By Nicholas J. Diamond

On July 25, 2022, the Department of Health and Human Services issued a new proposed rule (subsequently published in the Federal Register on August 4) on Section 1557 of the Affordable Care Act (ACA), which prohibits discrimination on the basis of race, color, national origin, sex, age, or disability in certain health programs and activities. The comment period closes on October 3.

This proposed rule is a broadly significant update to the implementing regulations for Section 1557. This Alert does not discuss the entirety of the proposed rule. Instead, it specifically addresses two parts impacting digital health, which are notably new additions in the history of rulemaking on Section 1557—namely, the proposed extension of Section 1557 to “clinical algorithms” and telehealth services.

Scope of the Proposed Rule

The proposed rule applies broadly to both payers and providers.

• HHS proposes to apply Section 1557 to: (1) every health program or activity that receives Federal financial assistance from HHS; (2) every health program or activity administered by HHS; and (3) every program or activity administered by an entity under Title I of the ACA (e.g., Exchanges).
• HHS proposes to define “health program or activity” broadly, ranging from, among others, providing healthcare services to providing health education for healthcare professionals.
• HHS proposes to define “Federal financial assistance” broadly to include grants, loans, and other types of Federal assistance.

For payers, as proposed, Section 1557 would apply to health plans, Medicare Advantage organizations, Medicare Part D plan sponsors, and Medicaid managed care organizations. Moreover, because Section 1557 would apply to the entity, not a particular product, insurers would need to comply across all lines of business, even when serving as a third-party administrator for a self-insured employer plan.

For providers, as proposed, Section 1557 would apply if they receive Federal financial assistance through participation in Medicare or Medicaid. Notably, for the first time, HHS is proposing to include Medicare Part B, meaning that providers that receive payments for outpatient services under Part B would need to comply with Section 1557.

The Addition of “Clinical Algorithms”

For the first time, HHS proposes to apply Section 1557 to covered entities that use “clinical algorithms” in their decision-making. As proposed, “clinical algorithms” would broadly include “tools used to guide health care decision-making and can range in form from flowcharts and clinical guidelines to complex computer algorithms, decision support interventions, and models.” While covered entities would not be liable for clinical algorithms that they did not develop, they would be liable for “any decisions made in reliance” on such tools.

As proposed, clinical algorithms would include a broad spectrum of tools that inform clinical decision-making. Further clarity is needed on the breadth of tools that HHS intends to include under the proposed rule. For example, as proposed, “clinical algorithms” would seem to include most every modern digital tool used in clinical settings, given the pervasive used of clinical decision support tools by covered entities. Definitional alignment with guidance from the Food and Drug Administration on artificial intelligence and machine learning, clinical decision support software (both device and non-device), and software-as-a-medical-device would provide helpful clarity.

The proposed rule provides selected examples where use of clinical algorithms has resulted in discrimination. As such, HHS emphasizes at several points in the preamble that clinical algorithms should be used to supplement, not replace, clinical judgment. However, further clarity is needed regarding the scope of “any decisions made in reliance,” which remains ambiguous in the proposed rule. Moreover, further clarity is needed on the closely related notion—which goes undefined in the proposed rule—of what it means to “supplement,” as opposed to replace, clinical judgment, given that the intended uses of such tools can vary widely and impact clinical judgment in nuanced ways.

The Addition of Telehealth Services

Also for the first time, HHS proposes to apply Section 1557 to covered entities in the delivery of telehealth services. As proposed, HHS refers to this as an “affirmative duty” that covered entities must not discriminate in the provision of their health programs and activities via telehealth. HHS defines telehealth consistent with how it is already defined by the Health Resources Services Administration, which includes a variety of technologies, such as live video and store-and-forward modalities.

However, further clarity is needed from HHS regarding other potentially included virtual care technologies that may relate to telehealth, but are usually treated separately. For example, remote patient monitoring and mobile health applications are both briefly mentioned in the examples, but not in the discussion of the definition. As another example, remote therapeutic management is not mentioned, but is separately part of other recent rulemaking from the Centers for Medicare and Medicaid Services.

HHS provides several examples of disparities in access to telehealth services, such as based on race or disability, which can result in discrimination. As proposed, to ensure compliance, covered entities would need to account for communications about the availability of telehealth services, the process for scheduling telehealth appointments, and the telehealth appointment itself. Under the proposed rule, this would include, for example, appropriate auxiliary aids and services for individuals with disabilities and language assistance for individuals with limited English proficiency.

Many covered entities may already comply with these proposed requirements under existing operational policies. However, if finalized, covered entities should closely revisit such policies, especially given the inclusion of payments made under Medicare Part B. For new entrants in the telehealth services marketplace, however, these requirements may result in additional operational costs.

This alert is not intended to provide legal advice, and no legal or business decision should be based on its contents. Please consult with your legal counsel for guidance. For assistance related to the HHS’ proposed rule on Section 1557 of the ACA that will impact digital health, please contact Nick Diamond at ndiamond@jw.com or any member of the Healthcare Regulatory Compliance practice.

Meet Nick

Nicholas J. Diamond is a regulatory lawyer with extensive, international experience counseling clients across the health sector, including life sciences companies, medical device companies, technology companies, retail pharmacies, medical distributors, industry trade organizations, and nonprofits. He maintains a global practice focused on regulatory, public policy, and ethics issues impacting the U.S., the Asia-Pacific region (APAC), Latin America, the European Union (EU), and the Middle East.