The U.S. Department of Health and Human Services (HHS) published new guidance in January 2022 reaffirming the definition of sex discrimination under Section 1557 of the Affordable Care Act (ACA). HHS states that statutes prohibiting discrimination based on race, color, national origin, sex, age, or disability apply to all health programs or related activities receiving federal funding.
More specifically, the HHS proposed rule includes discrimination based on sexual orientation and gender identity as components of prohibited sex discrimination in health care. HHS is clear that its final rule will require that determinations of essential benefits be nondiscriminatory in terms of sexual orientation or gender identity. In addition, any policies that make gender-affirming care unavailable to transgender individuals in need of such care are prohibited.
If a program policy prevents an individual from receiving gender-affirming care unless it is medically necessary by clinical evidence, HHS will presume that the policy is discriminatory. For instance, suppose that a program covers hormone therapy generally. If the program policy requires a showing of medical necessity for a person to receive hormone therapy due to gender dysphoria, then HHS would presume the policy to be discriminatory based on sex.
The History of Prohibiting Sexual Orientation and Gender Identity Discrimination
HHS first published a final rule in May 2016 interpreting Section 1557 of the ACA to protect individuals from discrimination based on sexual orientation and gender identity as part of the definition of sex discrimination. In June 2020, HHS revised its final rule and removed these nondiscrimination protections from various HHS regulations. Both the 2016 and 2020 rules also have been the subject of much litigation.
However, following the publication of the 2020 HHS rule, the U.S. Supreme Court issued its ruling in Bostock v. Clayton County, 140 S. Ct 1731 (2020). In that decision, the high Court found that sex discrimination under Title VII of the Civil Rights Act of 1964 included discrimination based on sexual orientation and gender identity, absent any indication in such laws to the contrary. Based on Bostock, President Biden issued an Executive Order in January 2021 applying the holding in that opinion to all laws prohibiting sex discrimination. The Order also advised agency heads, including the head of HHS, to review existing regulations and guidance to ensure that they are consistent with Bostock.
In response to the Order, HHS announced on May 10, 2021, that it would interpret Section 1557 of the ACA to prohibit sex discrimination based on sexual orientation and gender identity. On December 28, 2021, HHS published proposed regulations and solicited public comment consistent with its May 2021 notice. HHS’s latest policy guidance in January 2022 only reaffirms its position.
HHS anticipates legal challenges to its interpretation and enforcement of Section 1557 of the ACA. However, in light of Bostock, these legal challenges are likely to be more difficult. Nonetheless, health plans should be aware of the implications and risks of not following the 2021 HHS rule and Bostock. Those who have not already done so should strongly consider providing coverage of health care for transgender individuals in a nondiscriminatory manner according to the parameters set by HHS and the U.S. Supreme Court.
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