A closer look at a new anti-discrimination rule

Putting the ACA’s Section 1557 into perspective

Posted by Tom Delegram, Deloitte Advisory managing director, Deloitte & Touche LLP and Karolyn Woo, Deloitte Advisory principal, Deloitte & Touche LLP on August 17, 2016

A key anti-discrimination section of the Affordable Care Act (ACA) went into full effect this summer, which has potentially significant cultural and operational shift for organizations across the healthcare payment and delivery system.

The portion of the law, Section 1557, prohibits discrimination on the basis of race, color, national origin, sex, age, or disability in any health program or activity that receives federal financial assistance. Section 1557 also applies to any program or activity administered by an executive agency or any entity established under Title I of the ACA or its amendments.

The US Department of Health and Human Services (HHS) finalized the rule for Section 1557 in May 2016, with the rule becoming effective on July 18. For health plans, the regulation will have an impact on benefit design for the upcoming plan year.

Far-reaching impact

A wide variety of organizations stand to be affected by Section 1557—including federal health programs, healthcare providers, health insurance issuers, health insurance exchanges and co-ops, and state and local government agencies. The new rule means that organizations will have to look more intently at how they serve and communicate with their customers and potential customers. Noncompliance with Section 1557 could result in enforcement actions by the US Department of Justice or a civil lawsuit, with the potential for compensatory damages, not to mention potential brand and reputation implications in the marketplace.

Behind Section 1557 lies a simple concept—yet one that could pose complex compliance challenges for organizations. The Final Rule, “Nondiscrimination in Health Programs and Activities,” seeks to advance equity and reduce health disparities by protecting some of the populations that have been most vulnerable to discrimination in the healthcare context. Rather than create a new set of federal anti-discrimination requirements, it incorporates prohibitions covered under a variety of existing laws and applies them under the ACA.

Section 1557 holds organizations accountable on a variety of fronts. For example, it requires auxiliary aids and services for persons with impaired sensory, manual, or speaking skills. It also prohibits discrimination on basis of gender identity, as well as explicitly prohibiting discrimination against transgender individuals or in the provision of gender transition services. It requires notice content and taglines to appear in English and the top 15 non-English languages. The section also protects individuals with limited English proficiency, who now cannot be required to provide their own interpreters. And it requires that health programs and activities delivered through electronic means be user-friendly for individuals with disabilities.

The rule also extends far beyond those requirements and protections. Denying, cancelling, limiting, or refusing coverage because an enrollee belongs to a particular protected category would run afoul of the rule. Using marketing designs that discriminate on the same basis also would run counter to Section 1557.

Developing a new posture

In light of the rule, organizations will have to look closely at how they communicate with and serve their customers and would-be customers. They will have to take a deep look at their education programs for employees when it comes to interacting and transacting with the public and with customers. And they will have to implement and update new capabilities that are required to develop a more anti-discriminatory program aligned with Section 1557. Here are some things to consider as you move forward in a new anti-discrimination landscape.

  • Regulatory Monitoring. Having an active regulatory monitor area to identify regulatory changes and impacts to help prepare in advance for future changes.
  • Content. Understand what content you have—from call-center phone scripts to advertising to electronic communications such as websites and blogs. Know where the content resides, how it is disseminated, and how it meets or fails to meet Section 1557 requirements. Know how you will recraft content to ensure it complies with the new rule.
  • Business processes. Understand the customer-facing transactions and interactions that occur at each point in your business processes. Will the activities within each process stand up to Section 1557 scrutiny? What new steps or pieces of information might you have to inject into your processes to help ensure compliance?
  • Business organization. Look beyond the traditional customer-facing boundaries of your enterprise. Examine all functional areas for potential issues related to Section 1557. Areas that previously might not have fallen into the realm of discrimination concerns suddenly could become more important.
  • Technology and services. What tools and third-party providers do you use to communicate with and interact with customers? Beyond your employees, who and what supports your business processes? With those partners and resources, where are the potential gaps in compliance? What new resources—interpreters? auxiliary aids? remote services—will you need?
  • Education. Compliance with Section 1557 ultimately comes down to awareness among your people as they engage with customers (directly or indirectly) and as they conduct activities that can intersect customer recruitment, service, or engagement. Building a culture that is aware of specific anti-discrimination rules as well as discrimination issues at large can help you avoid missteps.

Want to know what else should be on your mind when it comes to addressing the requirements for Section 1557? Contact Deloitte Advisory to get the conversation started. For more information on Section 1557, please click here.

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