A final rule published by the Department of Health and Human Services’ (HHS) Office for Civil Rights (OCR) and the Centers for Medicare & Medicaid Services (CMS) significantly scales back nondiscrimination regulations first released in 2016. The final rule, which was published in the Federal Register on June 19, 2020, implements Section 1557 of the Affordable Care Act (ACA) and pares back numerous nondiscrimination regulations applicable to covered health care entities in an effort to reduce regulatory costs and eliminate duplicative legal obligations.

In doing so, the final rule drastically changes the interpretation of  Section 1557’s scope, waters down stringent requirements designed to promote universal access to covered programs and providers, and alters enforcement provisions. Despite these notable changes, certain core nondiscrimination provisions remain, such as communication and access standards for disabled and limited English proficiency (LEP) individuals. As a result, covered entities will need to understand how their obligations under the final rule change, what remains the same, and what to look out for moving forward when it becomes effective on August 18, 2020. Below are the new rule’s main takeaways.

What are the changes under the new rule?

A. A new meaning of “on the basis of sex.”

The regulations that flow from Section 1557 ban discrimination “on the basis of sex.” When first implementing regulations in 2016, OCR banned discrimination “on the basis of sex” to include any of the following categories: pregnancy, false pregnancy, termination of pregnancy, or recovery; childbirth or related medical conditions; gender identity; or sex stereotype. In a significant change from that original definition, OCR removes the definitions section entirely from the final rule. In doing so, OCR contends that “on the basis of sex” shall revert to the “plain meaning” of the term “sex” in Title IX – male and female biological binary.

However, this narrowing decision coincides with a significant U.S. Supreme Court decision only a few days earlier to more broadly define “on the basis of sex.” The decision in Bostock v. Clayton County, Ga.,[i], issued only four days before the OCR final rule publication, held that discrimination “on the basis of sex” includes claims based on gender identity and sexual orientation under Title VII of the Civil Rights Act. This ruling begs the question whether the holding in Bostock will be extended to the now-narrowed definition in the rule. OCR was previously enjoined from enforcing the 2016 definition after a number of health care organizations and a handful of states successfully challenged the broader definition in Franciscan Alliance v. Burwell. In fact, in comments on the proposed rule, several organizations requested that OCR wait to finalize this final rule until the Supreme Court had ruled on Bostock. Given the evolving legal landscape, there is an open question on the definition since Section 1557 refers to Title IX of the Education Amendments of 1972 for its definition of “on the basis of sex,” not Title VII, the law in question in the Bostock case.  Numerous groups have already stated publicly they will challenge the rule on this basis.  An alliance of LGBTQ groups and health care providers is the first to act, bringing suit on Monday against HHS on the grounds that the rule denies individuals full protections against sex-discrimination as required by federal law. The complaint references the Supreme Court’s holding in Bostock, which it argues is inconsistent with this rule and ultimately “forecloses” HHS’s final interpretation of “on the basis of sex.”  The complaint also takes aim at HHS’s decision to publish the rule despite recognizing in the proposed rule that a holding by the Supreme Court “will likely have ramifications for the definition of on the basis of sex” (note that HHS announced the final rule a few days before Bostock, but the rule’s publication followed a few days after the decision).  The outcome of this litigation—which is unlikely to be the first and only on this issue—will have a direct impact on the scope of nondiscrimination provisions under the rule.

B. Changing the scope of “covered entities.”

OCR indicates that the rule takes a narrower view regarding what constitutes a “covered entity.” Specifically, Section 92.3(b) clarifies that a covered “health program or activity” encompasses entities “principally engaged in the business of providing healthcare” that receive federal financial assistance, and for entities not principally engaged in the provision of health care, the rule applies only to the entity operations that receive financial assistance through HHS. Importantly, the rule creates a distinction for health insurers, on the grounds that provision of health insurance is not the same as the business of providing health care, exempting things such as employer-sponsored group plans that do not receive federal assistance and are not principally engaged in providing health care. Programs and entities established or administered under Title I of the ACA are governed by the rule (for example, state exchanges, qualified health plans and health programs or activities receiving federal financial assistance).

C. Changes to available enforcement mechanisms.

Under the rule, OCR states it will continue to “vigorously protect and enforce” civil rights; however, the rule makes significant changes to the enforcement mechanisms, repealing several key provisions of the 2016 rule:

• The changes eliminate Section 1557 rule-specific enforcement provisions, and instead adopt the enforcement mechanisms available under the four statutes underlying the rule – Title VI of the Civil Rights Act of 1964, Title IX of the Education Amendments of 1972, the Age Discrimination Act of 1975, or Section 504 of the Rehabilitation Act of 1973. OCR claims that the goal of this change is to minimize confusion over applicable legal standards by eliminating unnecessary statutory overlay.
• The rule repeals the provision allowing for compensatory damages for any and all claims under Section 1557. As a result, compensatory damages will be generally unavailable for claims based solely on a federal agency’s disparate impact regulations.
• The rule also eliminates the private right of action under the Section 1557 regulations, thereby shifting enforcement authority to OCR and away from private individuals. Therefore, we may see fewer complaints filed by individuals with OCR alleging violations of Section 1557.
• Additionally, the rule repeals provisions granting OCR authority to access and review HHS records and sources of information regarding compliance. Instead, OCR will rely on the provisions in the four underlying statutes that address access to review of covered entities’ compliance records.

D. Changes to obligations designed to provide meaningful access for LEP individuals.

1. Elimination of certain costly administrative requirements, such as taglines.

The rule repeals Section 92.8 of the 2016 rule, which required covered entities to send patients “notice and taglines” about nondiscrimination requirements and accessibility options in 15 or more foreign languages in almost every health care mailing. OCR justifies this change by explaining that these requirements imposed excessive administrative and regulatory costs on covered entities, costs which were likely to be passed down to consumers. Commenters, however, felt that the old requirements were critical to ensure that LEP individuals were informed of their rights; commenters argued that cost concerns alone did not justify a change that may substantially weaken access to the health care system for LEP individuals. Interestingly, the rule does not distinguish between requirements for covered entities to physically post nondiscrimination and accessibility information, to publicize it on their websites, or to include it in their physical mailings—some actions far more burdensome and costly than others. Instead, the rule erases these notice requirements wholesale. OCR points out, however, that covered entities are still required to provide a notice of nondiscrimination under Title IV, Section 504 and the Age Discrimination Act, and required to provide taglines where necessary to ensure “meaningful access by LEP individuals to a program or activity.” Moving forward, covered entities may consider reallocating resources used to comply with the notice and tagline requirements to other operational areas critical to ensure LEP individuals have meaningful access to their programs and activities.

2. The rule shifts to a more generalized approach to determining whether a covered entity has taken reasonable steps to provide meaningful access.

The rule incorporates a more generalized approached to assess the sufficiency of steps taken to ensure meaningful access, moving away from the individualized approach created under the 2016 rule. The new regulations enumerate four factors that OCR will use to assess alleged discrimination against LEP persons. OCR will consider the following four factors: (i) the number or proportion of LEP individuals eligible to be served or likely to be encountered in the eligible service population; (ii) the frequency with which LEP individuals come in contact with the entity’s health program, activity, or service; (iii) the nature and importance of the entity’s health program, activity, or service; and (iv) the resources available to the entity and costs. This flexible standard, which balances how many LEP individuals the entity sees against the cost of services, changes the view of compliance from an individually-based to a broader community-based inquiry. OCR states that the 2016 standard was overly stringent and risked imposing undue burdens on small businesses, small local governments, and small nonprofits that only treat a limited number of LEP individuals. Based on the additional color provided by OCR in its response to comments, it seems plausible that a lack of specific language access services may be justified, if an entity seldom sees LEP individuals and those services would require substantial resources or financial outlays. That said, entities should carefully consider the importance of the program and communication at issue and other relevant considerations, as laid out in the four-factor test, before making drastic reductions or changes to the provision of language access services.

What remains the same?

A. The revisions to the Section 1557 rule do not eliminate or otherwise undermine the vitality of separate statutory regimes related to nondiscrimination.

The rule states that “nothing in this part shall be construed to invalidate or limit the rights, remedies, procedures or legal standards available to parties” under the four underlying statutes, “or supersede State laws” that provide additional nondiscrimination protections. This provision underscores the fact that the revisions were driven in large part by OCR’s view that requirements under the 2016 rule were duplicative and unnecessary given the four underlying anti-discrimination statutes possessing parallel or analogous requirements (e.g., notice requirements for LEP individuals or rights to access and review compliance records of covered entities). According to OCR, the revisions are not intended to be a full-scale rollback of the protections and rights designed to combat discrimination in health care. Typifying this point is the insertion of general provisions at Section 92.2, articulating that the rule maintains the nondiscrimination requirements required by Title VI, Title IX, the Age Act, and Section 504. As such, individuals with multiple protected characteristics, such as race and disability, are protected under the OCR’s enforcement of Section 1557 to the extent those statutes and regulations apply.

All told, despite the new rule adopting a less stringent and more flexible approach compared to the 2016 version, covered entities must remain aware of regulatory obligations that arise under separate anti-discrimination statutory frameworks and take appropriate steps to effect compliance with any such requirements.

B. The rule retains the bulk of its communication services provisions for LEP and disabled individuals.

The rule retains the core provisions on effective communication for individuals with disabilities, including a requirement that interpreters be provided “free of charge” and “in a timely manner.” In its response to comments, OCR addresses concern over elimination of “acquisition or modification of equipment and devices; and other similar services and actions” from the list of examples of auxiliary aids and services, noting that the list is not meant to be exhaustive. Notably, the rule declines to incorporate a size-based exemption regarding the auxiliary aids and services requirement due to the veritable import of ensuring access to these devices. Further, covered entities are still required to make reasonable modifications to their policies, procedures, and practices to provide individuals with disabilities access to a covered entity’s health programs and activities.

Covered entities are required to offer language assistance services, including qualified translators and interpreters when appropriate. However, OCR no longer defines who is qualified in certain instances—for example, while the provision of language assistance services may include “qualified bilingual/multilingual staff,” the rule no longer defines that term. As with the 2016 rule, a covered entity may not require an individual with LEP to bring his or her own interpreter or rely on a family member to facilitate communication, except under limited circumstances.

The rule also preserves many of the requirements related to video services. For instance, the rule continues to hold covered entities to ADA Title II standards for video interpretive services where these are needed for effective communication for deaf or hard of hearing individuals. While the rule does not impose a blanket requirement for video remote interpreting (VRI) standards for LEP individuals, VRI services are still required if necessary to provide meaningful access to LEP individuals. The rule replaces the term “electronic and information technology” with the term “information and communication technology,” in an effort to update the definition with a more contemporaneous definition of information technology. However, it is unclear if this change will alter covered entities’ obligations under the rule with any material significance.

C. The rule retains accessibility standards for buildings and facilities.

Under the rule, Section 92.103(a) keeps the 2016 requirement that new construction or alteration of buildings or facilities comply with 2010 ADA Standards for Accessible Design, and retains the rules that allow for departure from the 2010 standards based on the “substantially equivalent or greater access to” standard.

What’s next?

Covered entities should review their non-discrimination policies and procedures in advance of the rule’s August 18 effective date.  OCR has provided a factsheet on the rule (see https://www.hhs.gov/sites/default/files/1557-final-rule-factsheet.pdf.) and we anticipate OCR will update its current FAQs to address the new regulations.  We also recommend that covered entities monitor developments on the rule, including the recent legal challenge.

[i] 590 U.S. ___, 2020 WL 3146686 (June 15, 2020)