Illinois SB 3114 — Transparency in Downcoding Act (PA 104-0568, signed 2026)
Illinois · Illinois PA 104-0568 (SB 3114), signed July 10, 2026; effective January 1, 2028 (Transparency in Downcoding Act)
Illinois Senate Bill 3114, the Transparency in Downcoding Act (Public Act 104-0568), signed by Governor Pritzker on July 10, 2026, prohibits health insurers from using any automated process, system, or tool — including artificial intelligence — as the sole basis for downcoding a medical claim based on medical necessity, unless a human employee or contractor has first reviewed the covered individual's medical record. The law also imposes a parallel obligation on health care providers, prohibiting providers from using AI to submit a health benefits claim without review by a provider or other person involved in developing the claim. Insurers must provide a clear explanation when downcoding, including the rationale and the coding changes applied. Downcoding cannot be based solely on diagnosis codes or targeted at providers who treat complex patients. The Act is effective January 1, 2028.
Technical detail
PA 104-0568 (SB 3114), signed July 10, 2026, effective January 1, 2028. Creates the Transparency in Downcoding Act as a new chapter under Illinois insurance law. Key provisions: (1) prohibits a health insurer from using an automated process, system, or tool, including AI, as the sole basis to downcode a claim on medical-necessity grounds unless a human employee or contractor has reviewed the covered individual's medical record; (2) imposes a parallel provider obligation — prohibits a provider from using AI to submit a health benefits claim without review by a licensed provider or another person involved in developing the claim; (3) requires insurer disclosure of rationale and code changes when downcoding; (4) prohibits basing downcoding solely on diagnosis codes or on patterns targeting providers of complex patients; (5) passed both chambers of the Illinois General Assembly unanimously (per ISMS reporting, May 28, 2026); (6) preempts home-rule regulation of downcoding in policies issued, amended, delivered, or renewed on or after January 1, 2028.
Who is protected: Illinois patients and health care providers whose medical claims are algorithmically downcoded by health insurers without human review
Who must comply: Health insurers operating in Illinois; health care providers submitting claims to Illinois insurers
Key facts
| Jurisdiction | Illinois |
|---|---|
| Level | State |
| Status | Enacted (not yet in effect) |
| Protection strength | Moderate protection |
| Effective date | 2028-01-01 |
| Enacted | 2026-07-10 |
| Citation | Illinois PA 104-0568 (SB 3114), signed July 10, 2026; effective January 1, 2028 (Transparency in Downcoding Act) |
| Enforced by | Illinois Department of Insurance |
| Private right of action | No — agency enforcement only |
| Topics | healthcare AI · automated decision-making · insurance AI |
| Last verified | 2026-08-12 |
| Official source | Illinois SB3114 (2025-2026) — Transparency in Downcoding Act — LegiScan ↗ |
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- Indiana HB 1271 (AI claims downcoding) · In effect
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