Affordable Care Act (ACA) § 1557: To Comply Or Not To Comply; For Now - There Is No Question
With the recent election, the fate of the ACA is uncertain. However, we can be fairly certain that, whatever the changes may be, it is unlikely that we will return to life as it was prior to the enactment of the ACA on March 23, 2010. What the “new” ACA will look like, we can’t know, so it is important to continue to be compliant with the laws and regulations as they are currently, unless and until those laws and regulations change.
As with the entirety of the ACA, it is unclear how the election will affect the nondiscrimination requirements provided for under ACA § 1557. ACA § 1557 prohibits a covered entity from discriminating against an individual on the basis of race, color, national origin, sex, age, or disability in certain health programs and activities. In May 2016, final regulations were released by the Office of Civil Rights within the Department of Health and Human Services with respect to ACA § 1557, with an effective date of July 28, 2016. These regulations broadly prohibit discrimination in denying or limiting health coverage, denying a claim, employing discriminatory marketing or benefit designs, or imposing additional cost sharing. Under these regulations, a health plan’s categorical exclusion of gender transition services is considered facially discriminatory. The regulations do not specify in what manner a health plan must address gender transition, but covered entities are permitted to apply neutral, nondiscriminatory standards and use reasonable medical management techniques, provided that they are used in a neutral, non-discriminatory manner and are not a pretext for discrimination. Compliance with these regulations in benefit plan design is required as of the first day of the 2017 plan year. Non-compliance can result in an action being brought by the Office of Civil Rights or by plan participants for compensatory damages through a private cause of action. Several lawsuits have already been filed.
In January 2016, Brittany R. Tovar filed an action in the United States District Court of Minnesota styled Brittany R. Tovar v. Essentia Health Innovis Health, LLC dba Essentia Health West, and HealthPartners, Inc., alleging discrimination by her employer and the TPA administering the group health plan (the “Plan”) and violation of Title VII of the Civil Rights Act of 1964, the Minnesota Human Rights Act, and ACA § 1557. Ms. Tovar’s teenage son, a beneficiary under the Plan, was diagnosed with gender dysphoria (a condition which occurs when an individual’s gender identity differs from the gender assigned at birth). The Plan contained an exclusion for “[s]ervices and or surgery for gender reassignment.” Ms. Tovar’s son was denied coverage under the Plan for prescription drugs, hormone therapy, and gender reassignment surgery. In May 2016, the District Court dismissed this action for lack of subject matter jurisdiction and failure to state a claim, finding that Ms. Tovar was not denied any benefits or privileges under the Plan and, therefore, could not establish that she, separate and apart from her son, suffered any discrimination. The Court also found that Ms. Tovar’s ACA § 1557 claim against the TPA failed because the specific entity sued was an improper party, and the claim would fail regardless because Ms. Tovar did not allege any discriminatory conduct by the TPA in administering the Plan only that the Plan itself was discriminatory. This matter is currently on appeal to the Eighth Circuit Court of Appeals.
More recently, an action was filed in the United States District Court in the Southern District of Ohio styled Rachel Dovel v. The Public Library of Cincinnati and Hamilton County and Community Insurance Company d/b/a Anthem Blue Cross and Blue Shield, claiming discrimination under Title VII, § 1983, and § 1557 of the ACA. In this action, Ms. Dovel, a transgender woman and long-term employee of the Public Library, was diagnosed in March 2014 with gender dysphoria and began her medical transition. In May 2014, she began hormone therapy which was covered by the Public Library’s health insurance policy with Anthem. Ms. Dovel legally changed her name, presented her outward appearance in line with her gender identity, and informed co-workers and supervisors that she is a transgender woman. Finally, Ms. Dovel’s health care providers determined that she met the eligibility criteria and that sex reassignment surgery was medically necessary to treat her gender dysphoria. In June 2015, Ms. Dovel discovered that the Public Library’s insurance policy “categorically excludes ‘[s]ervices and supplies related to sex transformation and/or the reversal thereof … regardless of origin or cause.’” Ms. Dovel’s surgery was scheduled for November 2016. This civil action is still pending in the District Court.
This is not, by any means, an exhaustive list of pending litigation with regard to the ACA and particularly § 1557. Other cases include denial of coverage to a transgender male for a double mastectomy pursuant to an exclusion for “treatment, drugs, medicine, services, supplies for, or leading to, sex transformation surgery” and denial of coverage for a transgender woman for breast implant surgery as cosmetic rather than medically necessary. There are also questions regarding the timing of these lawsuits based on the effective dates for compliance. In addition to the lawsuits filed by plan participants regarding their benefits, several non-profit, religiously affiliated, medical groups have challenged the regulations regarding coverage to transgender individuals, in that the regulation “not only forces healthcare professionals to violate their medical judgment, it also forces them to violate their deeply held religious beliefs.”
Again, it is unclear how, or when, the presidential election will impact the ACA, the new regulations, and any pending lawsuits, but the ACA and its regulations are currently in full effect and plans subject to these regulations would be well-advised to remain in compliance.