Healthcare · SB 3114
Transparency in Downcoding Act
- Public Act
- PA 104-0568
- Effective
- January 1, 2028
- Enforced by
- Illinois Department of Insurance
- Verified
Lets health insurers use automated tools to flag claims for possible downcoding but requires a natural person to make or review every downcoding determination, and bars downcoding based solely on reported diagnosis codes.
A health-care statute with an AI core: it draws the human-in-the-loop line through insurance claims adjudication. “Downcoding” — an insurer reassigning a claim to a lower-paying code — may still be flagged by an automated system, but under the Transparency in Downcoding Act the determination itself must be made or reviewed by a natural person applying the AMA’s CPT guidelines, and it can never rest on the reported diagnosis codes alone.
For a payor the work is procedural and dated to January 1, 2028: route every algorithmic downcoding flag to a human reviewer, tell the clinician when and why a claim was cut, and stand up an accessible dispute process. The Department of Insurance enforces it, and home-rule units are pre-empted from writing their own downcoding rules. Carried by Sen. Dave Koehler with physician-legislator Rep. Bill Hauter, it cleared both chambers without a dissenting vote.
What it requires
- Ensure every downcoding determination is made or reviewed by a natural person following the AMA CPT coding guidelines then in effect — automation may flag a claim, but not decide it.
- Do not downcode a claim based solely on the reported diagnosis codes.
- Do not apply downcoding in a targeted or discriminatory manner against clinicians who routinely treat complex or chronic patients.
- Notify the clinician when a claim is downcoded and reimbursed at a lower level, including the clinical reason, and provide an accessible process to dispute it.
Who is covered
Health care payors (health insurers and their agents) that adjudicate claims for Illinois clinicians, and the physicians and practices whose claims are subject to downcoding. Home-rule units are barred from separately regulating downcoding of medical claims on or after the effective date.
What the exposure is
Illinois Dept. of Insurance enforcement
Enforced by the Illinois Department of Insurance under the Insurance Code. Home-rule units are pre-empted from regulating downcoding of medical claims.
Key dates
- July 10, 2026 Signed by Gov. Pritzker as PA 104-0568
- January 1, 2028 Takes effect
Primary sources 3
- Bill status SB 3114 — Bill Status & Full Action History ILGA blocks automated retrieval; PA number corroborated via press and legislative trackers.
- Public Act Public Act 104-0568 — Full Text (PDF)
- Press Pritzker signs downcoding transparency bill into law
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