SB 3114

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Full Text of SB3114
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	SB3114 - 104th General Assembly
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			Senate Amendment 001
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		SB3114 Enrolled		LRB104 19668 BAB 33117 b
1    AN ACT concerning regulation.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 1. Short title. This Act may be cited as the
5Transparency in Downcoding Act.
6    Section 2. Findings. The General Assembly finds that:
7        (1) Downcoding of medical claims, when done without
8    clear justification or transparency, undermines fair
9    payment of health care professionals and threatens the
10    stability of medical practices.
11        (2) Improper downcoding may result in harm to patients
12    by disincentivizing care for individuals with complex
13    medical conditions.
14        (3) It is in the public interest to ensure that all
15    coding adjustments are clinically supported, transparent,
16    appealable, and free from discriminatory targeting.
17    Section 5. Definitions. As used in this Act:
18    "CARC" means Claim Adjustment Reason Codes, which provide
19the reason for a financial adjustment specific to a particular
20claim or service referenced in the transmitted Accredited
21Standards Committee (ASC) X12 835 standard transaction adopted
22by the United States Department of Health and Human Services
		SB3114 Enrolled	- 2 -	LRB104 19668 BAB 33117 b
1under 45 CFR 162.1602.
2    "Downcoding" means the unilateral alteration by a health
3care payor of the level of evaluation and management service
4code or other service code submitted on a claim, resulting in a
5lower payment. "Downcoding" does not include the practice of
6addressing instances when providers submit multiple codes for
72 or more services that must be included in one group code
8pursuant to federal and State program integrity requirements.
9    "Excepted benefits" has the meaning given to that term in
1042 U.S.C. 300gg-91(c) and implementing regulations.
11    "Group health plan" has the meaning given to that term in
12Section 5 of the Illinois Health Insurance Portability and
13Accountability Act.
14    "Group health plan sponsor" means the plan sponsor of a
15group health plan.
16    "Health care payor" means a group health plan sponsor,
17health insurance issuer, or Medicaid managed care
18organization.
19    "Health care professional" means a physician licensed to
20practice medicine in all its branches under the Medical
21Practice Act of 1987, a physician assistant licensed under the
22Physician Assistant Practice Act of 1987, or an advanced
23practice registered nurse licensed under the Nurse Practice
24Act.
25    "Health insurance issuer" has the meaning given to that
26term in Section 5 of the Illinois Health Insurance Portability
		SB3114 Enrolled	- 3 -	LRB104 19668 BAB 33117 b
1and Accountability Act.
2    "Medicaid managed care organization" has the meaning given
3to the term "managed care organization" in Section 5H-1 of the
4Illinois Public Aid Code.
5    "Plan sponsor" has the meaning given to that term in 29
6U.S.C. 1002(16)(B).
7    "RARC" means Remittance Advice Remark Codes, which provide
8supplemental information about a financial adjustment
9indicated by a CARC or information about remittance
10processing.
11    Section 10. Applicability; scope.
12    (a) This Act applies to the following if they are issued,
13amended, delivered, or renewed on or after the effective date
14of this Act:
15        (1) a policy or contract for health insurance coverage
16    as defined in the Illinois Health Insurance Portability
17    and Accountability Act;
18        (2) State, employee, county, municipality, or school
19    district group health plans; and
20        (3) subject to federal law, rules, regulations, and
21    guidance, policies issued or delivered in this State to
22    the Department of Healthcare and Family Services and
23    providing coverage to persons who are enrolled under
24    Article V of the Illinois Public Aid Code or under the
25    Children's Health Insurance Program Act. This Act does not
		SB3114 Enrolled	- 4 -	LRB104 19668 BAB 33117 b
1    diminish the ability of the Department of Healthcare and
2    Family Services' Office of the Inspector General to
3    prevent, detect, and eliminate fraud, waste, abuse,
4    mismanagement, and misconduct.
5    This Act does not apply to employee or employer
6self-insured health benefit plans under the federal Employee
7Retirement Income Security Act of 1974 and health care
8provided pursuant to the Workers' Compensation Act or the
9Workers' Occupational Diseases Act, and excepted benefits,
10including stand-alone dental plans.
11    (b) This Act shall not diminish a health care payor's
12duties and responsibilities under other federal or State law
13or the rules adopted thereunder.
14    (c) This Act is not intended to alter or impede the
15provisions of any consent decree or judicial order to which
16the State or any of its agencies is a party.
17    (d) The regulation of downcoding of medical claims in
18policies issued, amended, delivered, or renewed on or after
19January 1, 2028 is an exclusive power and function of the
20State. A home rule unit may not regulate downcoding of medical
21claims in policies issued, amended, delivered, or renewed on
22or after January 1, 2028. All home rule units must comply with
23this Act. This subsection is a denial and limitation of home
24rule powers and functions under subsection (h) of Section 6 of
25Article VII of the Illinois Constitution.
		SB3114 Enrolled	- 5 -	LRB104 19668 BAB 33117 b
1    Section 15. Prohibition of automatic downcoding.
2    (a) A health care payor shall not implement any policy or
3use any algorithm or other automated process, system, or tool
4that bypasses the evaluation of information included by the
5billing health care professional to downcode a claim.
6    (b) A health care payor may use an automated process to
7identify claims that may justify a downcoding determination
8following American Medical Association Current Procedural
9Terminology (CPT) coding guidelines in effect at the time of
10service. All downcoding determinations must be made or
11reviewed by a natural person following American Medical
12Association Current Procedural Terminology (CPT) coding
13guidelines in effect at the time, and the health care payor
14must maintain and implement policies and procedures requiring
15a natural person to consider information included by the
16billing health care professional on the claim submission in
17such determination.
18    Section 20. Prohibition on diagnosis-based downcoding. A
19health care payor shall not downcode a claim based solely on
20the reported diagnosis codes.
21    Section 25. Notification requirements for downcoded
22claims. When a claim is downcoded, the health care payor shall
23notify the billing health care professional using the
24appropriate CARCs and RARCs to clearly indicate that the claim
		SB3114 Enrolled	- 6 -	LRB104 19668 BAB 33117 b
1has been downcoded and provide:
2        (1) the specific reason for the downcoding, including
3    reference to the clinical information and coding guidance
4    used to justify the downcoding;
5        (2) the original and revised service codes and payment
6    amounts; and
7        (3) the process to initiate a dispute for a downcoding
8    decision.
9    Section 30. Dispute process for downcoded claims.
10    (a) A health care payor shall provide health care
11professionals with a clear and accessible process for
12disputing downcoded claims, including a written or electronic
13notice detailing how to initiate a dispute, contact
14information for the entity or department managing the dispute,
15reasonable timelines for submission by the billing health care
16professional of a dispute that are no less than 90 days, and
17timelines for adjudication of the dispute consistent with
18applicable State law or regulations governing utilization
19review.
20    (b) A health care payor must ensure that all downcoding
21disputes are reviewed by a natural person. The reviewing
22natural person must:
23        (1) be knowledgeable of, and have experience
24    providing, the health care services under dispute;
25        (2) not have been directly involved in making the
		SB3114 Enrolled	- 7 -	LRB104 19668 BAB 33117 b
1    decision to downcode the claim;
2        (3) perform a document review of the clinical
3    information supporting the billed service, including, but
4    not limited to, a review of all pertinent medical records
5    provided to the health care payor and any medical
6    literature provided to the health care payor from the
7    billing health care professional; and
8        (4) follow American Medical Association Current
9    Procedural Terminology (CPT) coding guidelines in effect
10    at the time of service.
11    (c) Use of a dispute process for downcoded claims does not
12preclude the health care professional's or enrollee's right to
13appeal any adverse determination under applicable State and
14federal law, rules, or regulations governing utilization
15review.
16    Section 35. Protections for patients with chronic
17conditions. A health care payor shall not use downcoding
18practices in a targeted or discriminatory manner against
19health care professionals who routinely treat patients with
20complex or chronic conditions.
21    Section 40. Administration and enforcement.
22    (a) The Department of Insurance shall enforce the
23provisions of this Act pursuant to the enforcement powers
24granted to it by law, including, but not limited to, any powers
		SB3114 Enrolled	- 8 -	LRB104 19668 BAB 33117 b
1granted to enforce the Illinois Insurance Code. Such
2enforcement shall extend to health care payors' compliance
3with this Act's procedural requirements and restrictions,
4compliance with this Act's standards for personnel and
5automated processes, and any pattern or practice of violating
6Section 20 of this Act. Nothing in this Act shall authorize the
7Department of Insurance to conduct any process under which a
8health care provider may submit an appeal for the purpose of
9receiving a determination from the Department of Insurance
10that is binding on the health care payor and the billing health
11care professional about the correctness of any particular
12downcoding decision under applicable coding guidelines, but
13the Department of Insurance shall have the authority to use
14any of its powers, including, but not limited to, the
15investigation of complaints, to enforce subsection (b) of
16Section 15.
17    (b) A health care payor shall be responsible for the
18compliance with this Act by any third party to whom the health
19care payor delegates any functions related to downcoding.
20    (c) The Department of Healthcare and Family Services shall
21enforce the provisions of this Act, subject to federal laws,
22rules, regulations, and regulatory guidance, as it applies to
23all Medicaid managed care organizations serving persons
24enrolled under Article V of the Illinois Public Aid Code or
25under the Children's Health Insurance Program Act.
		SB3114 Enrolled	- 9 -	LRB104 19668 BAB 33117 b
1    Section 500. The Illinois Public Aid Code is amended by
2adding Section 5-5.12g as follows:
3    (305 ILCS 5/5-5.12g new)
4    Sec. 5-5.12g. Compliance with the Transparency in 
5Downcoding Act. Notwithstanding any other provision of law to 
6the contrary, all managed care organizations shall comply with 
7the requirements of the Transparency in Downcoding Act.
8    Section 997. Severability. The provisions of this Act are
9severable under Section 1.31 of the Statute on Statutes.
10    Section 999. Effective date. This Act takes effect January
111, 2028.