Illinois SB 3114 — Transparency in Downcoding Act

PA 104-0568 (SB 3114, 104th G.A.; Senate Floor Amendment No. 2 replaced the introduced text), approved July 10, 2026, effective Jan. 1, 2028. Creates the Transparency in Downcoding Act: applies (subject to federal requirements) to health insurance policies amended, delivered, issued or renewed on or after the effective date, excluding ERISA self-insured plans and workers' compensation/occupational disease care; preempts home-rule regulation of downcoding in policies issued on or after Jan. 1, 2028; prohibits a health care payor from implementing any policy or using any algorithm or other automated process, system or tool that bypasses evaluation of all information included by the billing health care professional to downcode a claim; permits automated identification of claims that may justify downcoding; requires all downcoding determinations to be made or reviewed by a natural person following AMA CPT guidelines in effect at the time; bars downcoding based solely on reported diagnosis codes and targeted/discriminatory downcoding against professionals who routinely treat complex or chronic patients; sets notification and dispute requirements and administration/enforcement provisions (Department of Insurance). Amends the Illinois Public Aid Code (305 ILCS 5/5-5.12g) so all Medicaid managed care organizations must comply. Senate passed 59-0-0 on May 14, 2026; House passed 111-0-0 on May 27, 2026 (Passed Both Houses).