MD SB797

Prohibits insurers, health maintenance organizations, and managed care organizations from downcoding claims (reducing service codes to lower reimbursement) using AI, algorithms, or automated tools without clinical documentation review, or based solely on diagnosis codes

Requires insurers to notify health care providers within 30 days of intent to downcode a claim, including specific reasons, original and revised codes with reimbursement amounts, and opportunity to respond with additional documentation within 90 days

Mandates that final downcoding decisions be made by a board-certified physician in the same specialty as the service under review with actual clinical experience

Classifies downcoding decisions resulting in nonpayment as coverage decisions that can be appealed directly to the Insurance Commissioner without first filing an appeal with the carrier

Imposes fines up to $10,000 per violation and requires quarterly reporting to the Commissioner on the number of downcode notices sent and claims downcoded; effective October 1, 2026