Regulon.AI — MT-HB-556 · MT HB 556 (AI in Health Insurance)

Summary

Regulates the use of artificial intelligence, algorithms, and software tools by health insurance issuers for utilization review and utilization management functions in Montana. Requires that AI tools base determinations on individualized clinical data rather than solely group datasets, prohibits AI from supplanting healthcare provider decision-making or making medical necessity determinations, mandates non-discrimination and periodic performance review, restricts patient data use consistent with HIPAA, and requires written disclosure policies. Amends Montana's unfair claim settlement practices statute to make non-compliant AI use a prohibited practice. Enforcement is through the Commissioner of Securities and Insurance with penalties under Title 33.

Enforcement & Penalties

Enforcement Authority

Montana Commissioner of Securities and Insurance enforces via penalties under Title 33, chapter 18. Section 2 amends the unfair claim settlement practices statute (§ 33-18-201) to add non-compliant AI use as a prohibited practice, making violations enforceable through the same administrative and regulatory mechanisms applicable to other unfair claim settlement practices. No private right of action is explicitly created by this bill, though existing Montana insurance law remedies under Title 33 may apply.

Penalties

Penalties imposed by the commissioner, including but not limited to those available under Title 33, chapter 18 (unfair trade practices). The bill does not specify a dollar amount or create new remedy categories; it incorporates existing commissioner penalty authority. Violation also constitutes an unfair claim settlement practice under § 33-18-201(15), subjecting the issuer to penalties and enforcement available under that framework.

Who Is Covered

Compliance Obligations 11 obligations · click obligation ID to open requirement page

HC-01 Healthcare AI Decision Restrictions · HC-01.3 · Deployer · HealthcareFinancial Services

Section 1(1)(a)-(b)

Plain Language

Health insurance issuers using AI, algorithms, or software tools for utilization review or utilization management must ensure these tools base determinations on the individual enrollee's medical history, the requesting provider's presentation of clinical circumstances, and other relevant clinical information from the enrollee's record. The tools may not base determinations solely on aggregate or group-level datasets. This means insurers must configure and validate their AI tools to ingest and consider individualized patient data for each determination, not rely on population-level statistical outputs alone.

Statutory Text

(a) the artificial intelligence, algorithm, or other software tool bases its determination on the following information, as applicable: (i) a covered person'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 covered person's medical or other clinical record; (b) the artificial intelligence, algorithm, or other software tool does not base its determination solely on a group dataset;

HC-01 Healthcare AI Decision Restrictions · HC-01.1 HC-01.2 · Deployer · HealthcareFinancial Services

Section 1(2)

Plain Language

AI tools are categorically prohibited from denying, delaying, or modifying healthcare services based on medical necessity — even partially. Medical necessity determinations must be made exclusively by a licensed physician or licensed healthcare professional who is clinically competent in the relevant specialty. That professional must review and consider the treating provider's recommendation, the enrollee's medical and clinical history, and the enrollee's individual clinical circumstances. This provision supersedes the general requirements of subsection (1) and establishes an absolute bar: AI cannot make or contribute to medical necessity decisions.

Statutory Text

Notwithstanding subsection (1), the artificial intelligence, algorithm, or other software tool may not deny, delay, or modify health care services based, in whole or in part, on medical necessity. A determination of medical necessity must be made only by a licensed physician or a licensed health care professional competent to evaluate the specific clinical issues involved in the health care services requested by the provider, as provided in subsection (1)(a)(ii), by reviewing and considering the requesting provider's recommendation, the enrollee's medical or other clinical history, as applicable, and individual clinical circumstances.

HC-01 Healthcare AI Decision Restrictions · HC-01.4 · Deployer · HealthcareFinancial Services

Section 1(1)(i)

Plain Language

Health insurance issuers must periodically review and revise the performance, use, and outcomes of AI tools used in utilization review to maximize accuracy and reliability. The statute does not specify the frequency of review, but it is a continuing obligation — not a one-time pre-deployment check. Issuers should establish a documented review cadence and be prepared to demonstrate compliance to the commissioner.

Statutory Text

the artificial intelligence, algorithm, or other software tool's performance, use, and outcomes are periodically reviewed and revised to maximize accuracy and reliability;

HC-01 Healthcare AI Decision Restrictions · HC-01.5 · Deployer · HealthcareFinancial Services

Section 1(1)(j)

Plain Language

Patient data used by AI tools in utilization review or utilization management must not be repurposed beyond its intended and stated purpose. This obligation is explicitly aligned with HIPAA and Montana insurance law (Title 33). Issuers must ensure their AI tools do not use patient data collected for coverage determinations for secondary purposes such as marketing, risk profiling for other products, or model training beyond the stated utilization review function.

Statutory Text

patient data is not used beyond its intended and stated purpose, consistent with the federal Health Insurance Portability and Accountability Act of 1996, Public Law 104-191, and this title, as applicable;

HC-01 Healthcare AI Decision Restrictions · HC-01.7 · Deployer · HealthcareFinancial Services

Section 1(1)(g)-(h)

Plain Language

Health insurance issuers must make their AI tools available for inspection, audit, and compliance review by the Montana Department of Insurance pursuant to applicable law. Additionally, issuers must document disclosures regarding the use and oversight of AI tools in their written policies and procedures. This creates both a regulatory accessibility obligation and a documentation obligation — issuers must maintain written policies that describe how AI is used and overseen, and must permit the department to inspect the AI tools themselves.

Statutory Text

(g) the artificial intelligence, algorithm, or other software tool is open to inspection for audit or compliance reviews by the department pursuant to applicable state and federal law; (h) disclosures pertaining to the use and oversight of the artificial intelligence, algorithm, or other software tool are contained in the written policies and procedures, as required by this section;

H-02 Non-Discrimination & Bias Assessment · Deployer · HealthcareFinancial Services

Section 1(1)(e)-(f)

Plain Language

AI tools used in utilization review must not discriminate directly or indirectly against enrollees in violation of state or federal law, including Montana's anti-discrimination statute (§ 49-2-309, which prohibits discrimination in insurance). The tools must also be fairly and equitably applied, in compliance with applicable HHS regulations and guidance. This imposes both a non-discrimination obligation tied to existing protected-class frameworks and a broader fairness requirement that incorporates evolving federal guidance. Issuers should monitor HHS rulemaking for AI-specific fairness standards.

Statutory Text

(e) the use of the artificial intelligence, algorithm, or other software tool does not discriminate, directly or indirectly, against enrollees in violation of state or federal law, including 49-2-309; (f) the artificial intelligence, algorithm, or other software tool is fairly and equitably applied, including in accordance with any applicable regulations and guidance issued by the federal department of health and human services;