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It’s Déjà Vu All Over Again: New Section 1557 Final Rule Eliminates Taglines, Notices of Nondiscrimination, and More

on Tuesday, 7 July 2020 in Health Law Alert: Erin E. Busch, Editor

On Friday, June 12, 2020, the Office for Civil Rights (“OCR”) quietly released its “new” final rule enforcing the nondiscrimination provisions under Section 1557 of the Patient Protection and Affordable Care Act (“ACA”), which will replace the Obama-era Section 1557 rule originally effective on July 18, 2016.

The new Section 1557 final rule goes into effect August 18, 2020 and eliminates a number of the regulatory requirements under the Obama-era rule that critics deemed overly burdensome, including the requirement to post translated taglines, in addition to the requirement to post a notice of nondiscrimination.

The nondiscrimination protections of the ACA—commonly referred to as Section 1557—applied several existing civil rights laws to the operations of health programs or activities receiving Federal financial assistance, including Medicare Part A and Medicaid. Section 1557 prohibits discrimination by a number of Medicare providers and suppliers, including, without limitation, acute care hospitals, critical access hospitals, skilled nursing facilities, nursing facilities, home health agencies, based on a patient or resident’s race, color, national origin, sex, age, and disability.

Section 1557 went into effect immediately upon the passage of the ACA on March 23, 2010 but was mostly unnoticed until March 2015 when a Minnesota U.S. District Court allowed a lawsuit brought by a transgender man against a Minnesota hospital alleging a violation of Section 1557 to proceed. In that case, the plaintiff—Jakob Rumble—alleged that the hospital discriminated against him “on the basis of sex” multiple times throughout his visit to the emergency room in violation of Section 1557.

Over a year later, the OCR under the Obama Administration released a final rule interpreting Section 1557 that many industry commenters viewed as an overreach and burdensome on covered entities, including hospitals, nursing homes, and particularly commercial insurers. As a frequently cited illustrative example of the burden on providers, covered entities were required to affix translated taglines and a notice of nondiscrimination on all “significant publications and communications.”

Nearly a month after the original Section 1557 final rule went into effect, a number of faith-based health care organizations, led by Indiana-based health care system Franciscan Alliance, Inc., filed a lawsuit against the U.S. Department of Health and Human Services (“HHS”) alleging that the regulation exceeded the Section 1557 statutory language. One of the plaintiffs’ main arguments challenged OCR’s position that Section 1557 prohibited discrimination “on the basis of sex,” which OCR interpreted to include discrimination based on gender identity and termination of pregnancy. On December 31, 2016 Judge Reed O’Connor of the U.S. District Court in the Northern District of Texas granted the plaintiffs’ motion for a preliminary injunction, which prohibited OCR from enforcing those portions of the rule that prohibited discrimination based on gender identity and termination of pregnancy.

Shortly thereafter, President Trump assumed office and immediately signed an Executive Order that signaled the Administration’s policy of either repealing or undermining the ACA. The initial Executive Order signed on January 20, 2017 granted OCR enforcement discretion on those ACA regulations that posed a “regulatory burden” on health care providers and marked the beginning of the end of the Obama-era regulations.

After the transition to the Trump Administration, the adversarial nature of the lawsuit led by the faith-based health care entities took on a friendlier tone as Trump’s HHS largely agreed with the plaintiffs’ arguments. The lawsuit was delayed for nearly two years as OCR drafted a new set of Section 1557 regulations to reflect the Trump Administration’s limited interpretation of the statutory language under the ACA. HHS continually requested a pause in the proceedings of the case until it could release new proposed Section 1557 regulations, which it finally did in June 2019.

The new proposed Section 1557 regulations were published on June 14, 2019 in the Federal Register and the public was allowed to submit comments for sixty days until August 13, 2019. OCR received nearly 156,000 comments in response to the proposed rule ranging from overwhelming support to harsh criticism of OCR’s proposed changes.

The final rule published nearly a year later on June 12, 2020 adopts a majority of the provisions of the proposed rule without modification. Under the new Section 1557 final rule that goes into effect on August 18, 2020, health care providers are no longer required to link to the 15-translated taglines and the notice of nondiscrimination from their homepages, and no longer need to post the 15-translated taglines and notice of nondiscrimination in conspicuous public places throughout the facility. Health care providers may also stop adding the 15-translated taglines and notice of nondiscrimination to significant publications and communications, and the 2-translated taglines and shorter statement of discrimination to small-sized significant publications and communications.

Under the prior regulations, health care providers needed to ensure meaningful access for individuals with Limited English Proficiency, or “LEP,” and OCR would assess whether the covered entity had adopted a language access plan as part of its assessment of compliance with this standard. The new Section 1557 final regulations still require health care providers to provide meaningful access for individuals with LEP, but no longer encourage the development of a language access plan; OCR will now apply a more relaxed standard to determine if health care providers have provided “meaningful access” for individuals with LEP. OCR will now assess and balance four (4) factors to assess compliance: (a) the number or proportion of limited English proficient individuals eligible to be served or likely to be encountered in the eligible service population; (b) The frequency with which LEP individuals come in contact with the entity’s health program, activity, or service; (c) The nature and importance of the entity’s health program, activity, or service; and (d) The resources available to the entity and costs.

The Obama-era Section 1557 regulations also required that covered entities with fifteen (15) or more employees appoint a Section 1557 coordinator but the updated regulations eliminate such requirement. As such, health care providers are no longer required to have a Section 1557 coordinator effective August 18, 2020.

The new Section 1557 regulations largely retain the original Section 1557 regulation’s requirements for providing meaningful access for individuals with disabilities without modification. Patient requests for auxiliary aids, such as ASL interpreters, note takers, assistive listening devices, etc., should continue to be evaluated and granted based on an organization’s existing compliance program under Section 1557.

The new Section 1557 final regulations also eliminates the Obama-era rule’s interpretation of the term “on the basis of sex,” which included gender identity and termination of pregnancy. Although Judge Reed O’Connor issued a nationwide preliminary injunction on OCR’s ability to enforce this portion of the old Section 1557 final rule on December 31, 2016, a number of covered entities continued to follow the guidance under the rule given the potential for private lawsuits from individuals alleging violations of Section 1557. The threat of an enforcement action from OCR is greatly reduced by the new final rule but there is still a possibility that patients will file lawsuits alleging violations of Section 1557 because judges have been more willing to interpret Section 1557 as prohibiting discrimination “on the basis of sex,” including gender identity based on the statutory language without regard to the regulation.

Health care providers may take the steps outlined above to alleviate some of the compliance burden under the old Section 1557 regulations, such as eliminating the translated taglines and notice of nondiscrimination from significant publications and communications, effective August 18, 2020. With respect to the new rule’s elimination of the term “on the basis of sex”—providers should keep in mind that courts have demonstrated a willingness to base their judicial decisions on the statutory language of Section 1557 without relying on the regulatory language. As such, it is still a potential compliance risk that a judge will take a more expansive view of Section 1557 than OCR.

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