ACA Section 1557 Final Regulations: What Healthcare Providers Must Do

On May 6, 2024, the Department of Health and Human Services ("HHS") published final regulations implementing Section 1557 of the Patient Protection and Affordable Care Act (the "Final Rule") after soliciting commentary on the rule proposed in 2022 ("Proposed Rule"). Section 1557 is the first federal civil rights law to focus on nondiscrimination in healthcare, prohibiting discrimination on the basis of race, color, national origin, sex, age, or disability by certain healthcare organizations that receive federal financial assistance ("1557 Covered Entities"). The HHS Office of Civil Rights ("OCR") is responsible for enforcing compliance with Section 1557.

The rules implementing Section 1557 have changed significantly since the initial version in 2016. The Final Rule prohibits 1557 Covered Entities from denying program benefits to patients, excluding them from participation, or treating them differently based on protected characteristics: race, color, national origin, age, disability, or sex, as further discussed below.

The Final Rule further implements the statutory prohibitions of Section 1557 by:

• clarifying the nondiscrimination requirements applicable to 1557 Covered Entities;
• strengthening protections for individuals with limited English proficiency ("LEP"), individuals with disabilities, LGBTQI+ individuals, and pregnant individuals;
• specifying requirements to proactively prevent discrimination when using AI patient care decision support tools; and
• introducing detailed notice requirements for 1557 Covered Entities under the Final Rule.

A summary of the extensive requirements within the Final Rule are outlined in these sections below.

1. Who Is a Section 1557 Covered Entity?
2. What Operational Changes Are Required of Section 1557 Covered Entities?
3. Discrimination Based on Sex Is Interpreted More Broadly in the Final Rule
4. How May Section 1557 Be Enforced?
5. What Is the Enforcement History to Date of Section 1557?

Who Is a Section 1557 Covered Entity?

The Final Rule applies to healthcare organizations, programs, or activities that:

• indirectly or directly receive HHS funding, including providers that receive Medicare Part A or B payments;
• are administered by HHS (including health insurance plans such as Medicare Advantage and Prescription Drug Programs);
• are health insurers on state and federal health insurance Marketplaces; or
• are health insurers that receive federal financial assistance (more on this below), Medicaid agencies, Children's Health Insurance Programs, or Basic Health Programs.

In practical terms, entities and organizations subject to the Final Rule will generally include hospitals, all types of clinics, licensed health insurers, post-acute and long-term care facilities, and ancillary service providers that receive any form of grant, loan, subsidy, contract, or other form of financial assistance, including Medicare Part B reimbursement. However, the Final Rule does not apply to any employer or other plan sponsor of a self-insured group health plan, including a board of trustees or association.

Notably, providers and suppliers receiving Medicare Part B payments will be deemed a 1557 Covered Entity. After historically interpreting Medicare Part B as not constituting federal financial assistance for purposes of civil rights enforcement, in the Final Rule HHS determined that Medicare Part B payments to providers and suppliers qualify as federal financial assistance. The effective date of the Final Rule is designed to allow 1557 Covered Entities time to come into compliance with the new requirements.

Although the Final Rule applies broadly to various entities described above, the primary focus of this summary is on the application of the Final Rule to healthcare providers.

What Operational Changes Are Required of Section 1557 Covered Entities?

Provide Meaningful Access to Individuals With Limited English Proficiency

By July 5, 2024, Section 1557 requires 1557 Covered Entities to take reasonable steps to provide meaningful access to individuals with LEP who are eligible to be served or likely to be directly affected by health programs and activities. Section 1557 Covered Entities must provide timely and accurate language assistance services at no charge, and notice thereof, in a manner that protects the privacy and independent decision-making ability of the individual with LEP. Section 1557 Covered Entities must offer a qualified interpreter in their health programs and activities when interpretation services are required. Section 1557 Covered Entities may use in-person, video or audio interpreters and translators, but if the underlying text of a machine translation is critical to the rights, benefits, or meaningful access of an LEP individual, when accuracy is essential, or when the source material contains complex or technical language, the translation must be reviewed by a qualified human translator. A 1557 Covered Entity must not require an individual with LEP to provide their own interpreter, or rely on an adult, not qualified as an interpreter, accompanying an individual with LEP to interpret or facilitate communication except as a temporary measure in an emergency or where the individual with LEP specifically requests such.

Ensure Effective Communication With Individuals With Disabilities

Also by July 5, 2024, Section 1557 requires 1557 Covered Entities to take appropriate steps to ensure that communications with individuals with disabilities, and companions with disabilities, are as effective as communications with individuals without disabilities in their health programs and activities. The Final Rule now mandates further efforts in effective communication with individuals with disabilities by:

• requiring the provision of appropriate auxiliary aids and services;
• establishing standards for accessibility of buildings and facilities;
• requiring that health programs provided through electronic and information technology be accessible;
• requiring 1557 Covered Entities to make reasonable modifications to their policies and procedures;
• implementing practices to provide individuals with disabilities access to health programs and activities; and
• requiring health insurance and other health-related coverage to be provided in the most integrated setting appropriate to the needs of qualified individuals with disabilities.

To maintain compliance with the Final Rule, no later than July 5, 2025, 1557 Covered Entities must adopt policies and procedures regarding the provision of language assistance services for people with LEP and to ensure effective communication and reasonable modifications for people with disabilities. The 1557 Covered Entities are also required to train their staff on these policies and procedures. With respect to situations where two 1557 Covered Entities are interacting with the same individual, both 1557 Covered Entities are responsible for ensuring that individuals receive the appropriate language assistance services and/or auxiliary aids and services required by this rule.

Provide Notice of Nondiscrimination

By November 2, 2024, the Final Rule requires all 1557 Covered Entities, on an annual basis and upon request, to provide a Notice of Nondiscrimination (the "Notice of Nondiscrimination") to participants, beneficiaries, enrollees, and applicants of their health programs and activities that describes the right of individuals not to be discriminated against based on a protected characteristic.

The Notice of Nondiscrimination must also be made publicly available at a conspicuous location on the 1557 Covered Entity's website and in clear and prominent physical locations accessible to individuals who have low vision in sans serif font no smaller than 20-point. Section 1557 Covered Entities with 15 or more employees must also provide in the notice information regarding how to file a grievance if an individual has been subject to prohibited discrimination. This Notice of Nondiscrimination must also be accompanied by another notice, the notice of available language assistance services and auxiliary aids ("Notice of Availability") as described below. The 1557 Covered Entities may choose to integrate the Notice of Availability into the Notice of Nondiscrimination. As a practical matter, 1557 Covered Entities might consider, in addition to posting the notice on their website and in their facilities for the public, distributing this annual Notice of Nondiscrimination in combination with the Notice of Availability, during a patient's first visit each calendar year, if possible, keeping in mind that all participants, beneficiaries, enrollees, and applicants of their health program or activities will need to receive this notice, even those who do not use healthcare services on an annual basis, likely via email communication.

HHS provides sample Notices of Nondiscrimination as resources for providers.

Designate a Section 1557 Coordinator

By November 2, 2024, 1557 Covered Entities with more than 15 full-time employees must designate a Section 1557 coordinator who will be responsible for serving as an internal resource dedicated to ensuring compliance with the Final Rule. The coordinator can be one person or multiple individuals and does not need to be a full-time employee. The coordinator's most significant responsibility will be to receive, review, and investigate any grievance related to noncompliance with Section 1557.

"Reasonable Efforts" To Mitigate Against Discrimination in the Use of Patient Care Decision Support Tools

By May 1, 2025, the Final Rule prohibits 1557 Covered Entities from discriminating against any individual on the basis of race, color, national origin, sex, age, or disability in the use and implementation of patient care decision support tools. Decision support tools include automated, augmented, and non-automated decision-making technology, mechanisms, methods, software, and algorithms to support patient care. The Final Rule imposes a "reasonable efforts" standard with respect to 1557 Covered Entities, meaning that they are obligated 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 make reasonable efforts to mitigate the risk of discrimination that could potentially result from these tools.

When analyzing whether a 1557 Covered Entity is in compliance with the requirement to use reasonable efforts to identify in-scope uses of patient care decision support tools, the OCR states it may consider, among other factors:

• The 1557 Covered Entity's size and resources (e.g., a large hospital with an IT department and a health equity officer would likely be expected to make greater efforts to identify tools than a smaller provider without such resources);
• Whether the 1557 Covered Entity used the tool in the manner or under the conditions intended by the developer and approved by regulators, if applicable, or whether the 1557 Covered Entity has adapted or customized the tool;
• Whether the 1557 Covered Entity received product information from the developer of the tool regarding the potential for discrimination or identified that the tool's input variables include race, color, national origin, sex, age, or disability; and
• Whether the 1557 Covered Entity has a methodology or process in place for evaluating the patient care decision support tools it adopts or uses, which may include seeking information from the developer, reviewing relevant medical journals and literature, obtaining information from membership in relevant medical associations, or analyzing comments or complaints received about patient care decision support tools.

Post Notice of Available Language Assistance Services and Auxiliary Aids

By July 5, 2025, 1557 Covered Entities must provide participants, beneficiaries, enrollees, and applicants of their health programs and activities, and the public, with an annual Notice of Availability regarding free language assistance services and auxiliary aids and services. The notice must be provided in the 15 most prevalent non-English languages in the applicable state(s) in which the 1557 Covered Entity operates. The notice must be displayed in prominent locations both physically and online. Additionally, 1557 Covered Entities must make copies available upon request. The standards for the public-facing notice are similar to the Notice of Nondiscrimination, but the Notice of Availability must also accompany the following electronic and written communications:

• The Notice of Nondiscrimination;
• The notice of privacy practices required by HIPAA;
• Application and intake forms;
• Notices of denial or termination of eligibility, benefits, or services, including an Explanation of Benefits, and notices of appeal and grievance rights;

• Communications related to an individual's eligibility, benefits, or services that require or request a response from a participant, beneficiary, enrollee, or applicant;
• Communications related to a public health emergency;
• Consent forms and instructions related to medical procedures or operations, medical powers of attorney, or living wills;
• Discharge papers;
• Communications related to the cost and payment of care with respect to an individual, including medical billing and collections materials, and good-faith estimates provided pursuant to the No Surprises Act;
• Complaint forms; and
• Patient and member handbooks.

HHS provides sample Notices of Availability as resources for providers.

Individuals are allowed to opt out of the Notice of Availability, so long as the individual is informed of the right to receive the notice upon request in their primary language through an appropriate auxiliary aid and service, the receipt of any aid or service is not conditioned on the decision to opt out, and that opting out of receiving the notice is not a waiver of their right to receive language assistance services and any appropriate auxiliary aids and services. Section 1557 Covered Entities should document, on an annual basis, the individual's decision to opt out. Note that a non-response may not be treated as an individual's decision to opt out.

Nondiscrimination Policies and Procedures Adoption and Training

Also by July 5, 2025, the Final Rule requires 1557 Covered Entities to develop and implement written policies and procedures that are designed to facilitate compliance with the Final Rule. The 1557 Covered Entities must adopt and implement the following policies:

• a nondiscrimination policy;
• grievance procedures (for 1557 Covered Entities employing 15 or more persons);
• language access procedures;
• auxiliary aids and services procedures; and
• procedures for reasonable modifications for individuals with disabilities (collectively, "1557 Policies and Procedures").

Section 1557 Covered Entities should begin developing and implementing the 1557 Policies and Procedures well before July 5, 2025, as the Final Rule requires 1557 Covered Entities to begin internal training by the earlier of May 1, 2025, or 30 days after the Section 1557 Policies and Procedures have been adopted.

Discrimination Based on Sex Is Interpreted More Broadly in the Final Rule

HHS interprets Section 1557 to prohibit discrimination in healthcare on the basis of sex, which is defined more broadly under the Final Rule than in prior versions published by HHS.

Consistent with the U.S. Supreme Court's holding in Bostock v. Clayton County, 590 U.S. 644 (2020), the Final Rule provides that sex discrimination includes, but is not limited to, discrimination on the basis of sexual orientation, gender identity, sex characteristics (including intersex traits), pregnancy or related conditions, and sex stereotypes. The Final Rule provides a general prohibition on discrimination on the basis of a person's sex for any individual seeking to participate in or receive the benefits of a 1557 Covered Entity's health program or activity. The Final Rule also prohibits providers from imposing restrictions on the availability of care based on a patient's gender identity or sex assigned at birth. Moreover, 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.

For example, commentary in the Proposed Rule discusses that discrimination based on pregnancy or related conditions may include, but is not limited to, instances of individuals who experience discrimination throughout pregnancy, labor and delivery, or the postpartum period, as well as due to terminating a pregnancy. Sex characteristics may include characteristics such as genitals, gonads, chromosomes, hormone function, and brain development/anatomy. "Intersex traits" is an umbrella term used to describe a wide range of natural variations in sex characteristics that do not seem to fit typical binary notions of male or female bodies (e.g., genitals that do not match reproductive organs). A sex stereotype is a belief about the way that men and women should behave, such as the belief that a person should be attracted only to persons of the opposite sex and the belief that a person should identify with his or her biological sex. Discrimination on these grounds is prohibited.

Importantly, the Final Rule does not create an affirmative obligation for providers to offer specific healthcare services, including gender-affirming care, that providers do not think is clinically appropriate. The Final Rule affirms religious freedom and conscience exemptions, reiterating that a 1557 Covered Entity may rely on applicable federal protections for religious freedom and conscience. Further, the Final Rule does not require 1557 Covered Entities to cover specific healthcare services for the treatment of gender dysphoria

That being said, the effect of the Final Rule is to prohibit healthcare providers and other 1557 Covered Entities from excluding categories of services in a discriminatory way so that coverage and services are provided in a neutral and nondiscriminatory manner.

How May Section 1557 Be Enforced?

The government has several mechanisms to enforce the requirements of Section 1557. Mechanisms include requiring 1557 Covered Entities to keep records and submit compliance reports to OCR, conducting compliance reviews and complaint investigations, and providing technical assistance and guidance. Should an investigation occur, OCR may, for example, issue a 1557 Covered Entity a compliance letter, enter into an agreement with the 1557 Covered Entity, or require corrective action. Where noncompliance or threatened noncompliance cannot be corrected by informal means, available enforcement mechanisms include suspension of, termination of, or refusal to grant or continue federal financial assistance; referral to the Department of Justice ("DOJ") with a recommendation to investigate or bring proceedings to enforce any rights of the United States; and any other means authorized by laws. Additionally, the Final Rule also recognizes that the Supreme Court has confirmed that section 1557 authorizes a private right of action for individuals harmed by a Section 1557 violation under any of the bases of discrimination.

As a condition of participation in the Medicare program, the hospital must be in compliance with the applicable federal laws related to the health and safety of patients (42 C.F.R. § 482.11), which includes compliance with the new Section 1557 nondiscrimination and other requirements. Thus, a survey finding that a certified Medicare provider, such as a hospital or skilled nursing facility, is not in compliance with Section 1557 could impact the provider's participation in Medicare.

What Is the Enforcement History to Date of Section 1557?

Historically, the DOJ has not been shy about pursuing alleged violations of Section 1557 by hospitals and other healthcare providers.

For example, a hospital in Georgia, AdventHealth-Gordon ("Advent"), entered into a settlement with the DOJ to pay a patient $50,000 and $10,000 to the patient's companion to resolve allegations that Advent violated the effective communication provisions of the Americans with Disabilities Act ("ADA"). The settlement resolved a complaint by a deaf patient alleging that her requests for an American Sign Language interpreter for her labor and delivery were ignored. The patient and her companion were unable to understand important information about a complication during the delivery, resulting in fear and confusion. Under the settlement agreement, Advent agreed to advise patients and companions of their right to auxiliary aids and services to ensure effective communication, including a live qualified sign language interpreter, whether through video or on site. Additionally, the hospital agreed to provide prompt communication via text, pen and paper, and handheld devices to connect with a qualified interpreter in all reception areas. Further, the hospital agreed to modify its policies and practices, train its staff on ADA compliance, and periodically submit reports about compliance with the settlement agreement.

This example and other recent enforcement actions highlight the DOJ's initiative to pursue ADA violation claims and emphasize the importance of complying with the Final Rule 1557's nondiscrimination and other provisions. Taking into account the history of litigation surrounding Section 1557, the potential for future litigation is high given OCR's ambitious changes in the Final Rule. The Final Rule may also be susceptible to challenges under Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244 (2024), in which the Supreme Court overruled a long-held doctrine of administrative law established in Chevron U.S.A., Inc. v. Nat. Res. Def. Council, 467 U.S. 837 (1984).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.