Last week, the Department of Health and Human Services (HHS) Office of Civil Rights (OCR) released a proposed rule implementing section 1557 of the Affordable Care Act (ACA). Section 1557 applies the Rehabilitation Act of 1973 to the ACA so that a covered entity cannot discriminate against an individual on the basis of a disability in any health program or activity. The proposed rule clarified how OCR intended to enforce and interpret section 1557’s nondiscrimination provision.
As Timothy Jost and other commentators have noted, the government’s proposed interpretation of section 1557 significantly expands the number of health entities that need to meet the Rehabilitation Act’s nondiscrimination requirements. The regulation proposes to encompass all entities that operate a health program or activity, any part of which receives federal financial assistance. The regulation then broadly interprets “federal financial assistance” to include “subsidies and contracts of insurance.” Thus, an insurer receiving premium tax credits or cost-sharing reduction payments through participating in a health insurance Marketplace would need to ensure that all its health plans meet the Rehabilitation Act’s nondiscrimination requirements, regardless of whether the plans are sold through the Marketplace, outside the Marketplace, or through an employee benefit plan. This broad interpretation means that the Rehabilitation Act’s nondiscrimination provisions will now apply to a number of previously excluded plans.
Expanding the number of plans needing to meet section 1557’s nondiscrimination requirements will provide greater protection to more individuals with disabilities. In the United States, the Rehabilitation Act and the Americans with Disabilities Act (ADA) prohibit discrimination against individuals with disabilities. Both acts protect disabled individuals, but courts have consistently interpreted only the Rehabilitation Act as prohibiting insurers from designing their health plans to discriminate against individuals with disabilities. On the other hand, courts have held that the ADA provides a safe harbor for insurers when designing their benefit plans. Thus, some insurers under the ADA may be able to exclude all drugs treating HIV/AIDS from their formulary or place all drugs treating HIV/AIDS on the highest cost-sharing tier, benefit designs that the Rehabilitation Act would likely prohibit. See also Kelsey Berry’s post on this topic.
Section 1557’s expanded protections are an improvement, but may not be enough to protect all individuals with disabilities. Even with section 1557, many insurers may not be covered under the Rehabilitation Act. Section 1557 would likely be inapplicable to insurers not participating on the Marketplace or not offering a plan through a federal insurance program. For example, some insurers offer plans exclusively on a private exchange, and these plans would not be subject to section 1557’s provisions. These uncovered insurers would still be able to offer potentially discriminatory benefit plan designs outside the Marketplace, in the individual or small group market. An individual with disabilities may have problems accessing meaningful care if his employer sponsors his employees under a plan offered on a private exchange.
Going forward, HHS may need to determine how other sections of the ACA could offer greater protections against discrimination in insurance design for all individuals with disabilities.