HHS has published a final rule expanding protections under Section 1557 of the ACA, which prohibits discrimination in certain health programs and activities on the basis of race, color, national origin, sex, age, or disability in any health program activity that receives federal financial assistance and other covered entities. The Section 1557 regulations that took effect in 2016 under the Obama administration expanded the scope of Section 1557 prohibitions by including discrimination based upon gender identity. The 2016 regulations also required entities covered by the rule to distribute nondiscrimination notices and required them to have compliance coordinators and written grievance procedures to handle complaints concerning possible violations of Section 1557. In 2020, however, the Trump administration's HHS issued a final rule amending Section 1557 of the ACA to scale back explicit protections based on gender identity introduced by the Obama administration.

In the 2024 final rule, HHS reinstated the scope of the 2016 regulations and expanded the regulations further. The final rule is generally effective 60 days after publication in the Federal Register, but certain provisions have delayed effective dates. The complete effective dates on each provision under Section 1557 can be found in the HHS Section 1557 Final Rule: Frequently Asked Questions.

Here are highlights of the 2024 final rule on Section 1557:

Restores and broadens the definition of covered entities to include insurers and pharmacy benefit managers (PBMs).

The final rule restored and expanded the definition of covered entities of Section 1557 to health programs and activities that include health insurers and PBMs that receive federal financial assistance and all the operations of a covered entity, including an insurer's TPA activities. In contrast, group health plans are not explicitly defined as covered entities since many employers and group health plans are not direct recipients of federal financial assistance. The final rule states that Section 1557 will not be applied if it would violate federal protections for religious freedom and conscience. The final rule provided an administrative process for obtaining a written assurance of exemption.

Prohibits discrimination on the basis of sex.

The final rule affirms that protections against sex discrimination include protections against discrimination on the basis of sexual orientation and gender identity. Additionally, the final rule clarifies that sex discrimination includes discrimination on the basis of sex stereotypes, sex characteristics (including intersex traits), and pregnancy or related conditions.

Requires covered entities to take steps to identify and mitigate discrimination when they use patient care decision support tools.

The final rule requires covered entities to make reasonable efforts to identify patient care decision support tools that use input variables or factors that measure race, color, national origin, sex, age, or disability and to make reasonable efforts to mitigate the risk of discrimination that may result from the use of such tools. Within 120 days of the effective date, covered entities must begin providing an annual notice of nondiscrimination and a notice of language assistance services to participants, beneficiaries, enrollees, and applicants. FAQs accompanying the final regulations note that HHS has prepared sample notices in multiple languages to assist with this requirement.

Clarifies that nondiscrimination requirements apply to health programs and activities provided through telehealth services.

The final rule clarifies that covered entities must not discriminate in their delivery of health programs and activities provided through telehealth services. This means ensuring that such services are accessible to individuals with disabilities and providing meaningful program access to people with limited English proficiency.

The prohibition of discrimination on the basis of sex is historically one of the most litigated provisions of Section 1557. As explained above, the final rule is primarily directed at covered entities that receive federal financial assistance. However, group health plan sponsors should be aware of the issuance of the final rule, which could potentially impact their plan indirectly. Sponsors with questions regarding the specific application of Section 1557 and other nondiscrimination laws to their plan design should consult with their legal counsel.

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