The ACA’s Nondiscrimination Rule: Puzzling Misreading of the Statute

By Elizabeth Sepper

Like other healthcare civil rights statutes, the Affordable Care Act’s Section 1557 links nondiscrimination requirements to federal funding. Programs that receive “federal financial assistance” can’t discriminate against individuals based on their race, sex, age or disability. HHS has proposed to exclude Medicare Part B payments from “federal financial assistance.” As a result, physicians’ offices would be outside Section 1557’s reach. The statute, however, bars this puzzling and contradictory interpretation.

For almost fifty years, HHS has taken the position that Medicare Part B payments to physicians are “contracts of insurance.” Because previous civil rights statutes—like Title VI of the Civil Rights Act and the Rehabilitation Act—explicitly excluded “contracts of insurance” from the definition of “federal financial assistance,” physicians were exempted from compliance. Payments under Medicare Part B and other insurance contracts did not suffice to create nondiscrimination obligations.

HHS’s interpretation of Section 1557 would again exclude Medicare Part B payments from the ambit of “federal financial assistance.” But, this time, the statute doesn’t allow it. Section 1557 specifically states that federal financial assistance includes “contracts of insurance.” HHS can’t have it both ways, defining Part B as “contracts of insurance” when the statute excludes them and defining Part B as something else (it’s not clear what) when the statute includes contracts of insurance. The only permissible interpretation of Section 1557 means providers who participate in Medicare can’t discriminate.

In a series of posts this week, we’re blogging on the proposed HHS Nondiscrimination Rule. You’ll find our first post here. Look for our next posts on religious exemptions and remedies under Section 1557 later this week.

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