AI Frontier Institute

Transparency in Downcoding Amendment Act of 2026

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The Transparency in Downcoding Amendment Act of 2026 (B26-0853) was introduced October 5, 2026 and referred to the Committee on Health. It has not been enacted. If enacted, it would amend the Prompt Pay Act of 2002 by adding a new section 5a that bars health insurers from using automated processes, systems, or tools (including artificial intelligence) to downcode claims, from downcoding based solely on the reported diagnosis code, and from using downcoding in a targeted or discriminatory way against physicians who routinely treat patients with complex or chronic conditions. Downcoding is defined as an insurer's unilateral change of an evaluation and management or other service code on a claim that results in lower payment. Under section 5a(b), all downcoding decisions would have to be made by a clinician licensed in the District and of the same specialty as the treating provider, who must perform a documented review of the clinical information. Under 5a(c), insurers would have to notify the physician using CARC and RARC codes and give the specific reason and clinical criteria, the original and revised codes and payments, the reviewing physician's NPI and credentials, and notice of appeal rights. Under 5a(d), insurers must offer a clear appeal process with at least 180 days to file, set adjudication timelines, and allow batch appeals of similar claims. Under 5a(e) and (f), the Commissioner could take enforcement actions for discriminatory patterns (fines, restitution, license suspension), impose penalties up to $50,000 per violation, and order claims reprocessed with interest. The definition of health insurer would also expressly include third-party administrators and other payers adjudicating claims. The act would take effect after Mayoral approval and a 30-day congressional review period (Sec. 4).

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