HEA 1271 (2026), P.L.88-2026: health insurers may not downcode claims on automated tools or AI alone

Summary

Indiana's 2026 insurance act added a chapter on downcoding of health benefits claims (IC 27-1-52), meaning an insurer's unilateral change to a submitted service code or its payment that lowers the payment. An insurer may not use an automated process, system or tool, including AI, as the sole basis to downcode a claim based on medical necessity without review of the patient's medical record by an employee or contractor of the insurer. A provider may not use such tools, including AI, to submit a claim without review by a person involved in preparing it. Insurers must disclose in an easily accessible and readable manner when AI is used to make an adverse determination on a prior authorization request or to downcode a claim. The chapter also bars downcoding on the diagnosis code alone, requires notice with reasons and an appeal process of at least 180 days, and directs the Department of Insurance to adopt rules. It covers accident and sickness insurers, health maintenance organizations and certain dental preferred provider plans, and does not apply to Medicaid. The act also contains other health insurance and hospital provisions.

Key dates

1. March 4, 2026Enacted
2. July 1, 2026Takes effect
3. October 20, 2026Checked against sources
4. October 21, 2026Checked against sources

Developments are added when the record is reviewed. Next review: January 19, 2027.

Evidence

Each passage is quoted from its source. The quoted passages are re-checked against the live pages every month.

1. P.L.88-2026 [H.1271. Approved March 4, 2026.] AN ACT to amend the Indiana Code concerning insurance.

   Supports: Public law number, bill number and approval date

   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

   Supports: Downcoding chapter and effective date

   (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.

   Supports: No downcoding on automated tools or AI alone

   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.

   Supports: AI-use disclosure

   Sec. 14. The department shall adopt rules under IC 4-22-2 to carry out this chapter.

   Supports: Rulemaking

   Acts of 2026 (Second Regular Session, 124th General Assembly) Indiana General Assembly Primary source

2. Indiana (March 4, 2026). Indiana's HB 1271 is unique in that it prohibits health insurers from using AI tools as the sole basis for downcoding a claim

   Supports: Secondary confirmation of date and AI provision

   States Continue Efforts to Regulate AI in Healthcare Holland & Knight Reporting or analysis