HB 1271

           Second Regular Session of the 124th General Assembly (2026)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
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between statutes enacted by the 2025 Regular Session of the General Assembly.
    HOUSE ENROLLED ACT No. 1271
    AN ACT to amend the Indiana Code concerning insurance.
    Be it enacted by the General Assembly of the State of Indiana:
   SECTION 1. IC 16-18-2-52.5, AS AMENDED BY P.L.188-2025,
SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 52.5. (a) "Charity care", for purposes of
IC 16-21-6, IC 16-21-9, IC 16-21-9.5, and IC 16-40-6, means the
unreimbursed cost to a hospital of providing, funding, or otherwise
financially supporting health care services:
      (1) to a person classified by the hospital as financially indigent or
      medically indigent on an inpatient or outpatient basis; and
      (2) to financially indigent patients through other nonprofit or
      public outpatient clinics, hospitals, or health care organizations.
   (b) As used in this section, "financially indigent" means an
uninsured or underinsured person who is accepted for care with no
obligation or a discounted obligation to pay for the services rendered
based on the hospital's financial criteria and procedure used to
determine if a patient is eligible for charity care. The criteria and
procedure must include income levels and means testing indexed to the
federal poverty guidelines. A hospital may determine that a person is
financially or medically indigent under the hospital's eligibility system
after health care services are provided.
   (c) As used in this section, "medically indigent" means a person
whose medical or hospital bills after payment by third party payors
exceed a specified percentage of the patient's annual gross income as
determined in accordance with the hospital's eligibility system, and
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who is financially unable to pay the remaining bill.
    SECTION 2. IC 16-18-2-58.5 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2026]: Sec. 58.5. "Collection action", for
purposes of IC 16-21-9.5, has the meaning set forth in
IC 16-21-9.5-1.
    SECTION 3. IC 16-18-2-251 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2026]: Sec. 251. "Nonprofit
hospital", for purposes of IC 16-21-9 and IC 16-21-9.5, has the
meaning set forth in IC 16-21-9-3.
    SECTION 4. IC 16-18-2-272.4 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2026]: Sec. 272.4. "Payment assistance
program", for purposes of IC 16-21-9.5, has the meaning set forth
in IC 16-21-9.5-2.
    SECTION 5. IC 16-21-9.5 IS ADDED TO THE INDIANA CODE
AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]:
    Chapter 9.5. Notice of Payment Assistance Programs
    Sec. 1. As used in this chapter, "collection action" means the
sale or assignment of a bill to a collection agency, or the pursuit of
litigation for medical debt, by a hospital or any organization that
has a financial relationship with the hospital.
    Sec. 2. As used in this chapter, "payment assistance program"
refers to any of the following:
      (1) Charity care.
      (2) Financial assistance.
      (3) Any other payment plans made available to a patient by a
      hospital.
    Sec. 3. (a) A hospital shall provide written notice of the
hospital's payment assistance program to a patient or the patient's
representative at one (1) of the following times:
      (1) During registration or intake for inpatient or outpatient
      services.
      (2) At discharge.
      (3) With the initial billing statement for the provided services.
    (b) The written notice required under subsection (a) must
include the following:
      (1) A description of available payment assistance programs.
      (2) Eligibility criteria.
      (3) Application instructions.
      (4) Contact information for a hospital representative when
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     assistance is needed to complete the application.
   (c) A hospital may provide notice to a patient or the patient's
representative under subsection (a):
     (1) in a writing delivered to the patient or the patient's
     representative;
     (2) by electronic mail; or
     (3) through a mobile application or another Internet based
     method, if available;
according to the preference for communication expressed by the
patient or patient's representative.
   Sec. 4. A hospital shall post conspicuous signage notifying
patients of the availability of payment assistance programs in the
following locations:
     (1) Registration areas.
     (2) Emergency departments.
   Sec. 5. A hospital shall make payment assistance program
information available electronically through any patient portal
maintained by the hospital.
   Sec. 6. Before beginning a collection action, a hospital shall
make a reasonable effort to notify the individual of available
payment assistance programs and provide the individual with an
application form.
   Sec. 7. A nonprofit hospital shall annually report compliance
with this chapter as part of the nonprofit hospital's community
benefits plan report under IC 16-21-9-7.
   Sec. 8. The state department may adopt rules under IC 4-22-2
to administer and enforce this chapter.
   Sec. 9. The state department may assess a hospital a civil
penalty of not more than one thousand dollars ($1,000) per
violation for failure to comply with this chapter. A penalty
collected under this section shall be deposited into the state general
fund.
   SECTION 6. IC 27-1-52 IS ADDED TO THE INDIANA CODE AS
A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2026]:
   Chapter 52. Downcoding of Health Benefits Claims
   Sec. 0.3. This chapter does not apply to the Medicaid program
or a managed care organization (as defined in IC 12-7-2-126.9) that
provides services to a Medicaid recipient.
   Sec. 0.5. As used in this chapter, "CARC" refers to the claim
adjustment reason codes that provide the reason for a financial
adjustment specified to a particular claim or service, as referenced
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in the transmitted Accredited Standards Committee (ASC) X12
835 standard transaction adopted by the Department of Health and
Human Services under 45 CFR 162.1602.
   Sec. 1. As used in this chapter, "covered individual" means an
individual who is entitled to coverage under a health plan.
   Sec. 2. As used in this chapter, "downcode" or "downcoding"
means the unilateral alteration by an insurer of the:
     (1) payment for an evaluation and management service code
     or other service code; or
     (2) level of evaluation and management service code or other
     service code submitted on a claim that results in a lower
     payment.
   Sec. 3. As used in this chapter, "health benefits claim" means a
claim submitted by a provider for payment under a health plan for
health care services provided to a covered individual.
   Sec. 4. As used in this chapter, "health care service" means a
service or good furnished for the purpose of preventing,
alleviating, curing, or healing:
     (1) human illness;
     (2) physical disability; or
     (3) injury.
   Sec. 5. As used in this chapter, "health plan" means the
following:
     (1) A policy of accident and sickness insurance (as defined in
     IC 27-8-5-1).
     (2) An individual contract (as defined in IC 27-13-1-21) or a
     group contract (as defined in IC 27-13-1-16) with a health
     maintenance organization (as defined in IC 27-13-1-19).
     (3) A preferred provider plan subject to IC 27-8-11 under
     which dental services are provided.
   Sec. 6. As used in this chapter, "insurer" means the following:
     (1) An insurer (as defined in IC 27-1-2-3(x)) that issues a
     policy of accident and sickness insurance (as defined in
     IC 27-8-5-1).
     (2) A health maintenance organization (as defined in
     IC 27-13-1-19) that provides coverage for basic health care
     services (as defined in IC 27-13-1-4) under an individual
     contract (as defined in IC 27-13-1-21) or a group contract (as
     defined in IC 27-13-1-16).
     (3) An insurer that enters into a preferred provider plan
     subject to IC 27-8-11 under which dental services are
     provided.
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     (4) A third party contractor of an entity described in
     subdivision (1), (2), or (3).
   Sec. 7. As used in this chapter, "provider" means an individual
or entity licensed or legally authorized to provide health care
services.
   Sec. 7.5. As used in this chapter, "RARC" refers to remittance
advice remark codes that provide:
     (1) supplemental information about a financial adjustment
     indicated by a CARC; or
     (2) information about remittance processing.
   Sec. 8. Notwithstanding any other law or regulation to the
contrary, an insurer may not use downcoding in a manner that
prevents a provider from:
     (1) submitting a health benefits claim for the actual health
     care service performed; and
     (2) collecting reimbursement from the insurer for the actual
     health care service performed.
   Sec. 9. (a) An insurer may not use an automated:
     (1) process;
     (2) system; or
     (3) tool, including artificial intelligence;
as the sole basis to downcode a claim based on medical necessity
without the review of the covered individual's medical record by an
employee or contractor of the insurer.
   (b) A provider may not use an automated:
     (1) process;
     (2) system; or
     (3) tool, including artificial intelligence;
to submit a health benefits claim without the review of a provider
or other person involved in the development of the claim for
submission.
   (c) An insurer must disclose in an easily accessible and readable
manner when artificial intelligence is used to:
     (1) make an adverse determination on a prior authorization
     request; or
     (2) downcode a claim.
   Sec. 10. An insurer may not downcode a claim based solely on
the reported diagnosis code.
   Sec. 11. If a claim is downcoded, the insurer shall:
     (1) notify the provider using the appropriate CARC and
     RARC to clearly indicate that the claim has been downcoded;
     and
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     (2) provide:
        (A) the specific reason for the downcoding, including
        reference to the clinical criteria used to justify the
        downcoding;
        (B) the original and revised service codes and payment
        amounts; and
        (C) a notice of the right to appeal as described in section 12
        of this chapter.
   Sec. 12. (a) An insurer shall provide providers with a clear and
accessible process for appealing downcoded claims, including:
     (1) a written or electronic notice detailing how to initiate an
     appeal;
     (2) contact information for the individual managing the
     appeal; and
     (3) a timeline for submission of an appeal that is not less than
     one hundred eighty (180) days.
   (b) An insurer shall allow a provider to appeal in batches of
similar claims involving substantially similar downcoding issues
without restriction.
   Sec. 13. An insurer may not downcode in a targeted or
discriminatory manner against providers that routinely treat
patients with complex or chronic conditions.
   Sec. 14. The department shall adopt rules under IC 4-22-2 to
carry out this chapter.
   SECTION 7. IC 27-8-5.7-0.5 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2026]: Sec. 0.5. Sections 6.7 and 11.5 of this
chapter, as added in the 2026 session of the general assembly, and
section 10 of this chapter, as amended in the 2026 session of the
general assembly, apply to claims submitted under an accident and
sickness insurance policy that:
     (1) is issued, delivered, amended, or renewed after June 30,
     2026; and
     (2) provides coverage during a plan year beginning after
     December 31, 2026.
   SECTION 8. IC 27-8-5.7-2.7 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2026]: Sec. 2.7. As used in this chapter,
"health provider facility" has the meaning set forth in
IC 27-1-37-3.2.
   SECTION 9. IC 27-8-5.7-6.7 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
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[EFFECTIVE JULY 1, 2026]: Sec. 6.7. (a) An insurer may not
retroactively reduce the reimbursement rate for any CPT code.
   (b) An insurer shall provide at least sixty (60) days written
notice by:
      (1) mail or electronic mail to a provider; and
      (2) posting on the insurer's website;
before prospectively implementing a rate reduction for any CPT
code.
   SECTION 10. IC 27-8-5.7-10, AS ADDED BY P.L.55-2006,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 10. (a) An insurer may not, more than two (2)
years one hundred eighty (180) days after the date on which an
overpayment on a provider claim was made to the provider by the
insurer:
      (1) request that the provider repay the overpayment; or
      (2) adjust a subsequent claim filed by the provider as a method of
      obtaining reimbursement of the overpayment from the provider.
   (b) An insurer may not recoup a paid claim more than one
hundred eighty (180) days after the date on which the claim was
initially paid.
   (c) An insurer may not retroactively audit a paid claim more
than three (3) years after the date on which the claim was initially
paid.
   (b) (d) An insurer may not be required to correct a payment error to
a provider more than two (2) years after the date on which a payment
on a provider claim was made to the provider by the insurer. if notice
of the payment error is not provided within one hundred eighty
(180) days after payment for a fully adjudicated claim is received.
   (c) (e) This section does Subsections (a), (b), and (d) do not apply
in cases of fraud by the provider, the insured, or the insurer with
respect to the health benefits claim on which the overpayment or
underpayment was made when a final determination of fraud has
been made by a court.
   (f) Notwithstanding subsections (a) through (d), an insurer and
a hospital licensed under IC 16-21 may enter into a separate
written agreement that provides for different time frames than
those specified in this section.
   SECTION 11. IC 27-8-5.7-11.5 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2026]: Sec. 11.5. (a) If an insurer or a health
maintenance organization (as defined in IC 27-13-36.2-2) recoups
payment from a provider due to an error in coordination of
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benefits, the provider may submit a claim for the same services to
the appropriate insurer.
   (b) Except as provided in subsection (d) and notwithstanding
any other provision of law, a provider may submit a claim to the
appropriate insurer not later than ninety (90) days after the date
the recoupment is made.
   (c) A provider that submits a claim under this section shall
provide documentation to the insurer demonstrating:
     (1) the original submission of the claim to the initial insurer or
     health maintenance organization; and
     (2) the recoupment of payment by the initial insurer or health
     maintenance organization due to an error in coordination of
     benefits.
   (d) Nothing in this section prevents an insurer from allowing a
provider more time to submit a claim.
   SECTION 12. IC 27-13-36.2-0.5 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2026]: Sec. 0.5. Sections 4.7 and 9.5 of this
chapter, as added in the 2026 session of the general assembly, and
section 8 of this chapter, as amended in the 2026 session of the
general assembly, apply to claims submitted under an individual
contract and a group contract that:
     (1) is entered into, delivered, amended, or renewed after June
     30, 2026; and
     (2) provides coverage during a plan year beginning after
     December 31, 2026.
   SECTION 13. IC 27-13-36.2-2.3 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2026]: Sec. 2.3. As used in this chapter,
"health provider facility" has the meaning set forth in
IC 27-1-37-3.2.
   SECTION 14. IC 27-13-36.2-4.7 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2026]: Sec. 4.7. (a) A health maintenance
organization may not retroactively reduce the reimbursement rate
for any CPT code (as defined in IC 27-1-37.5-3).
   (b) A health maintenance organization shall provide at least
sixty (60) days notice by:
     (1) mail or electronic mail to a provider; and
     (2) posting on the health maintenance organization's website;
before prospectively reducing the reimbursement rate for any CPT
code (as defined in IC 27-1-37.5-3).
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   SECTION 15. IC 27-13-36.2-8, AS ADDED BY P.L.55-2006,
SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 8. (a) A health maintenance organization may not,
more than two (2) years one hundred eighty (180) days after the date
on which an overpayment on a provider claim was made to the provider
by the health maintenance organization:
     (1) request that the provider repay the overpayment; or
     (2) adjust a subsequent claim filed by the provider as a method of
     obtaining reimbursement of the overpayment from the provider.
   (b) A health maintenance organization may not recoup a paid
claim more than one hundred eighty (180) days after the date on
which the claim was initially paid.
   (c) A health maintenance organization may not retroactively
audit a paid claim more than three (3) years after the date on
which the claim was initially paid.
   (b) (d) A health maintenance organization may not be required to
correct a payment error to a provider more than two (2) years after the
date on which a payment on a provider claim was made to the provider
by the health maintenance organization. if notice of the payment
error is not provided within one hundred eighty (180) days after
payment for a fully adjudicated claim is received.
   (c) (e) This section does Subsections (a), (b), and (d) do not apply
in cases of fraud by the provider, the enrollee, or the health
maintenance organization with respect to the health benefits claim on
which the overpayment or underpayment was made when a final
determination of fraud has been made by a court.
   (f) Notwithstanding subsections (a) through (d), a health
maintenance organization and a hospital licensed under IC 16-21
may enter into a separate written agreement that provides for
different time frames than those specified in this section.
   SECTION 16. IC 27-13-36.2-9.5 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2026]: Sec. 9.5. (a) If an insurer (as defined
in IC 27-8-5.7-3) or a health maintenance organization recoups
payment from a provider due to an error in coordination of
benefits, the provider may submit a claim for the same services to
the appropriate health maintenance organization.
   (b) Except as provided in subsection (d) and notwithstanding
any other provision of law, a provider may submit a claim to the
appropriate health maintenance organization not later than ninety
(90) days after the date the recoupment is made.
   (c) A provider that submits a claim under this section shall
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provide documentation to the health maintenance organization
demonstrating:
     (1) the original submission of the claim to the initial insurer or
     health maintenance organization; and
     (2) the recoupment of payment by the initial insurer or health
     maintenance organization due to an error in coordination of
     benefits.
   (d) Nothing in this section prevents a health maintenance
organization from allowing a provider more time to submit a
claim.
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Speaker of the House of Representatives
President of the Senate
President Pro Tempore
Governor of the State of Indiana
Date:  Time:
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