Amends and adds to existing law to revise and establish provisions regarding prompt payment of insurance claims.

LEGISLATURE OF THE STATE OF IDAHO Sixty-eighth Legislature Second Regular Session - 2026 IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 829 BY HEALTH AND WELFARE COMMITTEE AN ACT1 RELATING TO PROMPT PAYMENT OF CLAIMS; AMENDING SECTION 41-5601, IDAHO CODE,2 TO DEFINE TERMS; AMENDING SECTION 41-5602, IDAHO CODE, TO REVISE PRO-3 VISIONS REGARDING PROMPT PAYMENT OF CLAIMS; AMENDING SECTION 41-5603,4 IDAHO CODE, TO REVISE PROVISIONS REGARDING INTEREST PAYMENTS; AMEND-5 ING SECTION 41-5605, IDAHO CODE, TO REVISE PROVISIONS REGARDING EXCEP-6 TIONS; AMENDING SECTION 41-5606, IDAHO CODE, TO REVISE PROVISIONS RE-7 GARDING PENALTIES; AMENDING CHAPTER 56, TITLE 41, IDAHO CODE, BY THE AD-8 DITION OF A NEW SECTION 41-5607, IDAHO CODE, TO ESTABLISH PROVISIONS RE-9 GARDING CIVIL ACTIONS AND PROHIBITED RETALIATORY CONDUCT BY INSURERS;10 AMENDING CHAPTER 56, TITLE 41, IDAHO CODE, BY THE ADDITION OF A NEW SEC-11 TION 41-5608, IDAHO CODE, TO ESTABLISH PROVISIONS REGARDING CONTRACT-12 ING STANDARDS AND APPLICABILITY; AMENDING CHAPTER 56, TITLE 41, IDAHO13 CODE, BY THE ADDITION OF A NEW SECTION 41-5609, IDAHO CODE, TO ESTABLISH14 PROVISIONS REGARDING TRANSPARENCY REQUIREMENTS; AND DECLARING AN EMER-15 GENCY AND PROVIDING AN EFFECTIVE DATE.16

Be It Enacted by the Legislature of the State of Idaho:17

SECTION 1. That Section 41-5601, Idaho Code, be, and the same is hereby18 amended to read as follows:19 41-5601. DEFINITIONS. As used in this chapter:20 (1) "Beneficiary" means a policyholder, subscriber, member, employer21 or other person who is eligible for benefits under a contract providing hos-22 pital, surgical, or medical expense coverage or a managed care organization23 policy or agreement under which a third party payer agrees to reimburse for24 covered health care services rendered to beneficiaries in accordance with25 the benefits contract.26 (2) "Claim" means a request from a beneficiary or a practitioner or fa-27 cility for payment for covered health care services submitted to an insurer.28 A claim is presumed to be a complete claim unless the insurer provides timely29 notice in accordance with the provisions of section 41-5602(4), Idaho Code.30 (3)(a) "Complete claim" means a claim that:31 (i) Has no material defect or impropriety;32 (ii) Includes all information reasonably required by the insurer33 to adjudicate the claim;34 (iii) Requires no additional information from a third party that35 is reasonably necessary to adjudicate the claim; and36 (iv) Complies with the insurer's published claim-submission37 standards in effect at the time the claim is submitted.38 (b) A claim shall not fail to meet the definition of complete claim due39 to minor clerical or technical errors or because an insurer requests in-40 formation or documentation that is not reasonably necessary to adjudi-41 cate the claim.42

2 (2) (4) "Date of payment" means the date the payment is sent as indi-1 cated by the mail stamp on the envelope, by the insurer to the practitioner or2 facility or to the beneficiary in the event there is not a contract for direct3 payment by the insurer to the practitioner or facility, or, in the event of4 a wire or other electronic funds transfer, upon acceptance by the insurer's5 bank of a payment order.6 (3) (5) "Department" means the department of insurance.7 (4) (6) "Director" means the director of the department of insurance.8 (5) (7) "Electronic claim" means a claim that is transmitted through9 the use of electronic media, which includes the internet, extranet, leased10 lines, dial-up lines, private networks, and those transmissions that are11 physically moved from one (1) location to another using magnetic tape, disk12 or compact disk media. The claim shall contain the proper format and code13 sets in accordance with the applicable implementation specifications under14 45 CFR 160 et seq., and 45 CFR 162 et seq submitted to a health insurer through15 secure electronic data exchange in a standardized, HIPAA-compliant format,16 including the ASC X12N 837 transaction, and that contains all data necessary17 for adjudication. Electronic claims shall not include paper, faxed, or18 scanned submissions.19 (6) (8) "Insurer" means any insurer that sells hospital, medical, long-20 term care, or vision insurance policies or certificates and managed care or-21 ganizations. For the purpose of this chapter only, "insurer" also includes a22 third party administrator who makes payments to beneficiaries, practition-23 ers or facilities on behalf of an insurer and a hospital or professional ser-24 vice corporation that provides hospital, medical, long-term care or vision25 health care services.26 (7) (9) "Practitioner or facility" means any physician, hospital or27 other person or facility licensed or otherwise authorized to furnish health28 care services.29 (8) (10) "Receipt of claim" means the date the claim is actually re-30 ceived by the insurer from the practitioner or facility or the beneficiary.31 (9) (11) "Submission of claim" means the date the claim is sent as indi-32 cated by the mail stamp on the envelope, by the beneficiary, practitioner or33 facility, to the insurer or the date an electronic claim is transmitted to an34 insurer.35

SECTION 2. That Section 41-5602, Idaho Code, be, and the same is hereby36 amended to read as follows:37 41-5602. PROMPT PAYMENT OF CLAIMS. (1) Except as otherwise specifi-38 cally provided in this chapter, an insurer shall process a claim for payment39 for health care services rendered by a practitioner or facility to a benefi-40 ciary in accordance with this section.41 (2) If Except as provided in subsection (4) of this section, if a bene-42 ficiary, practitioner or facility submits an electronic claim to an insurer43 within thirty (30) days of the date on which service was delivered, an, the44 insurer shall pay or deny the claim not later than thirty (30) days after re-45 ceipt of the claim.46 (3) If Except as provided in subsection (4) of this section, if a ben-47 eficiary, practitioner or facility submits a paper claim for payment to an48 insurer within forty-five (45) days of the date on which service was deliv-49

3 ered, an, the insurer shall pay or deny the claim not later than forty-five1 (45) days after receipt of the claim.2 (4) If an insurer denies the a claim or needs additional information3 to process the a claim, the insurer shall notify the practitioner or fa-4 cility and the beneficiary in writing within thirty (30) days of receipt5 of an electronic claim or within forty-five (45) days of receipt of a paper6 claim. The notice shall state why the insurer denied the claim. Such notice7 shall specify all known deficiencies reasonably identifiable at the time8 of notice, including all defects, omissions, or additional information and9 supporting documentation required. Every effort shall be made to inform10 the beneficiary, practitioner, or facility of any necessary information in11 order to adjudicate the claim. An insurer shall make a good faith effort12 to consolidate all requests for information to the extent practicable and13 shall avoid making serial requests for information in violation of subsec-14 tion (7) of this section. Upon receipt of the requested documentation, the15 insurer shall have twenty-one (21) days to pay the claim, deny the claim, or,16 if necessary, request further documentation. Upon receipt of the further17 requested documentation, the insurer shall have an additional twenty-one18 (21) days to either adjudicate and pay or deny the claim. If after this pe-19 riod, the insurer has still not paid or denied the claim, the beneficiary,20 practitioner, or facility shall have the right to file a complaint with the21 department of insurance and begin charging interest on the claim pursuant to22 the provisions of section 41-5603, Idaho Code.23 (5) If the claim was denied because more information was required to24 process the claim, the notice shall specifically describe all information25 and supporting documentation needed to evaluate the claim for processing.26 If the practitioner or facility submits the information and documentation27 identified by the insurer within thirty (30) days of receipt of the written28 notice, the insurer shall process and pay the claim within thirty (30) days29 of receipt of the additional information or, if appropriate, deny the claim.30 An insurer shall make a good faith effort to consolidate all requests for in-31 formation to the extent practicable and shall avoid making serial requests32 for information in violation of subsection (7) of this section.33 (6) An insurer may request medical records or additional documentation34 only when such information is reasonably necessary to adjudicate a claim,35 investigate fraud, verify medical necessity, coordinate benefits, or comply36 with applicable law.37 (7) An insurer shall not request information or documentation for the38 primary purpose of delaying payment, resetting statutory time frames, or39 discouraging submission of claims.40 (8) A practitioner or facility shall submit claims in good faith,41 within applicable contractual or statutory timely filing requirements, and42 using reasonable diligence to include information necessary for adjudica-43 tion. Failure to submit a claim in good faith or with reasonable diligence44 shall not relieve an insurer of its obligations under this chapter unless45 such failure materially prevents the insurer from adjudicating the claim and46 the insurer has complied with the notice requirements of subsection (4) of47 this section.48 (6) (9) Any claim submitted pursuant to this chapter shall use the cur-49 rent procedural terminology (CPT) code in effect, as published by the Ameri-50

4 can medical association, the international classification of diseases(ICD)1 code in effect, as published by the United States department of health and2 human services, or the healthcare common procedural coding system (HCPCS)3 code in effect, as published by the United States centers for medicare and4 medicaid services (CMS).5 (7) (10) This chapter shall not apply to claims submitted under policies6 or certificates of insurance for specific disease, hospital confinement in-7 demnity, accident-only, credit, medicare supplement, disability income in-8 surance, student health benefits only coverage issued as a supplement to li-9 ability insurance, worker's compensation or similar insurance, automobile10 medical payment insurance or nonrenewable short-term coverage issued for a11 period of twelve (12) months or less.12 (11) For the purposes of this chapter, a third-party administrator13 shall be subject to the same provisions that apply to the insurer, practi-14 tioner, or facility that the third-party administrator has entered into a15 written agreement with.16

SECTION 3. That Section 41-5603, Idaho Code, be, and the same is hereby17 amended to read as follows:18 41-5603. INTEREST PAYMENTS.19 (1)(a) An insurer that fails to pay, request additional information20 or documentation, or deny a claim from a beneficiary, practitioner or21 facility within the time periods established in this chapter shall pay22 interest at the contract statutory rate pursuant to section 28-22-104,23 Idaho Code, on the unpaid amount of a claim that is determined to be due24 and owing. The interest shall accrue from the date payment was due,25 pursuant to the provisions of this chapter, until the claim is paid.26 Payment of any interest amount of less than four dollars ($4.00) shall27 not be required. Insurers may add any interest due to a future payment28 to the beneficiary, practitioner or facility shall be required to pay29 interest upon payment of the claim if the director, after receiving a30 complaint regarding noncompliance with the provisions of this chapter,31 determines after investigating and reviewing the complaint that:32 (i) The provider has acted in good faith and attempted to provide33 all information requested by the insurer in a timely manner; and34 (ii) The insurer has not acted in good faith and has not been35 forthcoming with all documentation necessary to pay or deny the36 claim.37 (b) Interest shall begin accruing from the date a complaint is filed38 with the department.39 (2) Interest shall accrue at the following compounding annual rates:40 (a) Ten percent (10%) per annum for the first one hundred eighty (180)41 days after the payment deadline; and42 (b) Fifteen percent (15%) per annum for any period after the initial one43 hundred eighty (180) days following the payment deadline.44 (3) Interest owed shall be in addition to the claim amount and may not be45 offset against future payments.46

SECTION 4. That Section 41-5605, Idaho Code, be, and the same is hereby47 amended to read as follows:48

5 41-5605. EXCEPTIONS. (1) The time periods set forth in section1 41-5602, Idaho Code, shall not apply to claims that the insurer reasonably2 believes involve fraud or misrepresentation by the practitioner or facility3 or the beneficiary or to instances where the insurer has not been provided4 the information necessary to evaluate the claim after notice has been given5 requesting additional information by the insurer as required by section6 41-5602(5), Idaho Code.7 (2) The time periods set forth in section 41-5602, Idaho Code, shall8 not apply to claims that the insurer reasonably believes require medical9 records, including accident reports, for the purpose of investigating10 whether a claim is valid for subrogation, or the coordination of benefits11 payable by the insurer with benefits payable by another insurer or payable12 under federal or state law.13 (3) An insurer is not required to comply with the time periods set forth14 in section 41-5602, Idaho Code, if the insurer is in compliance with a con-15 tract with the practitioner or facility which specifies different payment16 requirements. Payments made within the time periods set forth in section17 41-5602, Idaho Code, for the purpose of this chapter, shall be deemed to be18 made in a reasonable and timely manner.19 (4) (3) An insurer is not required to comply with the periods set forth20 in section 41-5602, Idaho Code, if the fee or premium entitling a beneficiary21 to insurance benefits has not been paid in full.22 (5) (4) An insurer is not required to comply with the time periods set23 forth in section 41-5602, Idaho Code, if failure to comply is due to an act of24 God, bankruptcy, an act of a governmental authority responding to an act of25 God or emergency or the result of a strike, walkout or other labor dispute, or26 act of terrorism.27 (5) The provisions of this chapter shall not apply to a self-funded28 plan, including an employee welfare benefit plan that is self-funded and29 governed by the federal employee retirement income security act of 1974,30 except to the extent that such plan is insured by an insurer subject to the31 jurisdiction of this state.32

SECTION 5. That Section 41-5606, Idaho Code, be, and the same is hereby33 amended to read as follows:34 41-5606. PENALTIES. (1) The director shall enforce the provisions of35 this chapter and shall review and, if appropriate, investigate complaints36 received by the department related to noncompliance with the provisions of37 this chapter.38 (2) If the director determines an insurer has violated the provisions39 of this chapter, the director may impose an administrative fine not to exceed40 five thousand dollars ($5,000) based upon an enforcement action.:41 (a) Five thousand dollars ($5,000); or42 (b) Ten thousand dollars ($10,000) for a second or subsequent violation43 if such violation occurs within thirty-six (36) months of the insurer's44 most recent violation.45 (3) The director shall not may suspend or revoke an insurer's certifi-46 cate of authority for repeated or persistent violations of this chapter.47 (4) No administrative penalty shall be imposed against an insurer un-48 der this chapter or any other provision of law for failure to comply with49

6 this chapter if, in the calendar year it has paid ninety-five percent (95%)1 or more of all claims subject to this chapter to or on behalf of beneficia-2 ries within the time periods set forth in section 41-5602, Idaho Code Prior3 to the imposition of any administrative fine, suspension, or revocation, an4 insurer shall be provided notice and an opportunity for a hearing pursuant to5 the provisions of chapter 3, title 41, Idaho Code.6 (5) This section shall not create a private cause of action by or on be-7 half of a beneficiary or practitioner or facility against an insurer.8

SECTION 6. That Chapter 56, Title 41, Idaho Code, be, and the same is9 hereby amended by the addition thereto of a NEW SECTION, to be known and des-10 ignated as Section 41-5607, Idaho Code, and to read as follows:11 41-5607. CIVIL ACTIONS -- PROHIBITED RETALIATORY CONDUCT BY INSUR-12 ERS. (1) A practitioner or facility may commence a civil action in a court13 of competent jurisdiction against an insurer for violations of the provi-14 sions of this chapter. If a practitioner or facility proves that an insurer15 violated the provisions of this chapter, such practitioner or facility is16 entitled to recover:17 (a) Injunctive relief;18 (b) Actual damages;19 (c) Accrued interest; and20 (d) Reasonable costs and attorney's fees.21 (2)(a) An insurer shall not retaliate against a practitioner or facil-22 ity for the exercise of rights pursuant to this chapter.23 (b) Prohibited retaliatory actions include reducing reimbursement,24 altering network status, increasing administrative burdens, delaying25 credentialing, modifying utilization criteria, or any other conduct26 reasonably interpretable as dissuading a practitioner or facility from27 exercising statutory rights.28 (c) Retaliation shall constitute an unfair claim-settlement practice.29

SECTION 7. That Chapter 56, Title 41, Idaho Code, be, and the same is30 hereby amended by the addition thereto of a NEW SECTION, to be known and des-31 ignated as Section 41-5608, Idaho Code, and to read as follows:32 41-5608. CONTRACTING STANDARDS -- APPLICABILITY TO EXISTING AND FU-33 TURE CONTRACTS.34 (1)(a) All provider contracts, regardless of the date of execution of35 such contract, shall comply with the provisions of this chapter for36 claims submitted on or after July 1, 2026.37 (b) An insurer shall not require renegotiation of unrelated contract38 terms as a condition of implementing the provisions of this section.39 (2) No contract executed in this state may waive the provisions of this40 chapter.41

SECTION 8. That Chapter 56, Title 41, Idaho Code, be, and the same is42 hereby amended by the addition thereto of a NEW SECTION, to be known and des-43 ignated as Section 41-5609, Idaho Code, and to read as follows:44 41-5609. TRANSPARENCY REQUIREMENTS.45

7 (1)(a) An insurer that uses automated decision tools, algorithms, ar-1 tificial intelligence, or similar technologies to assist with claims2 intake, review, adjudication, payment determination, or denial, par-3 tial denial, or other adverse payment determination shall disclose, in4 a standardized manner, whether such tools materially assisted in the5 determination of a claim submitted under this chapter.6 (b) Disclosure pursuant to this subsection shall be limited to the fact7 of use of such tools and the general function for which they were used8 and shall not require disclosure of proprietary systems, algorithms,9 prompts, models, workflows, thresholds, scoring criteria, or trade se-10 crets.11 (c) The use of automated decision tools, algorithms, artificial in-12 telligence, or similar technologies shall not relieve an insurer of re-13 sponsibility for the accuracy, timeliness, and statutory compliance of14 any claim determination made under this chapter or excuse noncompliance15 with any provision of this chapter.16 (d) A disclosure made pursuant to this subsection shall not, by itself:17 (i) Constitute evidence of an improper claims practice;18 (ii) Create a presumption that a claim determination was incor-19 rect, arbitrary, or unlawful;20 (iii) Extend or toll any statutory time frames applicable under21 this chapter;22 (iv) Create a right to appeal; or23 (v) Require additional review, reconsideration, or appeal beyond24 those otherwise provided by law.25 (2)(a) A practitioner or facility that uses automated documentation26 tools, coding assistance tools, artificial intelligence, or similar27 technologies to assist with clinical dictation, medical record genera-28 tion, or claim coding shall disclose, in a standardized manner, whether29 such tools materially assisted in the preparation of a claim submitted30 under this chapter.31 (b) Disclosure pursuant to this subsection shall be limited to the fact32 of use of such tools and shall not require disclosure of proprietary33 systems, algorithms, prompts, models, workflows, or clinical deci-34 sion-making processes.35 (c) Use of automated documentation tools, coding assistance tools,36 artificial intelligence, or similar technologies shall not relieve a37 practitioner or facility of responsibility for the accuracy, complete-38 ness, and truthfulness of information submitted in a claim.39 (d) An insurer shall not impose additional claim submission require-40 ments, prepayment review, audits, or utilization management controls41 solely on the basis that a practitioner or facility disclosed use of au-42 tomated documentation tools, coding assistance tools, artificial in-43 telligence, or similar technologies.44 (e) A disclosure made pursuant to this subsection shall not, by itself:45 (i) Constitute a material defect or impropriety in a claim;46 (ii) Create a presumption of fraud, misrepresentation, or im-47 proper billing;48 (iii) Justify denial of a claim, delay of payment, or extension of49 statutory time frames under this chapter; or50

8 (iv) Permit additional documentation requests absent a specific,1 articulated inconsistency reasonably necessary to adjudicate the2 claim.3

SECTION 9. An emergency existing therefor, which emergency is hereby4 declared to exist, this act shall be in full force and effect on and after5 July 1, 2026.6