|
REFERENCE TITLE: insurance; claims processing; downcoded claims |
|
State of Arizona House of Representatives Fifty-seventh Legislature Second Regular Session 2026
|
|
HB 2407 |
|
|
|
Introduced by Representative Willoughby
|
AN ACT
Amending title 20, chapter 5, article 1, arizona revised statutes, by adding section 20-1139; relating to medical insurance.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Title 20, chapter 5, article 1, Arizona Revised Statutes, is amended by adding section 20-1139, to read:
20-1139. Health insurer; health care professionals; claims processing; downcoding claims; prohibition; appeals process; civil penalty; definitions
A. A health insurer may not use an automatic process, system or tool to make a final decision to downcode a claim.
B. A health care professional who is licensed in this state and who is of the same specialty as the treating health care professional shall perform a documented review of the clinical documentation that supports the billed service.
C. A health insurer may not downcode a claim based solely on the reported diagnosis code.
D. If a claim is downcoded, the health insurer shall notify the treating health care professional by using the appropriate claims adjustment reason codes and remittance advice remark codes to clearly indicate that the claim has been downcoded and shall provide:
1. The specific reason for the downcoding, including reference to the clinical criteria that were used to justify the decision to downcode.
2. The original and revised service codes and payment amounts.
3. The national provider identifier of the licensed health care professional who is responsible for the downcoding decision, including the licensed health care professional's credentials, board certifications and areas of specialty, expertise and training.
4. A notice of the right to appeal as described in subsection E of this section.
E. A health insurer shall provide a clear and accessible process for appealing downcoded claims in a written or electronic notice that details all of the following:
1. How to initiate an appeal.
2. The name and contact information for the individual who is managing the appeal.
3. Reasonable timelines of not less than one hundred eighty days after the decision to downcode for submitting an appeal.
4. Timelines for adjudicating an appeal that are consistent with state law, rules or a utilization review process.
F. A Health care Provider may appeal similar claims that involve substantially similar downcoding issues in batches without restriction.
G. A health insurer may not use downcoding practices in a targeted or discriminatory manner against a health care provider who routinely treats patients with complex or chronic conditions.
H. If the director or another regulatory authority determines that a health insurer has engaged in a pattern or practice of discriminatory downcoding, the health insurer may be subject to enforcement actions, including fines, restitution or suspension of the health insurer's license in this state.
I. The department shall enforce this section by doing both of the following:
1. Imposing a civil penalty of not more than $100 per violation.
2. Ordering the improperly downcoded claims to be reprocessed with interest.
J. For the purposes of this section:
1. "claims adjustment reason codes" means the codes that provide a reason for a financial adjustment that is specific to a particular claim or service and that are referenced in health care electronic funds transfers and remittance advice transaction standards that are adopted pursuant to 45 Code of Federal Regulations section 162.1602.
2. "Downcode" or "downcoding" means the unilateral alteration by a health insurer of the level of evaluation and management service code or other service code that was submitted on a claim and that resulted in a lower payment.
3. "Health insurer" means any of the following entities:
(a) An insurance company that is authorized to provide health insurance in this state pursuant to this title.
(b) A health care services organization as defined in section 20-1051.
(c) Any other entity that provides health insurance, health benefits or health care services and that contracts or offers to contract for reimbursement of health-related services.
(d) A third-party administrator or other payor who is responsible for adjudicating claims.
4. "Remittance advice remark codes" means the codes that provide supplemental information about a financial adjustment that is indicated by a claims adjustment reason code or information about remittance processing.