July 29, 2016

Legislative Update: Section 1557 Nondiscrimination Final Rule

This information will be shared with employers via special bulletin later today.

As we reported previously, on May 18, the Office for Civil Rights (OCR) within the Department of Health and Human Services (HHS) released the Nondiscrimination in Health Programs and Activities Final Rule (Final Rule).

This Final Rule implements Section 1557 of the Affordable Care Act, which prohibits discrimination in the administration of health insurance based on race, color, national origin, age, gender or disability. In addition to this general prohibition, the Final Rule outlines specific underwriting practices, plan designs and marketing activities that are prohibited forms of discrimination.

The Final Rule also specifically addresses discrimination against transgender individuals and establishes a number of accessibility standards for individuals with limited English proficiency and individuals with disabilities.

Many groups have inquired about Blue Cross and Blue Shield of Illinois’ (BCBSIL) implementation of these provisions and how they may impact their plans for 2017. This communication specifically addresses gender transition services, nondiscrimination notices and language accessibility. We are currently reviewing the implications of other parts of the Final Rule and will provide more information as it becomes available.

Key Points Related to Gender Transition Services

For insured groups, we will no longer have blanket exclusions for transgender-related services when medically necessary, beginning with the plan year on or after Jan 1, 2017.
Self-insured groups who do not wish to take the insured approach will need to inform us in writing and is subject to BCBSIL approval. Non-standard benefit requests will be subject to customary internal review.

We are reviewing our existing medical policy and will provide updates on any changes.

For additional information, refer to the following FAQs:

Q: What is Section 1557?
A: Section 1557 of the Affordable Care Act generally prohibits discrimination in the administration of health insurance based on race, color, national origin, age, gender or disability.

Q: What is BCBSIL doing regarding benefit exclusions related to gender transition services for insured groups?
A: Any blanket exclusions for gender transition services will be removed for insured groups beginning with new and renewing plans after Jan. 1, 2017.

Q: Does this mean plans are required to cover gender reassignment surgery?
A: Section 1557 does not mandate any coverage of benefits, but prohibits discriminatory exclusions or limitations from being placed on benefits. Groups may not exclude gender reassignment surgery (or other benefits) based on a discriminatory factor. This means that a group health plan may exclude or limit gender reassignment surgery (or any other benefit) based on neutral, non-discriminatory factors, such as clinical criteria; however, a group health plan may not exclude or limit gender transition surgery (or any other benefit) because of a discriminatory factor (i.e., age, gender, gender identity, sexual orientation, disability, etc.).

Our insured plans will cover gender reassignment surgery when medically necessary.

Example 1: Acme chooses to not cover gender reassignment surgery because the owner does not want to employ transgendered persons. Such an exclusion would likely violate 1557, as it is based on a discriminatory factor.
Example 2: Acme chooses to cover gender reassignment surgery, subject to medical necessity and other clinical criteria. Such a limitation may be permissible under 1557, provided those criteria are neutral and non-discriminatory.

Q: Are there ancillary services tied to gender reassignment that are covered/not covered?
A: The Final Rule does not mandate coverage of ancillary services tied to gender reassignment. When deemed medically necessary, these services will follow the same guidelines as other medically necessary services.

Q: Does this mean plans are required to cover preventive services for transgender individuals?
A: We provide coverage for all ACA-required preventive services with no member cost-share, regardless of an individual’s sex assigned at birth, gender identity or recorded gender.

Q: What does this rule mean for self-insured health plans?
A: As a default, plan designs for self-insured groups will remove all exclusions for gender transition services. Self-insured plans that do not wish to take the insured approach will need to work with their counsel to determine appropriate plan design and inform us in writing. Non-standard benefit requests will be subject to customary internal review.

Q: Does BCBSIL have medical necessity guidelines for transgender services?
A: We are reviewing our existing medical policy and will provide updates on any changes.

Q: When do group plans need to implement this change?
A: Plan changes to comply with nondiscrimination requirements must be effective on the first day of the first plan year beginning on or after Jan. 1, 2017.

Key Points Related to the Notice of Nondiscrimination and Language Accessibility

BCBSIL will add the required notification and language taglines on impacted communications produced by BCBSIL. We’re currently reviewing which communications will be impacted – we believe it will be most member-facing communications.
Groups are responsible for determining if they must add this information to communications that they provide to employees covered by their health plan, and if so, which communications require it.

For additional information, refer to the following FAQs:

Q. What is the definition of “significant communications” in regard to the notices and taglines?
A. While the regulation did not define “significant communications,” HHS Office of Civil Rights intends to interpret this term very broadly. We will be identifying impacted communications, and believe it will include the majority of member-facing communications. You will begin to see updated documents in mid-October.

Q. When a document is used for multiple states, what language assistance taglines will be applied?
A. The document will need to include all the top 15 non-English taglines, or all states will need to be made specific to a particular state.

This communication is intended for informational purposes only. It is not intended to provide, does not constitute, and cannot be relied upon as legal, tax or compliance advice. The information contained in this communication is subject to change based on future regulation and guidance.