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. Continue reading