Today, my colleagues, Kevin Lucia and Christine Monahan, and I released a new report exploring how private insurers and state regulators are incorporating and enforcing new nondiscrimination standards under the Affordable Care Act (ACA). Prior to the ACA, federal and state law included some nondiscrimination protections, but most have had only a limited effect in ensuring that coverage meets the needs of all consumers. Through its broad incorporation of new standards, the ACA prohibits discriminatory benefit design based on health status, disability, age, race, gender, gender identity, and sexual orientation, among other factors. This report explores how stakeholders are grappling with these requirements as insurers design and market new products, regulators review and approve products, and consumers look to obtain coverage that best meets their needs.
What does the ACA require? Among its many new protections, the ACA ushers in significant requirements designed to limit discriminatory benefit design. Under the ACA, insurers are prohibited from adopting benefit designs—or implementing benefit designs (such as through coverage decisions, reimbursement rates, or incentive programs)—that discriminate based on age, expected length of life, disability, medical dependency, quality of life, or other health conditions. Insurers also cannot 1) adopt benefit designs that discriminate on the basis of race, color, national origin, disability, age, sex, gender identity, or sexual orientation; or 2) utilize discriminatory marketing practices or benefit designs that discourage the enrollment of individuals with significant health needs.
In addition to these requirements, Section 1557 of the ACA applies existing federal civil rights protections to private health insurance and prohibits individuals from being subject to discrimination, excluded from participation, or denied the benefits of health programs or activities based on race, color, national origin, sex, age, or disability. Indeed, Section 1557 has already been used to challenge insurer and employer practices.
What did the report find? Based on interviews with state insurance regulators, insurers, and patient and consumer advocacy organizations, we found that:
- Stakeholders struggled to articulate an ideal standard for identifying discriminatory benefit design and raised concerns about the potential for discrimination in the design of drug formularies and the adoption of narrow provider networks, among other plan features.
- States and insurers have not changed their approach to nondiscrimination but are using new tools, such as attestations, outlier analysis, and internal tracking databases, to monitor for compliance.
- States raised questions about how nondiscrimination requirements relate to the essential health benefits benchmark plan and identified challenges in enforcement because of a lack of clinical expertise and the inability to fully see benefits in the filing process.
- Stakeholders stressed the need for ongoing monitoring of discriminatory benefit design.
- Some stakeholders supported meaningful federal guidance with clear examples of discrimination.
What do the findings mean? These findings suggest that regulators face practical limitations in trying to implement new nondiscrimination requirements. Further, some regulators may not be willing to assume a much broader role in defining discriminatory benefit design without clearer federal standards. In light of such limitations, ensuring that the ACA’s nondiscrimination standards are met likely requires ongoing monitoring of consumer complaints, the development of new infrastructure such as tracking systems, and robust grievance and appeals processes.
The findings also suggest that clarification from federal regulators may be needed to address coverage inconsistencies and help ensure that consumers are protected from discrimination. In particular, federal guidance could include clear examples of specific benefit design features (such as exclusions, cost-sharing, visit limits, and restrictive medical necessity definitions, among others) that would be considered discriminatory under the ACA. Our findings also raise questions about whether the essential health benefits benchmark plan approach may have perpetuated the inclusion of discriminatory benefit designs in at least some states by requiring the selection of benchmark plans that were not designed to be in compliance with the ACA’s most significant reforms.