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IL SB3114

IL SB3114
TRANSPARENCY IN DOWNCODING ACT

summary

Introduced
02/02/2026
In Committee
05/15/2026
Crossed Over
05/14/2026
Passed
Dead

Introduced Session

104th General Assembly

Bill Summary

Creates the Transparency in Downcoding Act. Provides that, subject to federal requirements, the Act applies to certain policies of health insurance amended, delivered, issued, or renewed on or after the effective date of the Act, except for employee or employer self-insured health benefit plans under the federal Employee Retirement Income Security Act of 1974 and health care provided pursuant to the Workers' Compensation Act or the Workers' Occupational Diseases Act. Prohibits home rule units from regulating downcoding of medical claims in policies issued, amended, delivered, or renewed on or after January 1, 2028. Prohibits a health care payor from implementing any policy or using any algorithm or other automated process, system, or tool that bypasses the evaluation of all information included by the billing health care professional to downcode a claim. Provides that a health care payor may use an automated process to identify claims that may justify a downcoding determination. Provides that all downcoding determinations must be made or reviewed by a natural person following American Medical Association Current Procedural Terminology coding guidelines in effect at the time. Prohibits a health care payor from downcoding a claim based solely on the reported diagnosis codes. Sets forth provisions concerning notification requirements and the dispute process for downcoded claims. Prohibits a health care payor from using downcoding practices in a targeted or discriminatory manner against health care professionals who routinely treat patients with complex or chronic conditions. Establishes administration and enforcement provisions. Amends the Illinois Public Aid Code. Provides that, notwithstanding any other provision of law to the contrary, all managed care organizations shall comply with the requirements of the Transparency in Downcoding Act. Effective January 1, 2028.

AI Summary

This bill, the Transparency in Downcoding Act, aims to prevent health insurance companies (referred to as "health care payors") from unfairly reducing payments to healthcare providers for services rendered. It prohibits payors from using automated systems or algorithms to "downcode" a claim, which means unilaterally changing the service code submitted by a healthcare professional to justify a lower payment, without a human review. While automated systems can flag claims for potential downcoding, the final decision must be made or reviewed by a person who follows established coding guidelines, like those from the American Medical Association's Current Procedural Terminology (CPT). The bill also prevents downcoding based solely on diagnosis codes and requires payors to provide clear reasons and a dispute process for any downcoded claims, ensuring these disputes are also reviewed by a qualified individual. Furthermore, it prohibits discriminatory downcoding practices against providers who treat patients with complex or chronic conditions, and it clarifies that local governments cannot regulate downcoding of medical claims starting January 1, 2028, as this becomes an exclusive state power. The Act applies to most health insurance policies and plans issued or renewed on or after its effective date, with exceptions for self-insured employee plans and workers' compensation cases, and mandates that managed care organizations comply with these new transparency requirements.

Committee Categories

Business and Industry

Sponsors (25)

Last Action

Added as Co-Sponsor Sen. Chris Balkema (on 05/19/2026)

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