WHAT THIS BILL REGULATES · 3 REQUIREMENT TYPES
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.
(1)(a)–(f) The general assembly finds and declares that: (a) Health-care decisions affect the most intimate, complex, and consequential aspects of human life, including physical survival, mental well-being, family stability, and personal dignity, and therefore must be grounded in compassion, clinical judgment, and individualized understanding; (b) Artificial intelligence systemsArtificial intelligence system"Artificial intelligence system" has the meaning set forth in section 6-1-1701 (2).C.R.S. § 10-16-112.7(1)(a) may offer valuable tools to support efficiency, data analysis, and administrative functions in health-care delivery; however, these systems cannot comprehend the full breadth and depth of the human experience, including trauma, culture, disability, grief, fear, hope, and the lived realities that shape patient health outcomes; (c) The state of Colorado has a compelling interest in ensuring that health care remains human-centered and that decisions involving coverage determinations, medical necessity, and access to treatment, particularly denials of care, are made by qualified human clinicians or physicians who are accountable for these decisions and can exercise professional judgment and ethical reasoning; (d) Reliance on artificial intelligence systemsArtificial intelligence system"Artificial intelligence system" has the meaning set forth in section 6-1-1701 (2).C.R.S. § 10-16-112.7(1)(a) to make or materially influence adverse health-care determinations without meaningful human oversight risks compounding inequities, embedding bias, and eroding trust between patients, providers, and health-care systems; (e) Artificial intelligence systemsArtificial intelligence system"Artificial intelligence system" has the meaning set forth in section 6-1-1701 (2).C.R.S. § 10-16-112.7(1)(a) may be used as an assistive tool in health-care delivery and administration but must not replace human judgment, human accountability, or the therapeutic relationship that is essential to safe, ethical, and effective care; and (f) Every Coloradan, regardless of income, insurance status, disability, language access needs, race, ethnicity, geography, or immigration status, deserves access to human-centered health care that recognizes their dignity, individuality, and humanity.
(2)(a)–(c) Therefore, the general assembly declares that it is essential to: (a) Regulate the use of artificial intelligence systemsArtificial intelligence system"Artificial intelligence system" has the meaning set forth in section 6-1-1701 (2).C.R.S. § 10-16-112.7(1)(a) in health care to ensure transparency, accountability, equity, and patient safety; (b) Prohibit automated systems from making adverse coverage determinations without qualified human review; and (c) Preserve the central role of licensed clinicians in decisions that affect the health, well-being, and lives of Coloradans.
Section 1 sets forth the General Assembly's findings regarding the role of AI in health care. It declares that health-care decisions must be grounded in compassion, clinical judgment, and individualized understanding, and that AI systems must not replace human judgment, accountability, or the therapeutic relationship. These are legislative findings that create no independent compliance obligations.
(1)(a)–(d) As used in this section: (a) "Artificial intelligence systemArtificial intelligence system"Artificial intelligence system" has the meaning set forth in section 6-1-1701 (2).C.R.S. § 10-16-112.7(1)(a)" has the meaning set forth in section 6-1-1701 (2). (b) "Behavioral health administrative services organizationBehavioral health administrative services organization"Behavioral health administrative services organization" means an organization selected by the behavioral health administration pursuant to section 27-50-402 to establish and maintain a network of behavioral health providers.C.R.S. § 10-16-112.7(1)(b)" means an organization selected by the behavioral health administration pursuant to section 27-50-402 to establish and maintain a network of behavioral heath providers. (c) "Managed care entityManaged care entity"Managed care entity" has the meaning set forth in section 25.5-5-403 (4).C.R.S. § 10-16-112.7(1)(c)" has the meaning set forth in section 25.5-5-403 (4). (d) "Private utilization review organizationPrivate utilization review organization"Private utilization review organization" or "organization" means a private utilization review organization, as defined in section 10-16-112 (1)(a), that has a contract with or performs prior authorization on behalf of a carrier.C.R.S. § 10-16-112.7(1)(d)" or "organization" means a private utilization review organizationPrivate utilization review organization"Private utilization review organization" or "organization" means a private utilization review organization, as defined in section 10-16-112 (1)(a), that has a contract with or performs prior authorization on behalf of a carrier.C.R.S. § 10-16-112.7(1)(d), as defined in section 10-16-112 (1)(a), that has a contract with or performs prior authorization on behalf of a carrier.
(2)(a)–(c) Utilization review. Subsections (3), (4), and (5) of this section apply to: (a) A carrier that: (I) Uses an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" has the meaning set forth in section 6-1-1701 (2).C.R.S. § 10-16-112.7(1)(a) for the purpose of utilization review; or (II) Contracts with or otherwise works through a person that uses an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" has the meaning set forth in section 6-1-1701 (2).C.R.S. § 10-16-112.7(1)(a) for the purpose of utilization review; (b) A pharmacy benefit manager or private utilization review organizationPrivate utilization review organization"Private utilization review organization" or "organization" means a private utilization review organization, as defined in section 10-16-112 (1)(a), that has a contract with or performs prior authorization on behalf of a carrier.C.R.S. § 10-16-112.7(1)(d) that contracts with a carrier to provide utilization review services on behalf of the carrier and uses an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" has the meaning set forth in section 6-1-1701 (2).C.R.S. § 10-16-112.7(1)(a) for the purpose of conducting the utilization review; and (c) A behavioral health administrative services organizationBehavioral health administrative services organization"Behavioral health administrative services organization" means an organization selected by the behavioral health administration pursuant to section 27-50-402 to establish and maintain a network of behavioral health providers.C.R.S. § 10-16-112.7(1)(b) or managed care entityManaged care entity"Managed care entity" has the meaning set forth in section 25.5-5-403 (4).C.R.S. § 10-16-112.7(1)(c) that uses an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" has the meaning set forth in section 6-1-1701 (2).C.R.S. § 10-16-112.7(1)(a) for the purpose of conducting utilization review of mental or behavioral health services.
(3)(a) 1 A person described in subsection (2) of this section that uses an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" has the meaning set forth in section 6-1-1701 (2).C.R.S. § 10-16-112.7(1)(a) to conduct utilization review shall ensure that: (a) The artificial intelligence systemArtificial intelligence system"Artificial intelligence system" has the meaning set forth in section 6-1-1701 (2).C.R.S. § 10-16-112.7(1)(a) bases its determination on the following information, as applicable: (I) An individual's medical or other clinical history; (II) Individual clinical circumstances as presented by the requesting provider; and (III) Other relevant clinical information contained in the individual's medical or other clinical record;
(3)(b) 2 The artificial intelligence systemArtificial intelligence system"Artificial intelligence system" has the meaning set forth in section 6-1-1701 (2).C.R.S. § 10-16-112.7(1)(a) does not base its determinations solely on group data, without reference to the individual's data;
(3)(c)–(d) 3 The artificial intelligence systemArtificial intelligence system"Artificial intelligence system" has the meaning set forth in section 6-1-1701 (2).C.R.S. § 10-16-112.7(1)(a) is not used in any way that discriminates against individuals in violation of other state or federal laws; (d) The artificial intelligence systemArtificial intelligence system"Artificial intelligence system" has the meaning set forth in section 6-1-1701 (2).C.R.S. § 10-16-112.7(1)(a) is fairly and equitably applied, including in accordance with applicable regulations and guidance issued by the federal department of health and human services;
(3)(e) 4 The artificial intelligence systemArtificial intelligence system"Artificial intelligence system" has the meaning set forth in section 6-1-1701 (2).C.R.S. § 10-16-112.7(1)(a) produces and retains documentation, audit logs, and model-governance records in order to demonstrate compliance with this section and section 10-3-1104.9;
(3)(f) 5 The artificial intelligence systemArtificial intelligence system"Artificial intelligence system" has the meaning set forth in section 6-1-1701 (2).C.R.S. § 10-16-112.7(1)(a)'s performance, use, and outcomes are periodically reviewed to maximize accuracy and reliability;
(3)(g) 6 An individual's health data is not used beyond its intended or stated purpose, consistent with applicable state and federal laws;
(3)(h) The artificial intelligence systemArtificial intelligence system"Artificial intelligence system" has the meaning set forth in section 6-1-1701 (2).C.R.S. § 10-16-112.7(1)(a)'s or algorithm's criteria and guidelines comply with other applicable state or federal laws concerning utilization review and coverage for health-care services.
(4)(a)–(d) 7 A person described in subsection (2) of this section shall provide written disclosures to the division, the department of human services, or the department of health care policy and financing, as applicable, that identify: (a) The utilization review functions for which the artificial intelligence systemArtificial intelligence system"Artificial intelligence system" has the meaning set forth in section 6-1-1701 (2).C.R.S. § 10-16-112.7(1)(a) will be used; (b) The points in the utilization review process when the artificial intelligence systemArtificial intelligence system"Artificial intelligence system" has the meaning set forth in section 6-1-1701 (2).C.R.S. § 10-16-112.7(1)(a) is used; (c) The human oversight process, including the qualifications of the reviewer and whether the a human must approve an adverse determination; and (d) The process for maintaining audit information sufficient to demonstrate compliance with subsection (3) of this section.
(5)(a)–(b) 8 Notwithstanding subsection (3) of this section, an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" has the meaning set forth in section 6-1-1701 (2).C.R.S. § 10-16-112.7(1)(a) may be used to assist with utilization review, including expedited approvals. (b) A carrier's denial of coverage based in whole or in part on medical necessity shall not be issued solely on the output of an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" has the meaning set forth in section 6-1-1701 (2).C.R.S. § 10-16-112.7(1)(a) without human review and approval of the denial by a licensed clinician, licensed physician, or other regulated professional that is competent to evaluate the specific clinical issues involved in the health-care services requested by the provider and a review of the health benefit plan's terms of coverage for the health-care service.
(6)(a)–(c) 9 Prohibition on payment for AI-delivered psychotherapy services. (a) A carrier offering a health benefit plan issued or renewed in the state on or after the effective date of this section shall not provide coverage for services that constitute psychotherapy services, as defined in section 12-245-202 (14), that are provided directly to an individual and that are conducted by an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" has the meaning set forth in section 6-1-1701 (2).C.R.S. § 10-16-112.7(1)(a). (b) Subsection (6)(a) of this section does not prohibit the use of billing software, electronic health records, video platforms, or other nontherapeutic software tools incident to services provided by a human provider. (c) The use of videoconferencing, messaging platforms, or other communications software to enable supervision or consultation by a licensed, registered, or certified individual does not constitute supervision or consultation that is conducted by an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" has the meaning set forth in section 6-1-1701 (2).C.R.S. § 10-16-112.7(1)(a), as referenced in subsection (6)(a) of this section.
Section 10-16-112.7 is the bill's operative core, imposing requirements on carriers, pharmacy benefit managers, private utilization review organizations, behavioral health administrative services organizations, and managed care entities that use AI systems for utilization review. The section establishes multiple overlapping obligations: AI systems must base determinations on individual patient clinical data (not solely group data), must not discriminate, must be fairly and equitably applied, must produce and retain compliance documentation, must be periodically reviewed for accuracy, and must not use patient health data beyond its intended purpose.
Subsection (5) is a critical gatepost: AI may assist with utilization review including expedited approvals, but any denial based in whole or in part on medical necessity must receive human review and approval by a licensed clinician competent to evaluate the specific clinical issues. Subsection (4) requires written disclosures to the applicable state regulatory body identifying AI functions, human oversight processes, and audit procedures.
Subsection (6) creates a separate prohibition: carriers may not provide coverage for psychotherapy services provided directly to an individual and conducted by an AI system, with carve-outs for billing software, EHR, video platforms, and other nontherapeutic software tools incident to services provided by a human provider.
10 A payer of mental or behavioral health-care services provided under the "Colorado Medical Assistance Act", as specified in articles 4, 5, and 6 of this title 25.5, or the "Children's Basic Health Plan Act", as specified in article 8 of this title 25.5, shall not pay for services that constitute psychotherapy services, as defined in section 12-245-202 (14), that are provided directly to an individual and that are conducted by an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" has the meaning set forth in section 6-1-1701 (2).C.R.S. § 10-16-112.7(1)(a), as that term is defined in section 10-16-112.7 (1)(b).
Section 25.5-1-209 extends the prohibition on paying for AI-delivered psychotherapy services to payers under the Colorado Medical Assistance Act (Medicaid) and the Children's Basic Health Plan Act (CHP+). This mirrors the carrier prohibition in § 10-16-112.7(6) but applies to public health programs rather than private insurance.
(1)–(2) This act takes effect January 1, 2027; except that, if a referendum petition is filed pursuant to section 1 (3) of article V of the state constitution against this act or an item, section, or part of this act within the ninety-day period after final adjournment of the general assembly, then the act, item, section, or part will not take effect unless approved by the people at the general election to be held in November 2026 and, in such case, will take effect January 1, 2027, or on the date of the official declaration of the vote thereon by the governor, whichever is later. (2) This act applies to actions taken on or after the applicable effective date of this act.
Section 4 sets the effective date at January 1, 2027, subject to a referendum petition provision under the Colorado Constitution. If a referendum petition is filed within ninety days of final adjournment, the act will take effect only if approved by voters in November 2026. The act applies to actions taken on or after the effective date.