;
• Updating practices, policies, procedures, and employee trainings to reflect these updated requirements;
• Designating a coordinator, as appropriate;
• Establishing or updating a grievance process, as appropriate;
• Publishing and distributing appropriate notices; and
• Implementing ongoing monitoring and mitigation measures for uses of AI technologies as part of their health care operations.

Authored by Cybil Roehrenbeck, Ken Choe, James Huang, and Alyssa Golay.