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Providers urge transparency as insurers warn HB 4054 could add costly mandates
Summary
Medical providers said automatic 'downcoding' by AI and automated tools undercuts reimbursements and urged HB 4054's disclosure and appeals requirements; insurers and trade groups warned the bill would duplicate existing standards, conflict with national codes and raise administrative costs.
House Bill 4054, which would require insurers to notify providers each time artificial intelligence or other automated technology automatically downcodes a claim and to provide an appeals process, brought a large and divided witness list to the committee on Feb. 6.
Sabrina Riggs, representing a coalition of provider groups including the Oregon Independent Medical Coalition, described increased batching and automated adjustments and said the bill seeks transparency not a ban: "This is only a transparency bill," she told the Joint Committee on Information Management and Technology.
Provider groups and emergency physicians described clinical examples where automated downcoding reclassified higher-acuity emergency visits as lower-level services after care was delivered, often without notice, increasing administrative burdens and threatening the financial viability of independent and rural practices. Dr. Ofer Nadler said his group has seen automated adjustments affect about 10% of bills and called for clarity and an appeal path.
Insurers, trade associations and large health plans testified in opposition, arguing the bill's requirements would conflict with national X12 claims-adjustment codes and could force carriers to build one-off solutions that slow payments and increase premiums. Peter Brown, representing AHIP, said many automated adjustments are routine corrections and that the bill would create significant operational challenges and thousands of notices monthly.
Points of contention included definitions (what counts as AI or automated technology), whether existing insurance-code appeals processes already cover downcoding, and the operational impact on claims processing. Several carriers and plan representatives urged a negotiated, systemwide approach and more stakeholder work in the interim rather than immediate state-specific mandates.
Committee process: Members asked insurers to provide written clarification on existing appeals processes and how standardized remittance codes (X12) currently communicate adjustment reasons. The hearing record closed after extensive oral testimony; the committee did not vote on the bill at the meeting.
Next steps: Committee staff said they would collect follow-up materials and that members would consider whether HB 4054 requires refinement to align with national standards and to avoid duplicative notifications.
