For Immediate Release
October 5, 2026
Sierra Wallace, Communications Director
(202) 355-8431
swallace@dccouncil.gov

Councilmember Henderson Introduces Legislation to Establish Greater Transparency and Fairness for Health Care Reimbursement

Washington, DC – Today, Councilmember Henderson introduced the Transparency in Downcoding Amendment Act of 2026 to protect District clinicians and patients from health insurers automatically reducing reimbursement for care that has been provided solely based on a diagnosis code. This bill would restrict the usage of automated tools in downcoding claims decisions and establish transparency, clinical review, and due process protections for health care providers.  

“Downcoding occurs when an insurer reduces a service code submitted by a clinician to a lower-level code, resulting in lower reimbursement," stated Councilmember Henderson. “Increasingly, insurers are using automated systems, algorithms and artificial intelligence to make these decisions, sometimes without a clinician reviewing the patient's medical record, or the information submitted by the treating provider. This practice undermines clinical judgement, creates administrative burdens, and unfairly disadvantages clinicians who care for patients with complex or chronic conditions."

“Clinicians should be paid accurately for the care they provide, and an algorithm should not be permitted to substitute a diagnosis code for the clinical judgment and documentation of the treating professional,” said Councilmember Henderson. 

The American Medical Association has documented the growing use of payer downcoding programs, which have prompted similar legislative actions in Illinois, Indiana, and Virginia, as well as regulatory guidance in Maryland.  

Specifically, the legislation would:  

• Prohibit automated downcoding, preventing insurers from using an automated process, system or tool to downcode a claim, nor from downcoding based solely on the diagnosis code reported by the provider.

• Require clinical review by a licensed clinician in the District who practices in the same specialty as the treating provider and who conducts a documented review of the clinical information supporting the billed service.  

• Require notice and justification by insurers to clearly notify the provider, explain the specific reason and clinical criteria supporting the decision, and provide information about the clinician responsible for the downcoding.  

• Establish an appeals process for downcoded claims, including at least 180 days to submit an appeal, and the ability to appeal batches of similar claims involving substantially similar issues.  

• Protect clinicians caring for complex patients by prohibiting insurers from using downcoding practices in a targeted or discriminatory manner against physicians who routinely treat patients with complex or chronic conditions.  

• Provide for enforcement, including monetary penalties of up to $50,000 per violation and orders requiring improperly downcoded claims to be reprocessed with interest.  

This bill was co-introduced by Chairman Phil Mendelson and Councilmembers Charles Allen, Anita Bonds, Matthew Frumin, Janeese Lewis George, Brianne K. Nadeau, Zachary Parker, Brooke Pinto, and Trayon White, Sr.  

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