WHAT THIS BILL REGULATES · 1 REQUIREMENT TYPE
How Is This Bill Enforced
Verbatim statutory text on the left; plain-language analysis and a per-section checklist on the right. Numbered markers cross-link to the matching checklist row.
(a)(1) ARTIFICIAL INTELLIGENCEArtificial intelligenceARTIFICIAL INTELLIGENCE. A machine-based system that may include software or physical hardware that performs tasks, based upon data set inputs, which require human-like perception, cognition, planning, learning, communication, or physical action and which is capable of improving performance based upon learned experience without significant human oversight toward influencing real or virtual environments.Section 1(a)(1). A machine-based system that may include software or physical hardware that performs tasks, based upon data set inputs, which require human-like perception, cognition, planning, learning, communication, or physical action and which is capable of improving performance based upon learned experience without significant human oversight toward influencing real or virtual environments.
(a)(2) HEALTH BENEFIT PLANHealth benefit planHEALTH BENEFIT PLAN. a. Any plan, policy, or contract issued, delivered, or renewed in this state that provides health coverage that includes payment for hospitalization, physician care, treatment, surgery, therapy, drugs, equipment, and any other medical expense, regardless of whether the plan is for a group or individual. b. The term does not include accident-only, specified disease, individual hospital indemnity, credit, dental-only, Medicare supplement, long-term care, disability income, or other limited benefit health insurance policies, or coverage issued as supplemental to liability insurance, workers' compensation, or automobile medical payment insurance.Section 1(a)(2). a. Any plan, policy, or contract issued, delivered, or renewed in this state that provides health coverage that includes payment for hospitalization, physician care, treatment, surgery, therapy, drugs, equipment, and any other medical expense, regardless of whether the plan is for a group or individual. b. The term does not include accident-only, specified disease, individual hospital indemnity, credit, dental-only, Medicare supplement, long-term care, disability income, or other limited benefit health insurance policies, or coverage issued as supplemental to liability insurance, workers' compensation, or automobile medical payment insurance.
(a)(3) INSURERInsurerINSURER. Any entity that issues, delivers, or renews a health benefit plan, or performs utilization management or utilization review for a health benefit plan, including an insurer regulated pursuant to Title 27, Code of Alabama 1975, a health maintenance organization established under Chapter 21A of Title 27, Code of Alabama 1975, a health care service corporation established under Article 6, Chapter 20, Title 10A, Code of Alabama 1975, or a pharmacy benefits manager regulated under Chapter 45A, Title 27, Code of Alabama 1975.Section 1(a)(3). Any entity that issues, delivers, or renews a health benefit planHealth benefit planHEALTH BENEFIT PLAN. a. Any plan, policy, or contract issued, delivered, or renewed in this state that provides health coverage that includes payment for hospitalization, physician care, treatment, surgery, therapy, drugs, equipment, and any other medical expense, regardless of whether the plan is for a group or individual. b. The term does not include accident-only, specified disease, individual hospital indemnity, credit, dental-only, Medicare supplement, long-term care, disability income, or other limited benefit health insurance policies, or coverage issued as supplemental to liability insurance, workers' compensation, or automobile medical payment insurance.Section 1(a)(2), or performs utilization management or utilization reviewUtilization management or utilization reviewUTILIZATION MANAGEMENT or UTILIZATION REVIEW. A protocol for the prospective or concurrent determination of the appropriateness of a health care service or treatment for coverage under a health benefit plan.Section 1(a)(6) for a health benefit planHealth benefit planHEALTH BENEFIT PLAN. a. Any plan, policy, or contract issued, delivered, or renewed in this state that provides health coverage that includes payment for hospitalization, physician care, treatment, surgery, therapy, drugs, equipment, and any other medical expense, regardless of whether the plan is for a group or individual. b. The term does not include accident-only, specified disease, individual hospital indemnity, credit, dental-only, Medicare supplement, long-term care, disability income, or other limited benefit health insurance policies, or coverage issued as supplemental to liability insurance, workers' compensation, or automobile medical payment insurance.Section 1(a)(2), including an insurerInsurerINSURER. Any entity that issues, delivers, or renews a health benefit plan, or performs utilization management or utilization review for a health benefit plan, including an insurer regulated pursuant to Title 27, Code of Alabama 1975, a health maintenance organization established under Chapter 21A of Title 27, Code of Alabama 1975, a health care service corporation established under Article 6, Chapter 20, Title 10A, Code of Alabama 1975, or a pharmacy benefits manager regulated under Chapter 45A, Title 27, Code of Alabama 1975.Section 1(a)(3) regulated pursuant to Title 27, Code of Alabama 1975, a health maintenance organization established under Chapter 21A of Title 27, Code of Alabama 1975, a health care service corporation established under Article 6, Chapter 20, Title 10A, Code of Alabama 1975, or a pharmacy benefits manager regulated under Chapter 45A, Title 27, Code of Alabama 1975.
(a)(4) PATIENTPatientPATIENT. An insured individual enrolled in a health benefit plan.Section 1(a)(4). An insured individual enrolled in a health benefit planHealth benefit planHEALTH BENEFIT PLAN. a. Any plan, policy, or contract issued, delivered, or renewed in this state that provides health coverage that includes payment for hospitalization, physician care, treatment, surgery, therapy, drugs, equipment, and any other medical expense, regardless of whether the plan is for a group or individual. b. The term does not include accident-only, specified disease, individual hospital indemnity, credit, dental-only, Medicare supplement, long-term care, disability income, or other limited benefit health insurance policies, or coverage issued as supplemental to liability insurance, workers' compensation, or automobile medical payment insurance.Section 1(a)(2).
(a)(5) PERSONPersonPERSON. The term includes, but is not limited to, an individual, corporation, limited liability company, partnership, unincorporated association, trust, or any other legal entity.Section 1(a)(5). The term includes, but is not limited to, an individual, corporation, limited liability company, partnership, unincorporated association, trust, or any other legal entity.
(a)(6) UTILIZATION MANAGEMENT or UTILIZATION REVIEWUtilization management or utilization reviewUTILIZATION MANAGEMENT or UTILIZATION REVIEW. A protocol for the prospective or concurrent determination of the appropriateness of a health care service or treatment for coverage under a health benefit plan.Section 1(a)(6). A protocol for the prospective or concurrent determination of the appropriateness of a health care service or treatment for coverage under a health benefit planHealth benefit planHEALTH BENEFIT PLAN. a. Any plan, policy, or contract issued, delivered, or renewed in this state that provides health coverage that includes payment for hospitalization, physician care, treatment, surgery, therapy, drugs, equipment, and any other medical expense, regardless of whether the plan is for a group or individual. b. The term does not include accident-only, specified disease, individual hospital indemnity, credit, dental-only, Medicare supplement, long-term care, disability income, or other limited benefit health insurance policies, or coverage issued as supplemental to liability insurance, workers' compensation, or automobile medical payment insurance.Section 1(a)(2).
Section 1(a) defines the key terms used throughout the bill. Insurer is defined broadly to include any entity that issues, delivers, or renews a health benefit plan or performs utilization management or review, encompassing traditional insurers, HMOs, health care service corporations, and pharmacy benefits managers. Health benefit plan covers most comprehensive health plans but excludes limited-benefit and supplemental policies. Artificial intelligence follows a capabilities-based definition emphasizing human-like cognition and self-improvement from learned experience.
(b)(1) 1 An insurerInsurerINSURER. Any entity that issues, delivers, or renews a health benefit plan, or performs utilization management or utilization review for a health benefit plan, including an insurer regulated pursuant to Title 27, Code of Alabama 1975, a health maintenance organization established under Chapter 21A of Title 27, Code of Alabama 1975, a health care service corporation established under Article 6, Chapter 20, Title 10A, Code of Alabama 1975, or a pharmacy benefits manager regulated under Chapter 45A, Title 27, Code of Alabama 1975.Section 1(a)(3) that uses artificial intelligenceArtificial intelligenceARTIFICIAL INTELLIGENCE. A machine-based system that may include software or physical hardware that performs tasks, based upon data set inputs, which require human-like perception, cognition, planning, learning, communication, or physical action and which is capable of improving performance based upon learned experience without significant human oversight toward influencing real or virtual environments.Section 1(a)(1), an algorithm, or other software tool to perform utilization management or utilization reviewUtilization management or utilization reviewUTILIZATION MANAGEMENT or UTILIZATION REVIEW. A protocol for the prospective or concurrent determination of the appropriateness of a health care service or treatment for coverage under a health benefit plan.Section 1(a)(6) functions, or which contracts with another personPersonPERSON. The term includes, but is not limited to, an individual, corporation, limited liability company, partnership, unincorporated association, trust, or any other legal entity.Section 1(a)(5) to use artificial intelligenceArtificial intelligenceARTIFICIAL INTELLIGENCE. A machine-based system that may include software or physical hardware that performs tasks, based upon data set inputs, which require human-like perception, cognition, planning, learning, communication, or physical action and which is capable of improving performance based upon learned experience without significant human oversight toward influencing real or virtual environments.Section 1(a)(1), an algorithm, or other software tool to perform utilization management or utilization reviewUtilization management or utilization reviewUTILIZATION MANAGEMENT or UTILIZATION REVIEW. A protocol for the prospective or concurrent determination of the appropriateness of a health care service or treatment for coverage under a health benefit plan.Section 1(a)(6) functions, that purport to be based in whole or in part on medical necessity, shall adhere to all of the following requirements when making a coverage determination: a. Uses the relevant clinical information in the patientPatientPATIENT. An insured individual enrolled in a health benefit plan.Section 1(a)(4)'s medical history. b. Uses the patientPatientPATIENT. An insured individual enrolled in a health benefit plan.Section 1(a)(4)'s unique clinical circumstances as presented by the requesting provider or concurrent with the request for determination. c. Does not base the determination solely on a group dataset. d. Does not ignore health care provider decision making. e. Does not discriminate directly or indirectly against a patientPatientPATIENT. An insured individual enrolled in a health benefit plan.Section 1(a)(4) in violation of state or federal law, including any regulations or guidance issued by the federal Department of Health and Human Services. f. Follows criteria and protocols that comply with this section, Chapter 3A of Title 27, Code of Alabama 1975, and other applicable state and federal law.
(b)(2) 2 Notwithstanding the requirements listed in subdivision (1), the determination of medical necessity shall always be made by a licensed physician or other health care professional who is competent to evaluate any recommendation or conclusion of artificial intelligenceArtificial intelligenceARTIFICIAL INTELLIGENCE. A machine-based system that may include software or physical hardware that performs tasks, based upon data set inputs, which require human-like perception, cognition, planning, learning, communication, or physical action and which is capable of improving performance based upon learned experience without significant human oversight toward influencing real or virtual environments.Section 1(a)(1), an algorithm, or other software tool in the light of the specific clinical issues involved in the health care treatment requested or recommended by the health care provider who is treating the patientPatientPATIENT. An insured individual enrolled in a health benefit plan.Section 1(a)(4).
Section 1(b) is the operative core of the bill, imposing two layers of requirements on insurers that use AI, algorithms, or other software tools in utilization management or review. Subdivision (1) sets six baseline conditions that any AI-assisted coverage determination must satisfy: it must use the patient's individual medical history and unique clinical circumstances, must not rely solely on group datasets, must not ignore provider decision-making, must not discriminate, and must comply with applicable state and federal law including Chapter 3A of Title 27.
Subdivision (2) adds an absolute human-in-the-loop requirement: the determination of medical necessity must always be made by a licensed physician or competent health care professional who evaluates the AI recommendation in light of the specific clinical issues presented by the treating provider. This is a strict override — even where subdivision (1) is satisfied, the human professional must make the final call.
(c)(1) 3 Make prominent written disclosure to enrollees in a health benefit planHealth benefit planHEALTH BENEFIT PLAN. a. Any plan, policy, or contract issued, delivered, or renewed in this state that provides health coverage that includes payment for hospitalization, physician care, treatment, surgery, therapy, drugs, equipment, and any other medical expense, regardless of whether the plan is for a group or individual. b. The term does not include accident-only, specified disease, individual hospital indemnity, credit, dental-only, Medicare supplement, long-term care, disability income, or other limited benefit health insurance policies, or coverage issued as supplemental to liability insurance, workers' compensation, or automobile medical payment insurance.Section 1(a)(2), and to health care providers who contract with the insurerInsurerINSURER. Any entity that issues, delivers, or renews a health benefit plan, or performs utilization management or utilization review for a health benefit plan, including an insurer regulated pursuant to Title 27, Code of Alabama 1975, a health maintenance organization established under Chapter 21A of Title 27, Code of Alabama 1975, a health care service corporation established under Article 6, Chapter 20, Title 10A, Code of Alabama 1975, or a pharmacy benefits manager regulated under Chapter 45A, Title 27, Code of Alabama 1975.Section 1(a)(3), that artificial intelligenceArtificial intelligenceARTIFICIAL INTELLIGENCE. A machine-based system that may include software or physical hardware that performs tasks, based upon data set inputs, which require human-like perception, cognition, planning, learning, communication, or physical action and which is capable of improving performance based upon learned experience without significant human oversight toward influencing real or virtual environments.Section 1(a)(1), an algorithm, or other software tool is used in utilization management or utilization reviewUtilization management or utilization reviewUTILIZATION MANAGEMENT or UTILIZATION REVIEW. A protocol for the prospective or concurrent determination of the appropriateness of a health care service or treatment for coverage under a health benefit plan.Section 1(a)(6) to contribute information to determinations of medical necessity.
(c)(2) 4 Periodically review use of artificial intelligenceArtificial intelligenceARTIFICIAL INTELLIGENCE. A machine-based system that may include software or physical hardware that performs tasks, based upon data set inputs, which require human-like perception, cognition, planning, learning, communication, or physical action and which is capable of improving performance based upon learned experience without significant human oversight toward influencing real or virtual environments.Section 1(a)(1), an algorithm, or other software tool, and the outcomes that they generate, including the percentage of denials or modifications of treatment in relation to the total number of requests for the same or similar health care treatment.
(c)(3) 5 Ensure that patientPatientPATIENT. An insured individual enrolled in a health benefit plan.Section 1(a)(4) data used in utilization review or utilization management functions by artificial intelligenceArtificial intelligenceARTIFICIAL INTELLIGENCE. A machine-based system that may include software or physical hardware that performs tasks, based upon data set inputs, which require human-like perception, cognition, planning, learning, communication, or physical action and which is capable of improving performance based upon learned experience without significant human oversight toward influencing real or virtual environments.Section 1(a)(1), an algorithm, or other software tool is not used beyond its intended and stated purpose consistent with the federal Health Insurance Portability and Accountability Act (HIPAA), 42 U.S.C. § 1320d et seq.
Section 1(c) imposes three distinct ongoing obligations on insurers. First, insurers must make prominent written disclosure to both enrollees and contracted health care providers that AI is used in utilization management or review for medical necessity determinations. Second, insurers must periodically review the performance of their AI tools, specifically tracking denial and modification rates relative to total requests for the same or similar treatments. Third, patient data used by AI in utilization review must not be used beyond its intended and stated purpose, consistent with HIPAA.
The disclosure obligation is notable for its dual audience — both patients and providers must be notified — and for requiring the disclosure to be prominent rather than merely available in plan documents.
(d) 6 A personPersonPERSON. The term includes, but is not limited to, an individual, corporation, limited liability company, partnership, unincorporated association, trust, or any other legal entity.Section 1(a)(5) who is injured by a violation of this section may bring a civil action in a court of competent jurisdiction in the county in which the injury occurred against an insurerInsurerINSURER. Any entity that issues, delivers, or renews a health benefit plan, or performs utilization management or utilization review for a health benefit plan, including an insurer regulated pursuant to Title 27, Code of Alabama 1975, a health maintenance organization established under Chapter 21A of Title 27, Code of Alabama 1975, a health care service corporation established under Article 6, Chapter 20, Title 10A, Code of Alabama 1975, or a pharmacy benefits manager regulated under Chapter 45A, Title 27, Code of Alabama 1975.Section 1(a)(3) or contractor for compensatory or punitive damages, injunctive relief, and reasonable costs and attorney fees.
Section 1(d) creates a private right of action for any person injured by a violation of the act. Suit may be brought in the county where the injury occurred against the insurer or its contractor. Available remedies include compensatory damages, punitive damages, injunctive relief, and reasonable costs and attorney fees. The provision does not specify statutory minimums or maximums, and recovery of compensatory damages requires proof of injury.
(e) The Alabama Department of Insurance may adopt rules to enforce this section.
Section 1(e) grants the Alabama Department of Insurance permissive rulemaking authority to enforce the act. This is a delegation of regulatory power rather than a compliance obligation on insurers.
This act shall become effective on October 1, 2025.
Section 2 sets an effective date of October 1, 2025 for the act.