Health Claim Denial Transparency Act
- Sponsor
- Rep. McBath, Lucy [D-GA-6]
- Committees
- Education and Workforce Committee (primary)
- Last action
- Jul 16, 2026
Bottom line
This bill mandates comprehensive transparency from group health plans regarding claim denials, aiming to provide consumers and regulators with detailed data on healthcare access and insurer practices, including the use of AI in claims processing.
What it actually does
This bill directs the Secretary of Labor to promulgate regulations within one year, requiring all group health plans to include detailed claim denial information in their annual reports under the Employee Retirement Income Security Act of 1974 (ERISA). The required data includes total claims submitted, approved, denied, appealed, and reversed, broken down by service type (e.g., pre-service, post-service, urgent care), specific benefit categories (e.g., prescription drugs, mental health/substance use disorder, cancer treatment), dollar amounts, and the specific reasons for denial. Notably, it also mandates reporting on claims processed using artificial intelligence or other automated decision-making tools, including the number of such claims paid and denied. The bill also amends existing regulations to extend these detailed reporting requirements to small group health plans (fewer than 100 participants), with a limited exception for specific claim types if a plan receives 20 or fewer unique claims in that category.
Proponents argue
Proponents argue that increased transparency regarding claim denials is crucial for consumer protection, allowing individuals to understand why their claims are denied and empowering them to appeal. It would also enable regulators to better oversee health plans, identify problematic patterns, and ensure compliance with existing laws like mental health parity. The inclusion of AI-processed claims data addresses emerging concerns about algorithmic bias in healthcare decisions, ensuring accountability in new technologies.
Opponents contend
Opponents might argue that the extensive reporting requirements impose a significant administrative and financial burden on group health plans, especially smaller ones, potentially increasing healthcare costs for employers and employees. They might also raise concerns about the privacy implications of collecting and reporting such detailed data, or the potential for misinterpretation of raw data without proper context, leading to unwarranted scrutiny.
The bill is short and clearly written, allowing a reader to quickly grasp its core intent and provisions.
Section 2(a)(1)
Mandate for Detailed Claim Denial Reporting
This provision directs the Secretary of Labor to issue a regulation within one year requiring all group health plans to include specific, detailed information about claim denials in their annual reports. This data must cover total claims submitted, approved, denied, and appealed, as well as the number of appeals reversed. It also requires breakdowns by service type (pre-service, post-service, urgent care, in-patient, out-patient), specific benefit categories (prescription drugs, mental health/SUD, cancer treatment), the total dollar amount of claims paid and denied, and the specific reasons for denial (e.g., medical necessity, lack of prior authorization).
Supporters argue
Supporters argue this provision is essential for shedding light on opaque claim denial processes, empowering consumers with critical information, and enabling more effective regulatory oversight to ensure fair practices and compliance with existing laws.
Critics contend
Opponents may contend that the detailed reporting requirements are overly burdensome and costly for health plans, potentially leading to increased premiums or administrative fees without a clear benefit proportional to the cost, especially given existing appeals processes.
Tradeoffs
This provision balances the public interest in transparency and regulatory oversight against the administrative and financial burden placed on private entities (group health plans) to collect and report granular data.
Section 2(a)(1)(J)
Disclosure of AI Use in Claim Processing
This provision specifically requires group health plans to report the number of claims processed using artificial intelligence or other automated decision-making tools. For these AI-processed claims, plans must disclose how many were paid and how many were denied during the plan year. This aims to provide insight into the role of automation in healthcare claim adjudication.
Section 2(a)(2)
Small Plan Exemption for Specific Claim Type Data
This provision creates a limited exception for small group health plans. It states that the Secretary may not require, and a plan may not include, detailed claim numbers for prescription drugs, mental health and substance use disorder benefits, or cancer treatment benefits if the plan received 20 or fewer unique claims in that specific category during the plan year. This aims to reduce disproportionate burdens on very small claim volumes.
Section 2(b)
Expanding Reporting Requirements to Small Group Health Plans
This provision directs the Secretary of Labor to amend existing regulations (specifically 29 CFR 2520.104-46(b)(2)) to require group health plans with fewer than 100 participants to comply with the new, detailed reporting requirements outlined in subsection (a). Currently, these smaller plans may have simplified reporting, so this represents a significant expansion of their obligations.
Section 2(c)
Mandating Full Data in Simplified Reports
This provision states that if the Secretary of Labor allows a group health plan to file a simplified report pursuant to ERISA, that simplified report must still include all the detailed claim denial information required by subsection (a). This prevents the Secretary from creating a simplified reporting option that omits the core transparency data mandated by the Act.
Directs the Secretary of Labor to amend existing regulations (29 CFR 2520.104-46(b)(2)) to require group health plans with fewer than 100 participants to comply with the new, detailed reporting requirements outlined in subsection (a). This is a significant change for small plans that previously had simplified reporting.
Section 2(b)
Why it matters:This is a standard legislative technique to modify existing regulatory frameworks. However, its placement could obscure the substantial impact it has on a large number of small plans, potentially making it less visible to those most affected.
Case for: Ensures that the transparency goals of the Act apply broadly across the market, including to smaller plans, thereby protecting participants in those plans and providing a more complete picture of industry practices.
Case against: Imposes a significant new administrative burden on small plans, which historically have had simplified reporting requirements. This could lead to increased compliance costs for small businesses, potentially impacting their ability to offer health benefits.
Estimated impact: Expands detailed reporting requirements to thousands of small group health plans, potentially increasing their compliance costs significantly, ranging from thousands to hundreds of thousands of dollars annually per plan depending on existing infrastructure.