An Illinois Senate bill introduced in February would ban payers from using automated tools, including AI, to downcode physician claims and would require that any downcoding decision be made by a licensed physician of the same or similar specialty as the treating physician.
The bill, dubbed the Transparency in Downcoding Act, passed committee unanimously on March 11 and is on the Senate floor. If enacted, the law would take effect immediately.
The bill defines downcoding as payer alteration of the level of an evaluation and management service code or other service code submitted on a claim that results in a lower payment. Under the legislation, any physician making a downcoding decision would be required to perform a review of the clinical information supporting the billed service. The bill would also ban insurers from downcoding a claim based solely on reported diagnosis codes.
When a claim is downcoded, insurers would be required to notify the treating physician and provide the specific clinical reason for the adjustment, the original and revised service codes and payment amounts, and the NPI, credentials, board certifications, and specialty of the physician who made the downcoding decision. Physicians would also be notified of their right to appeal.
For appeals, the bill sets a minimum 180 day window for physicians to submit a challenge and allows batch appeals for similar downcoding issues. The legislation also stops insurers from using downcoding in a targeted or discriminatory manner against physicians who routinely treat patients with complex or chronic conditions.
The bill applies to fully insured plans, state and local government employee health plans, and Medicaid and CHIP coverage in Illinois. It does not apply to self-insured plans governed by ERISA.
