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Sexual Orientation and Gender Identity (SOGI) Nondiscrimination Proposals Omitted from HHS Final 2023 Benefit and Payment Parameters
Practical Law Legal Update w-035-4157 (Approx. 5 pages)
Sexual Orientation and Gender Identity (SOGI) Nondiscrimination Proposals Omitted from HHS Final 2023 Benefit and Payment Parameters
by Practical Law Employee Benefits & Executive Compensation
| Published on 02 May 2022 • USA (National/Federal) |
The Department of Health and Human Services (HHS) has finalized its benefit and payment parameters for the 2023 plan year. In a change from HHS's proposed parameters for 2023, the final parameters do not include provisions involving sexual orientation and gender identity (SOGI) nondiscrimination. The parameters also address state reporting on essential health benefits (EHBs) and HHS's EHB nondiscrimination policy, among other topics.
HHS has finalized its regulations containing the agency's benefit and payment parameters for the 2023 plan year (along with a related fact sheet and CMS press release). The parameters address requirements for insurers and other entities involving the Affordable Care Act's (ACA's) health insurance exchanges. In a change from the proposed benefit and payment parameters issued in December 2021 (87 Fed. Reg. 584 (Jan. 5, 2022)), the final benefit and payment parameters do not address proposed nondiscrimination provisions related to sexual orientation and gender identity (SOGI). The final regulations will be effective 60 days after publication in the Federal Register.
Discrimination Based on SOGI
In the context of insurer-oriented rules governing the ACA's guaranteed availability and other exchange requirements, HHS's January 2022 regulations included proposals to identify and recognize discrimination based on SOGI (see Practice Note, Grandfathered Health Plans Under the ACA: Nonenforcement Policy for Grandmothered Health Plans (Extended in March 2022)). Specifically, the January 2022 proposals would have amended certain regulations to expressly identify and recognize SOGI discrimination as prohibited forms of discrimination based on sex consistent with:
- The Supreme Court's 2020 Bostock ruling (140 S. Ct. 1731 (2020); see Legal Update, Supreme Court: Discrimination Based on Sexual Orientation or Transgender Status Is Sex Discrimination Under Title VII).
- HHS's nondiscrimination policy that existed prior to HHS's June 2020 regulatory amendments that repealed, redesignated, and replaced certain aspects of the ACA Section 1557 nondiscrimination rules, as previously implemented (85 Fed. Reg. 37160 (June 19, 2020 (see Practice Note, June 2020 Final Regulations Under ACA Section 1557: Nondiscrimination in Health Programs and Activities)
The 2023 proposals also would have included an example involving gender-affirming care intended to illustrate a health plan design that presumptively discriminated against individuals based on gender identity.
HHS Will Address SOGI Discrimination Under Section 1557 Proposals
As background, ACA Section 1557 generally prohibits discrimination on the basis of race, color, national origin, sex, age, or disability in a health program or activity if any part of the program or activity receives federal financial assistance, including credits, subsidies, or contracts of insurance—or under any program or activity administered by an executive agency or an entity established under ACA Title I or its amendments (see Article, Nondiscrimination in Health Programs and Activities Under the ACA (Section 1557)). In May 2016, the Obama administration's HHS issued final regulations under Section 1557 that defined "on the basis of sex" to include discrimination on the basis of SOGI. In June 2020, however, the Trump administration's HHS issued final regulations that repealed the definition of "on the basis of sex" under the May 2016 final regulations. In May 2021, the Biden administration's HHS announced that it would interpret and enforce Section 1557's prohibition on the basis of sex to include discrimination on the basis of SOGI (86 Fed. Reg. 27984 (May 25, 2021)).
In the 2023 final benefit and payment parameters, HHS indicated that it submitted proposed Section 1557 regulations to the Office of Management and Budget (OMB) in March 2022. To ensure consistency between the parameters' SOGI provisions and the proposed Section 1557 regulations, the 2023 final parameters do not address the proposed nondiscrimination provisions at this time. However, HHS indicated that it will continue to interpret and enforce Section 1557 to prohibit discrimination on the basis of SOGI—but also in compliance with the Religious Freedom Restoration Act (RFRA).
For more information on Section 1557, including ongoing litigation, see Practice Note, June 2020 Final Regulations Under ACA Section 1557: Nondiscrimination in Health Programs and Activities.
State Reporting on Essential Health Benefits (EHBs)
Under the ACA, states may permit qualified health plans (QHPs) offered in the state to cover benefits in addition to EHBs. However, states must make payments (either to an individual or an insurer on a participant's behalf) to defray the cost of these additional state-mandated benefits (see Practice Note, Lifetime Limits, Annual Limits, and Essential Health Benefits Under the ACA). In its 2021 benefit and payment parameters (issued in May 2020), HHS finalized a requirement—effective beginning in 2021 plan years—that states identify benefits that are required under state law and whether the benefits are in addition to EHBs.
Under the final benefit and payment parameters for 2023, the deadline for submitting required documents for the state's EHB benchmark plan selection is the first Wednesday in May of the year that is two years before the new EHB benchmark plan's effective date. Going forward, as a result, HHS will not propose deadlines for this process. If a state does not make a selection by the May deadline (or its benchmark plan selection does not meet the ACA's requirements), the state's EHB-benchmark plan for the applicable plan year will be that state's EHB-benchmark plan that applied for the prior year.
The 2023 final benefit and payment parameters also eliminate:
- The requirement that states annually report state-required benefits in addition to EHBs to HHS.
- States' ability to permit insurers to substitute benefits between EHB categories.
Practical Impact
The precise scope of the ACA's Section 1557 requirements has been something of a moving target in recent years—reflecting the respective policy objectives of the past administrations. It appears that the Biden administration, too, will soon be putting its stamp on ACA Section 1557 in the form of additional proposed regulations. It would seem likely that the new proposals will more closely resemble the Obama administration's implementing rules (as opposed to the June 2020 final regulations) and also reflect HHS's interpretation of the Supreme Court's Bostock ruling.