Privacy Law Library

Downcoding of Health Benefits Claims (AI use limits and disclosure)

IN Health Claims AI Disclosure

Artificial intelligence · Health

Enacted by HEA 1271 (2026) and effective July 1, 2026, this chapter limits claim downcoding by health insurers. Insurers may not use automated tools, including AI, as the sole basis for a medical-necessity downcode without human review of the medical record. Providers may not submit claims generated by automated tools without human review. Insurers must disclose when AI is used to deny prior authorization or downcode a claim.

Where
Indiana
Citation
Ind. Code ch. 27-1-52 (IC 27-1-52-0.3 to 27-1-52-14); AI provisions at IC 27-1-52-9
Status
In force
In force since
2026-07-01
Enforced by
Indiana Department of Insurance (rulemaking, IC 27-1-52-14)
People can sue
No
Penalties
The chapter directs rulemaking and states no specific penalty.
Applies to
  • Accident and sickness insurers, HMOs, and dental PPO insurers (not Medicaid or Medicaid managed care), and health care providers submitting claims (IC 27-1-52-0.3, 27-1-52-6, 27-1-52-9)

What a privacy notice must say

  • Insurers must disclose, in an easily accessible and readable way, when AI is used to make an adverse prior authorization decision or to downcode a claim.IC 27-1-52-9(c) · From 2026-07-01
  • When downcoding, notify the provider with CARC and RARC codes, the specific reason and clinical criteria, the original and revised codes and amounts, and appeal rights.IC 27-1-52-11 · From 2026-07-01

Practices it requires

  • Insurers may not use an automated process, system, or tool (including AI) as the sole basis for a medical-necessity downcode without an employee or contractor reviewing the medical record.IC 27-1-52-9(a) · From 2026-07-01
  • Providers may not use automated tools, including AI, to submit claims without review by a person involved in preparing the claim.IC 27-1-52-9(b) · From 2026-07-01

Sources

Checked against these sources on 2026-09-25 by research agent (Claude), primary sources.

Unverified: Whether the Department of Insurance has adopted implementing rules was not checked.

Research reference, not legal advice.