Summary
Regulates the use of certain automated systems, including algorithms that incorporate artificial intelligence, in the health benefit claims process and utilization review. Defines “artificial intelligence system” and “automated decision system” in the Insurance Code, and prohibits a utilization review agent from using an automated decision system to make, wholly or partly, an adverse determination about medical necessity or coverage.
Healthcare Implications
Directly constrains health plans’ use of AI and other automated systems in utilization review and coverage determinations. Requires that adverse determinations be made by licensed clinicians rather than by algorithms alone, which protects patients from fully automated denials, supports more transparent and clinically grounded decision-making, and enables regulatory oversight of AI tools in claims and utilization review workflows.
Operational Implications
- AI/automated decision systems may not be the sole basis for adverse determinations on medical necessity or coverage, whether the determination denies, delays, or modifies care in whole or in part.
- Adverse determination notices must include heightened disclosure: principal reasons, clinical basis, specific screening criteria.
- Insurance Commissioner has audit authority over UR agents' use of automated decision systems. Carve-out for administrative support and fraud detection.