HB 1201

                                                             Introduced Version
           HOUSE BILL No. 1201
                 _____
              DIGEST OF INTRODUCED BILL
Citations Affected: IC 25-1-23.5; IC 27-1; IC 27-8; IC 27-13.
Synopsis: Various mental health and insurance matters. Prohibits the
use of an artificial intelligence system to impersonate or act as a
substitute for a licensed mental health professional. Requires the
department of insurance to contract with an objective third party to
verify that health carriers are in compliance with network adequacy
standards. Sets forth notice requirements for an amendment to a health
provider contract. Prohibits the use of downcoding in a specified
manner. Requires an insurer and a health maintenance organization to
reimburse providers of mental illness or substance abuse services at
rates that are at least as favorable relative to Medicare rates as
reimbursement rates are for providers of medical or surgical services
relative to Medicare rates. Prohibits an insurer and a health
maintenance organization from retroactively auditing a paid claim or
seeking recoupment or a refund of a paid claim after a certain time
frame. Sets forth a limitation on the amount that an insured or enrollee
may be charged for receiving mental and behavioral care services from
an out of network provider under certain circumstances.
Effective: July 1, 2026.
                              Rowray
   January 5, 2026, read first time and referred to Committee on Insurance.
2026  IN 1201—LS 6817/DI 141
                                                                                       Introduced
            Second Regular Session of the 124th General Assembly (2026)
 PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
 Constitution) is being amended, the text of the existing provision will appear in this style type,
 additions will appear in this style type, and deletions will appear in this style type.
   Additions: Whenever a new statutory provision is being enacted (or a new constitutional
 provision adopted), the text of the new provision will appear in this style type. Also, the
 word NEW will appear in that style type in the introductory clause of each SECTION that adds
 a new provision to the Indiana Code or the Indiana Constitution.
  Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
 between statutes enacted by the 2025 Regular Session of the General Assembly.
                   HOUSE BILL No. 1201
    A BILL FOR AN ACT to amend the Indiana Code concerning
 insurance.
     Be it enacted by the General Assembly of the State of Indiana:
1    SECTION 1. IC 25-1-23.5 IS ADDED TO THE INDIANA CODE
2 AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
3 JULY 1, 2026]:
4    Chapter 23.5. Use of Artificial Intelligence Systems
5    Sec. 1. As used in this chapter, "artificial intelligence system"
6 means a machine based system that, for explicit or implicit
7 objectives, infers from the input it receives how to generate
8 outputs, including:
9      (1) predictions;
10      (2) content;
11      (3) recommendations; or
12      (4) decisions;
13 that can influence physical or virtual environments. The term
14 includes generative artificial intelligence.
15    Sec. 2. As used in this chapter, "board" means any of the
16 following:
17      (1) The behavioral health and human services licensing board.
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1(2) The state psychology board.
2     Sec. 3. As used in this chapter, "generative artificial
3 intelligence" means an automated computing system that, when
4 prompted with human prompts, descriptions, or queries, can
5 produce outputs that simulate human product content, including:
6(1) textual outputs, such as short answers, essays, poetry, or
7longer compositions or answers;
8(2) image outputs, such as fine art, photographs, conceptual
9art, diagrams, and other images;
10(3) multimedia outputs, such as audio or video in the form of
11compositions, songs, or short-form or long-form audio or
12video; and
13(4) other content that would otherwise be produced by human
14means.
15     Sec. 4. As used in this chapter, "licensed mental health
16 professional" means an individual who holds an unlimited license
17 to practice as any of the following in Indiana:
18(1) Any behavioral health and human services professional
19licensed under IC 25-23.6.
20(2) A psychologist licensed under IC 25-33.
21     Sec. 5. A person or entity may not use an artificial intelligence
22 system to:
23(1) impersonate; or
24(2) act as a substitute for;
25 a licensed mental health professional during any interaction that
26 is required to be performed by the licensed mental health
27 professional.
28     Sec. 6. A licensed mental health professional who violates this
29 chapter is subject to disciplinary action under IC 25-1-9.
30     Sec. 7. If a board finds that a person or an entity violates section
31 5 of this chapter, the board may impose a civil penalty of not more
32 than five thousand dollars ($5,000) per violation. Penalties
33 collected under this section must be deposited in the state general
34 fund.
35     SECTION 2. IC 27-1-37-11, AS ADDED BY P.L.215-2025,
36 SECTION 52, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
37 JULY 1, 2026]: Sec. 11. The department shall do the following:
38(1) Require health carriers to meet network adequacy standards
39that are no less stringent than the network adequacy standards
40established by the Centers for Medicare and Medicaid Services.
41(2) When assessing whether a health carrier has met the network
42adequacy standards, consider the availability and variety of
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1      independent specialty providers that provide services within in
2      network provider facilities in the health carrier's network.
3      (3) Contract with an objective third party to verify that health
4      carriers are in compliance with the network adequacy
5      standards.
6    SECTION 3. IC 27-1-37.1-5 IS AMENDED TO READ AS
7 FOLLOWS [EFFECTIVE JULY 1, 2026]: Sec. 5. A person who enters
8 into a health provider contract with a provider shall provide written
9 notice to the provider of any amendment to the health provider contract
10 not less than forty-five (45) sixty (60) days before the proposed
11 effective date of the amendment.
12    SECTION 4. IC 27-1-37.1-5.5 IS ADDED TO THE INDIANA
13 CODE AS A NEW SECTION TO READ AS FOLLOWS
14 [EFFECTIVE JULY 1, 2026]: Sec. 5.5. Before an amendment to a
15 health provider contract that:
16      (1) makes a material change; or
17      (2) reduces the reimbursement rate for any CPT code (as
18      defined in IC 27-8-5.7-2.5);
19 goes into effect, a person shall obtain the provider's approval of the
20 amendment and the provider's signature.
21    SECTION 5. IC 27-1-52.1 IS ADDED TO THE INDIANA CODE
22 AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
23 JULY 1, 2026]:
24    Chapter 52.1. Downcoding of Health Benefits Claims
25    Sec. 1. As used in this chapter, "covered individual" means an
26 individual who is entitled to coverage under a health plan.
27    Sec. 2. As used in this chapter, "downcoding" means the
28 adjustment of a health benefits claim by an insurer to a less
29 complex or lower cost service to reimburse a provider in an
30 amount less than the required amount under the provider contract.
31 The term includes the use of remark codes.
32    Sec. 3. As used in this chapter, "health benefits claim" means a
33 claim submitted by a provider for payment under a health plan for
34 health care services provided to a covered individual.
35    Sec. 4. As used in this chapter, "health plan" means the
36 following:
37      (1) A policy of accident and sickness insurance (as defined in
38      IC 27-8-5-1), but not including the coverages described in
39      IC 27-8-5-2.5(a).
40      (2) An individual contract (as defined in IC 27-13-1-21) or a
41      group contract (as defined in IC 27-13-1-16) with a health
42      maintenance organization (as defined in IC 27-13-1-19) that
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1provides coverage for basic health care services (as defined in
2IC 27-13-1-4).
3     Sec. 5. As used in this chapter, "insurer" means the following:
4(1) An insurer (as defined in IC 27-1-2-3(x)) that issues a
5policy of accident and sickness insurance (as defined in
6IC 27-8-5-1), but not including the coverages described in
7IC 27-8-5-2.5(a).
8(2) A health maintenance organization (as defined in
9IC 27-13-1-19) that provides coverage for basic health care
10services (as defined in IC 27-13-1-4) under an individual
11contract (as defined in IC 27-13-1-21) or a group contract (as
12defined in IC 27-13-1-16).
13     Sec. 6. As used in this chapter, "provider" means an individual
14 or entity licensed or legally authorized to provide health care
15 services.
16     Sec. 7. Notwithstanding any other law or regulation to the
17 contrary, an insurer may not use downcoding in a manner that
18 prevents a provider from:
19(1) submitting a health benefits claim for the actual service
20performed; and
21(2) collecting reimbursement from the insurer for the actual
22service performed.
23     Sec. 8. The department shall adopt rules under IC 4-22-2 to
24 carry out this chapter.
25     SECTION 6. IC 27-8-5-15.8, AS ADDED BY P.L.103-2020,
26 SECTION 4, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
27 JULY 1, 2026]: Sec. 15.8. (a) As used in this section, "treatment of a
28 mental illness or substance abuse" means:
29(1) treatment for a mental illness, as defined in IC 12-7-2-130(1);
30and
31(2) treatment for drug abuse or alcohol abuse.
32     (b) As used in this section, "act" refers to the Paul Wellstone and
33 Pete Domenici Mental Health Parity and Addiction Act of 2008 and
34 any amendments thereto, plus any federal guidance or regulations
35 relevant to that act, including 45 CFR 146.136, 45 CFR 147.136, 45
36 CFR 147.160, and 45 CFR 156.115(a)(3).
37     (c) As used in this section, "nonquantitative treatment limitations"
38 refers to those limitations described in 26 CFR 54.9812-1, 29 CFR
39 2590.712, and 45 CFR 146.136.
40     (d) An insurer that issues a policy of accident and sickness
41 insurance that provides coverage of services for treatment of a mental
42 illness or substance abuse shall submit a report to the department not
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1 later than December 31 of each year that contains the following
2 information:
3(1) A description of the processes:
4(A) used to develop or select the medical necessity criteria for
5coverage of services for treatment of a mental illness or
6substance abuse; and
7(B) used to develop or select the medical necessity criteria for
8coverage of services for treatment of other medical or surgical
9conditions.
10(2) Identification of all nonquantitative treatment limitations that
11are applied to:
12(A) coverage of services for treatment of a mental illness or
13substance abuse; and
14(B) coverage of services for treatment of other medical or
15surgical conditions;
16within each classification of benefits.
17(3) The reimbursement rates for providers of mental illness or
18substance abuse services relative to Medicare rates and the
19reimbursement rates for providers of medical or surgical
20services relative to Medicare rates in the respective
21classification of benefits.
22     (e) There may be no separate nonquantitative treatment limitations
23 that apply to coverage of services for treatment of a mental illness or
24 substance abuse that do not apply to coverage of services for treatment
25 of other medical or surgical conditions within any classification of
26 benefits.
27     (f) An insurer that issues a policy of accident and sickness insurance
28 that provides coverage of services for treatment of a mental illness or
29 substance abuse shall also submit an analysis showing the insurer's
30 compliance with this section and the act to the department not later
31 than December 31 of each year. The analysis must do the following:
32(1) Identify the factors used to determine that a nonquantitative
33treatment limitation will apply to a benefit, including factors that
34were considered but rejected.
35(2) Identify and define the specific evidentiary standards used to
36define the factors and any other evidence relied upon in designing
37each nonquantitative treatment limitation.
38(3) Provide the comparative analyses, including the results of the
39analyses, performed to determine the following:
40(A) That the processes and strategies used to design each
41nonquantitative treatment limitation for coverage of services
42for treatment of a mental illness or substance abuse are
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1comparable to, and applied no more stringently than, the
2processes and strategies used to design each nonquantitative
3treatment limitation for coverage of services for treatment of
4other medical or surgical conditions.
5(B) That the processes and strategies used to apply each
6nonquantitative treatment limitation for treatment of a mental
7illness or substance abuse are comparable to, and applied no
8more stringently than, the processes and strategies used to
9apply each nonquantitative limitation for treatment of other
10medical or surgical conditions.
11     (g) This subsection applies to a policy of accident and sickness
12 insurance that is issued, delivered, amended, or renewed after June
13 30, 2026. An insurer that issues a policy of accident and sickness
14 insurance that provides coverage of services for treatment of a
15 mental illness or substance abuse shall reimburse providers of
16 mental illness or substance abuse services at rates that are at least
17 as favorable relative to Medicare rates as reimbursement rates are
18 for providers of medical or surgical services relative to Medicare
19 rates in the respective classification of benefits.
20     (g) (h) The department shall adopt rules to ensure compliance with
21 this section and the applicable provisions of the act.
22     SECTION 7. IC 27-8-5.7-0.5 IS ADDED TO THE INDIANA
23 CODE AS A NEW SECTION TO READ AS FOLLOWS
24 [EFFECTIVE JULY 1, 2026]: Sec. 0.5. Section 6.7 of this chapter, as
25 added in the 2026 session of the general assembly, and section 10
26 of this chapter, as amended in the 2026 session of the general
27 assembly, apply to an accident and sickness insurance policy that
28 is issued, delivered, amended, or renewed after June 30, 2026.
29     SECTION 8. IC 27-8-5.7-6.7 IS ADDED TO THE INDIANA
30 CODE AS A NEW SECTION TO READ AS FOLLOWS
31 [EFFECTIVE JULY 1, 2026]: Sec. 6.7. (a) An insurer may not
32 retroactively reduce the reimbursement rate for any CPT code.
33     (b) An insurer:
34(1) shall provide at least sixty (60) days notice to a provider;
35and
36(2) must obtain the approval and signature of a provider in
37accordance with IC 27-1-37.1-5.5;
38 before implementing a rate reduction for any CPT code.
39     SECTION 9. IC 27-8-5.7-10, AS ADDED BY P.L.55-2006,
40 SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
41 JULY 1, 2026]: Sec. 10. (a) An insurer may not, more than two (2)
42 years after the date on which an overpayment on a provider claim was
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1 made to the provider by the insurer:
2      (1) request that the provider repay the overpayment; or
3      (2) adjust a subsequent claim filed by the provider as a method of
4      obtaining reimbursement of the overpayment from the provider.
5    (a) An insurer may not retroactively audit a paid claim or seek
6 recoupment or a refund of a paid claim more than:
7      (1) one hundred eighty (180) days after the date on which the
8      claim was initially paid; or
9      (2) the same number of days that a provider is required to
10      submit a claim to the insurer;
11 whichever occurs first.
12    (b) An insurer may not be required to correct a payment error to a
13 provider more than two (2) years after the date on which a payment on
14 a provider claim was made to the provider by the insurer. period
15 described in subsection (a).
16    (c) This section does not apply in cases of fraud by the provider, the
17 insured, or the insurer with respect to the claim on which the
18 overpayment or underpayment was made.
19    SECTION 10. IC 27-8-11-15 IS ADDED TO THE INDIANA
20 CODE AS A NEW SECTION TO READ AS FOLLOWS
21 [EFFECTIVE JULY 1, 2026]: Sec. 15. (a) This section applies if:
22      (1) an insurer provides coverage for mental and behavioral
23      care services;
24      (2) network access to the mental and behavioral care services
25      does not meet reasonable appointment wait time standards;
26      and
27      (3) the insured receives care from an out of network provider.
28    (b) The insured's treating provider may collect from the insured
29 only the deductible or copayment, if any, that the insured would be
30 responsible to pay if the mental and behavioral care services had
31 been provided by a provider with which the insurer has entered
32 into an agreement under section 3 of this chapter.
33    (c) The insured may not be billed by the insurer or by the out of
34 network provider for any difference between the out of network
35 provider's charge and the amount paid by the insurer to the out of
36 network provider.
37    SECTION 11. IC 27-13-7-14.2, AS ADDED BY P.L.103-2020,
38 SECTION 5, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
39 JULY 1, 2026]: Sec. 14.2. (a) As used in this section, "treatment of a
40 mental illness or substance abuse" means:
41      (1) treatment for a mental illness, as defined in IC 12-7-2-130(1);
42      and
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1(2) treatment for drug abuse or alcohol abuse.
2    (b) As used in this section, "act" refers to the Paul Wellstone and
3 Pete Domenici Mental Health Parity and Addiction Act of 2008 and
4 any amendments thereto, plus any federal guidance or regulations
5 relevant to that act, including 45 CFR 146.136, 45 CFR 147.136, 45
6 CFR 147.160, and 45 CFR 156.115(a)(3).
7    (c) As used in this section, "nonquantitative treatment limitations"
8 refers to those limitations described in 26 CFR 54.9812-1, 29 CFR
9 2590.712, and 45 CFR 146.136.
10    (d) An individual contract or a group contract that provides
11 coverage of services for treatment of a mental illness or substance
12 abuse shall submit a report to the department not later than December
13 31 of each year that contains the following information:
14(1) A description of the processes:
15(A) used to develop or select the medical necessity criteria for
16coverage of services for treatment of a mental illness or
17substance abuse; and
18(B) used to develop or select the medical necessity criteria for
19coverage of services for treatment of other medical or surgical
20conditions.
21(2) Identification of all nonquantitative treatment limitations that
22are applied to:
23(A) coverage of services for treatment of a mental illness or
24substance abuse; and
25(B) coverage of services for treatment of other medical or
26surgical conditions;
27within each classification of benefits.
28(3) The reimbursement rates for providers of mental illness or
29substance abuse services relative to Medicare rates and the
30reimbursement rates for providers of medical or surgical
31services relative to Medicare rates in the respective
32classification of benefits.
33    (e) There may be no separate nonquantitative treatment limitations
34 that apply to coverage of services for treatment of a mental illness or
35 substance abuse that do not apply to coverage of services for treatment
36 of other medical or surgical conditions within any classification of
37 benefits.
38    (f) An individual contract or a group contract that provides coverage
39 of services for treatment of a mental illness or substance abuse shall
40 also submit an analysis showing the insurer's compliance with this
41 section and the act to the department not later than December 31 of
42 each year. The analysis must do the following:
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1(1) Identify the factors used to determine that a nonquantitative
2treatment limitation will apply to a benefit, including factors that
3were considered but rejected.
4(2) Identify and define the specific evidentiary standards used to
5define the factors and any other evidence relied upon in designing
6each nonquantitative treatment limitation.
7(3) Provide the comparative analyses, including the results of the
8analyses, performed to determine the following:
9(A) That the processes and strategies used to design each
10nonquantitative treatment limitation for coverage of services
11for treatment of a mental illness or substance abuse are
12comparable to, and applied no more stringently than, the
13processes and strategies used to design each nonquantitative
14treatment limitation for coverage of services for treatment of
15other medical or surgical conditions.
16(B) That the processes and strategies used to apply each
17nonquantitative treatment limitation for treatment of a mental
18illness or substance abuse are comparable to, and applied no
19more stringently than, the processes and strategies used to
20apply each nonquantitative limitation for treatment of other
21medical or surgical conditions.
22     (g) This subsection applies to an individual contract or a group
23 contract that is entered into, delivered, amended, or renewed after
24 June 30, 2026. An individual contract or a group contract that
25 provides coverage of services for treatment of a mental illness or
26 substance abuse shall reimburse providers of mental illness or
27 substance abuse services at rates that are at least as favorable
28 relative to Medicare rates as reimbursement rates are for
29 providers of medical or surgical services relative to Medicare rates
30 in the respective classification of benefits.
31     (g) (h) The department shall adopt rules to ensure compliance with
32 this section and the applicable provisions of the act.
33     SECTION 12. IC 27-13-36-5.5 IS ADDED TO THE INDIANA
34 CODE AS A NEW SECTION TO READ AS FOLLOWS
35 [EFFECTIVE JULY 1, 2026]: Sec. 5.5. (a) This section applies if:
36(1) a health maintenance organization provides coverage for
37mental and behavioral care services;
38(2) network access to the mental and behavioral care services
39does not meet reasonable appointment wait time standards;
40and
41(3) the enrollee receives care from an out of network provider.
42     (b) The enrollee's treating provider may collect from the
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1 enrollee only the deductible or copayment, if any, that the enrollee
2 would be responsible to pay if the mental and behavioral care
3 services had been provided by a participating provider.
4    (c) The enrollee may not be billed by the health maintenance
5 organization or by the out of network provider for any difference
6 between the out of network provider's charge and the amount paid
7 by the health maintenance organization to the out of network
8 provider.
9    SECTION 13. IC 27-13-36.2-0.5 IS ADDED TO THE INDIANA
10 CODE AS A NEW SECTION TO READ AS FOLLOWS
11 [EFFECTIVE JULY 1, 2026]: Sec. 0.5. Section 4.7 of this chapter, as
12 added in the 2026 session of the general assembly, and section 8 of
13 this chapter, as amended in the 2026 session of the general
14 assembly, apply to an individual contract and a group contract that
15 is entered into, delivered, amended, or renewed after June 30,
16 2026.
17    SECTION 14. IC 27-13-36.2-4.7 IS ADDED TO THE INDIANA
18 CODE AS A NEW SECTION TO READ AS FOLLOWS
19 [EFFECTIVE JULY 1, 2026]: Sec. 4.7. (a) A health maintenance
20 organization may not retroactively reduce the reimbursement rate
21 for any CPT code (as defined in IC 27-1-37.5-3).
22    (b) A health maintenance organization:
23      (1) shall provide at least sixty (60) days notice to a provider;
24      and
25      (2) must obtain the approval and signature of a provider in
26      accordance with IC 27-1-37.1-5.5;
27 before reducing the reimbursement rate for any CPT code (as
28 defined in IC 27-1-37.5-3).
29    SECTION 15. IC 27-13-36.2-8, AS ADDED BY P.L.55-2006,
30 SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
31 JULY 1, 2026]: Sec. 8. (a) A health maintenance organization may not,
32 more than two (2) years after the date on which an overpayment on a
33 provider claim was made to the provider by the health maintenance
34 organization:
35      (1) request that the provider repay the overpayment; or
36      (2) adjust a subsequent claim filed by the provider as a method of
37      obtaining reimbursement of the overpayment from the provider.
38    (a) A health maintenance organization may not retroactively
39 audit a paid claim or seek recoupment or a refund of a paid claim
40 more than:
41      (1) one hundred eighty (180) days after the date on which the
42      claim was initially paid; or
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1      (2) the same number of days that a provider is required to
2      submit a claim to the health maintenance organization;
3 whichever occurs first.
4    (b) A health maintenance organization may not be required to
5 correct a payment error to a provider more than two (2) years after the
6 date on which a payment on a provider claim was made to the provider
7 by the health maintenance organization. period described in
8 subsection (a).
9    (c) This section does not apply in cases of fraud by the provider, the
10 enrollee, or the health maintenance organization with respect to the
11 claim on which the overpayment or underpayment was made.
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