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Read. Follow. Verify.Maryland restricts health plan claim downcoding and sets appeal rights for providers
Last action · February 12, 2026: Hearing 3/04 at 1:00 p.m.Sponsor: Clarence Lam
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What This Bill Would Do
Senate Bill 797 prohibits insurers, nonprofit health service plans, health maintenance organizations, and managed care organizations from downcoding medical reimbursement claims without clinical documentation review, standard diagnosis code review, or specific emergency service protocols. The bill establishes notice and appeal requirements for d claims and takes effect October 1, 2026.
Health care providers treating patients with complex or chronic conditions gain specific notice and appeal protections when insurers reduce reimbursement codes, backed by fines up to $10,000 per violation.
- Maryland's insurance laws govern health service plans, HMOs, and managed care organizations operating within the state. context
Who It Would Affect
Groups the bill's text would affect if enacted, as described in the record. Being affected is not a position for or against it.
Health care providers
Health care providers receive new advance notice requirements, 90-day response windows for altered claims, and direct appeal rights when claims are downcoded.
Insurers and Health Maintenance Organizations
Insurers and HMOs must establish clinical review procedures by board-certified physicians, comply with 30-day notice rules for downcoding, submit quarterly reports to the Commissioner, and face fines up to $10,000 per violation.
Key Facts
- Insurers, nonprofit health service plans, health maintenance organizations, and managed care organizations are prohibited from using AI, algorithms, or machine learning to downcode a claim without a review of clinical documentation.
- Carriers cannot downcode a claim based solely on the reported diagnosis code.
- For emergency services claims, insurers cannot downcode based on final diagnosis rather than presented symptoms measured against a prudent layperson standard.
- Carriers are barred from targeting health care providers who routinely treat patients with complex or chronic conditions.
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- Insurers intending to downcode a claim must notify the health care provider within 30 days of receiving the claim, providing specific clinical reasons and revised codes.
- Health care providers have 90 days after receiving a downcoding notice to respond and provide additional supporting documentation.
- A final determination to downcode a claim must be made by a physician board-certified or eligible in the same specialty with actual clinical experience.
- A final decision to downcode a claim that leads to nonpayment constitutes a coverage decision that can be appealed under subtitle 10D.
- Violations of the new downcoding restrictions subject insurers to a fine not exceeding $10,000 for each violation.
- Carriers must submit quarterly reports to the Commissioner detailing the number of downcoding notices sent and claims downcoded, aggregated by zip code.
- The Act takes effect October 1, 2026.
Frequently Asked Questions
What does downcoding mean under this bill?
Who is authorized to make a final decision to downcode a claim?
Can health care providers appeal a final decision to downcode a claim?
What else do you want to know?
News Coverage
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Votes, people, money & the original sourceWhere This Stands
Currently filed. The next step in the legislative lifecycle is Committee.
Procedural history
2 actions- Feb 12, 2026SenateHearing 3/04 at 1:00 p.m.
- Feb 6, 2026SenateIntroducedFirst Reading Finance
Version history
Only one version on file - nothing to compare yet. As later stages (committee substitute, engrossed, enrolled) are captured, the redline appears here.
View official text →Lobbying Activity
No state lobbying filings in our records match this bill. Federal lobbying reports (LDA) cover Congress, so they are not listed on state bills.
Full breakdown
Who this bill affects and the strongest case for and against it, written only from the bill’s own text.
Sponsors
Discoveries
Patterns POLISCOPE noticed across the record. These are observations to investigate, not conclusions.
Establishment of Clinical Review Mandates for Claim Alterations
The bill shifts regulatory oversight by prohibiting automated or algorithmic downcoding without individual clinical documentation review and peer-specialty physician sign-off.
Connected Entities
Sources
mgaleg.maryland.gov
Analysis Score
0–100- Significance75How much this matters to a regular citizen
- Controversy50Intensity of disagreement among stakeholders
- Entertainment10Compellingness for a non-policy-wonk reader
- Buzz40Current news / social attention level
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