WHAT THIS BILL REGULATES · 2 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.
(o) Violation. – In accordance with this Chapter, a violation of this section subjects an insurer and an agent of the insurer to G.S. 58-2-70.
(s) 1 Artificial Intelligence. – An insurer shall not use an artificial intelligence-based algorithm as the sole basis for a utilization review determination to, in whole or in part, deny, delay, or modify any healthcare services for an insured. Only individuals meeting the licensing and qualification requirements for participating in the utilization review process under this section shall make a determination regarding the medical necessity or appropriateness of any healthcare service. Insurers shall verify that all contracts with a third party, including with a pharmacy benefits manager, for conducting any utilization review are not in violation of this subsection.
Section 1 of the bill amends G.S. 58-50-61, North Carolina's utilization review statute, in two ways. First, it clarifies that both an insurer and an agent of the insurer are subject to the enforcement penalties in G.S. 58-2-70 for violations. Second, it adds new subsection (s), which creates an affirmative prohibition on using an AI-based algorithm as the sole basis for any utilization review determination that denies, delays, or modifies healthcare services. The subsection further requires that only licensed and qualified individuals may make medical necessity or appropriateness determinations, and that insurers must verify compliance in all third-party contracts, including those with pharmacy benefits managers.
The prohibition is notable for its scope: it reaches any AI-based algorithm used in the utilization review process, whether operated by the insurer directly or by a contracted third party. The third-party contract verification obligation is a distinct duty that places ongoing compliance monitoring responsibility on the insurer itself.
2 In accordance with G.S. 135-48.24(b) and G.S. 135-48.30(a)(7) which require the State Treasurer to implement procedures that are substantially similar to the provisions of G.S. 58-50-61 for the North Carolina State Health Plan for Teachers and State Employees (State Health Plan), the State Treasurer and the Executive Administrator of the State Health Plan shall review all practices of the State Health Plan and all contracts with, and practices of, any third party conducting any utilization review on behalf of the State Health Plan to ensure compliance with G.S. 58-50-61(s), as amended by Section 1 of this act.
Section 2 directs the State Treasurer and the Executive Administrator of the North Carolina State Health Plan for Teachers and State Employees to review all State Health Plan practices and all contracts with third parties conducting utilization review on behalf of the State Health Plan to ensure compliance with the new subsection (s). This obligation extends the bill's reach beyond private insurers to the state's own employee health plan, leveraging existing statutory authority under G.S. 135-48.24(b) and G.S. 135-48.30(a)(7) that requires the State Health Plan to implement procedures substantially similar to G.S. 58-50-61.
This act is effective 30 days after it becomes law.
Section 3 provides that the act takes effect 30 days after it becomes law. Because the bill has not yet been enacted, the specific effective date cannot be determined.