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.
(a)(1)–(4) As used in this section, the following terms shall have the following meanings: (1) "Adverse determinationAdverse determination"Adverse determination" shall have the same meaning as such term is defined in section four thousand nine hundred of the public health law.Ins. Law § 338(a)(1)" shall have the same meaning as such term is defined in section four thousand nine hundred of the public health law. (2) "Artificial intelligence-based algorithmArtificial intelligence-based algorithm"Artificial intelligence-based algorithm" means any artificial system that performs tasks under varying and unpredictable circumstances without significant human oversight or that can learn from experience and improve performance when exposed to data sets.Ins. Law § 338(a)(2)" means any artificial system that performs tasks under varying and unpredictable circumstances without significant human oversight or that can learn from experience and improve performance when exposed to data sets. (3) "Clinical peer reviewerClinical peer reviewer"Clinical peer reviewer" shall have the same meaning as such term is defined in section four thousand nine hundred of the public health law.Ins. Law § 338(a)(3)" shall have the same meaning as such term is defined in section four thousand nine hundred of the public health law. (4) "Utilization reviewUtilization review"Utilization review" shall have the same meaning as such term is defined in section forty-nine hundred of the public health law.Ins. Law § 338(a)(4)" shall have the same meaning as such term is defined in section forty-nine hundred of the public health law.
Subsection (a) establishes the definitional framework for the new section. It defines four key terms: adverse determination, artificial intelligence-based algorithm, clinical peer reviewer, and utilization review. The first, third, and fourth terms incorporate by reference the existing definitions in Section 4900 of the Public Health Law. The AI algorithm definition is original to this bill and is notably broad — it covers any artificial system that either performs tasks under varying circumstances without significant human oversight or that can learn from experience and improve with data.
(b) 1 The superintendent shall require all insurersInsurerAn insurer authorized to write accident and health insurance in this state, a corporation organized pursuant to article forty-three of this chapter, or a health maintenance organization certified pursuant to article forty-four of the public health law.Ins. Law § 338(b) authorized to write accident and health insurance in this state, corporations organized pursuant to article forty-three of this chapter, and a health maintenance organization certified pursuant to article forty-four of the public health law to notify insureds and enrollees about the use or lack of use of artificial intelligence-based algorithmsArtificial intelligence-based algorithm"Artificial intelligence-based algorithm" means any artificial system that performs tasks under varying and unpredictable circumstances without significant human oversight or that can learn from experience and improve performance when exposed to data sets.Ins. Law § 338(a)(2) in the utilization reviewUtilization review"Utilization review" shall have the same meaning as such term is defined in section forty-nine hundred of the public health law.Ins. Law § 338(a)(4) process on the accessible Internet website of such insurerInsurerAn insurer authorized to write accident and health insurance in this state, a corporation organized pursuant to article forty-three of this chapter, or a health maintenance organization certified pursuant to article forty-four of the public health law.Ins. Law § 338(b) authorized to write accident and health insurance in this state, corporation organized pursuant to article forty-three of this chapter, or health maintenance organization certified pursuant to article forty-four of the public health law.
Subsection (b) requires the Superintendent to mandate that all covered health insurers, Article 43 corporations, and HMOs notify insureds and enrollees about the use or lack of use of AI-based algorithms in the utilization review process. The notification must appear on the entity's publicly accessible website. This is a transparency obligation directed at consumers, but it is structured as a directive to the Superintendent to impose the requirement — making it both a regulatory-authority mandate and an operator disclosure duty.
(c) 2 Every insurerInsurerAn insurer authorized to write accident and health insurance in this state, a corporation organized pursuant to article forty-three of this chapter, or a health maintenance organization certified pursuant to article forty-four of the public health law.Ins. Law § 338(b) authorized to write accident and health insurance in this state, corporation organized pursuant to article forty-three of this chapter, and health maintenance organization certified pursuant to article forty-four of the public health law shall submit the artificial intelligence-based algorithmsArtificial intelligence-based algorithm"Artificial intelligence-based algorithm" means any artificial system that performs tasks under varying and unpredictable circumstances without significant human oversight or that can learn from experience and improve performance when exposed to data sets.Ins. Law § 338(a)(2) and training data sets that are being used or will be used in the utilization reviewUtilization review"Utilization review" shall have the same meaning as such term is defined in section forty-nine hundred of the public health law.Ins. Law § 338(a)(4) process to the department. The department shall implement a process that allows the department to certify that these artificial intelligence-based algorithmsArtificial intelligence-based algorithm"Artificial intelligence-based algorithm" means any artificial system that performs tasks under varying and unpredictable circumstances without significant human oversight or that can learn from experience and improve performance when exposed to data sets.Ins. Law § 338(a)(2) and training data sets have minimized the risk of bias based on the covered person's race, color, religious creed, ancestry, age, sex, gender, national origin, handicap or disability and adhere to evidence-based clinical guidelines.
Subsection (c) imposes a dual obligation. First, covered entities must submit their AI-based algorithms and training datasets used (or to be used) in utilization review to the Department of Financial Services. Second, the Department must implement a certification process to verify that the submitted algorithms and training data minimize bias across a broad set of protected characteristics — race, color, religious creed, ancestry, age, sex, gender, national origin, handicap, and disability — and adhere to evidence-based clinical guidelines. This is both a regulatory submission obligation on insurers and a bias-certification mandate directed at the Department.
(d) 4 A clinical peer reviewerClinical peer reviewer"Clinical peer reviewer" shall have the same meaning as such term is defined in section four thousand nine hundred of the public health law.Ins. Law § 338(a)(3) who participates in a utilization reviewUtilization review"Utilization review" shall have the same meaning as such term is defined in section forty-nine hundred of the public health law.Ins. Law § 338(a)(4) process for an insurerInsurerAn insurer authorized to write accident and health insurance in this state, a corporation organized pursuant to article forty-three of this chapter, or a health maintenance organization certified pursuant to article forty-four of the public health law.Ins. Law § 338(b) authorized to write accident and health insurance in this state, a corporation organized pursuant to article forty-three of this chapter, and a health maintenance organization certified pursuant to article forty-four of the public health law that initially uses artificial intelligence-based algorithmsArtificial intelligence-based algorithm"Artificial intelligence-based algorithm" means any artificial system that performs tasks under varying and unpredictable circumstances without significant human oversight or that can learn from experience and improve performance when exposed to data sets.Ins. Law § 338(a)(2) for a utilization reviewUtilization review"Utilization review" shall have the same meaning as such term is defined in section forty-nine hundred of the public health law.Ins. Law § 338(a)(4) shall open and document the utilization review of the individual clinical records or data prior to issuing an adverse determinationAdverse determination"Adverse determination" shall have the same meaning as such term is defined in section four thousand nine hundred of the public health law.Ins. Law § 338(a)(1).
Subsection (d) requires that when a covered insurer initially uses an AI-based algorithm for utilization review, a clinical peer reviewer must open and document a review of the individual's clinical records or data before issuing an adverse determination. This is a human-in-the-loop requirement ensuring that no adverse determination arising from an AI-initiated review proceeds without individualized clinical review by a qualified peer.
(e)(1)(i) A violation of the provisions of this section shall be subject to one or more of the following penalties at the discretion of the superintendent, in consultation with the commissioner of health and the commissioner of education as applicable: (i) Where a violation is made by an insurerInsurerAn insurer authorized to write accident and health insurance in this state, a corporation organized pursuant to article forty-three of this chapter, or a health maintenance organization certified pursuant to article forty-four of the public health law.Ins. Law § 338(b) authorized to write accident and health insurance in this state, a corporation organized pursuant to article forty-three of this chapter, or a health maintenance organization certified pursuant to article forty-four of the public health law: (A) Suspension or revocation of license; (B) Refusal, for a period not to exceed one year, to issue a new license; (C) A fine of not more than $5,000 for each violation of this section; or (D) A fine of not more than $10,000 for each willful violation of this section. Fines imposed pursuant to the provisions of this subparagraph on a single insurerInsurerAn insurer authorized to write accident and health insurance in this state, a corporation organized pursuant to article forty-three of this chapter, or a health maintenance organization certified pursuant to article forty-four of the public health law.Ins. Law § 338(b) authorized to write accident and health insurance in this state, a corporation organized pursuant to article forty-three of this chapter, or a health maintenance organization certified pursuant to article forty-four of the public health law shall not exceed five hundred thousand dollars in aggregate during a calendar year.
(e)(1)(ii) Where a violation is made by a clinical peer reviewerClinical peer reviewer"Clinical peer reviewer" shall have the same meaning as such term is defined in section four thousand nine hundred of the public health law.Ins. Law § 338(a)(3): (A) Suspension or revocation of license; (B) Refusal, for a period not to exceed one year, to issue a new license; (C) A fine of not more than $5,000 for each violation of this section; or (D) A fine of not more than $10,000 for each willful violation of this section. Fines imposed pursuant to the provisions of this subparagraph on a single clinical peer reviewerClinical peer reviewer"Clinical peer reviewer" shall have the same meaning as such term is defined in section four thousand nine hundred of the public health law.Ins. Law § 338(a)(3) shall not exceed one hundred thousand dollars in aggregate during a calendar year.
(e)(2) Penalties pursuant to the provisions of this subsection shall be in addition to any other remedies or penalties that may be imposed under any other applicable law.
Subsection (e) establishes the penalty framework, distinguishing between violations by insurer entities and violations by individual clinical peer reviewers. For insurer entities, penalties include license suspension/revocation, refusal to issue a new license for up to one year, fines up to $5,000 per violation (or $10,000 per willful violation), with an aggregate annual cap of $500,000. For clinical peer reviewers, the same per-violation amounts apply but with a lower aggregate annual cap of $100,000. All penalties are at the superintendent's discretion. Paragraph (2) clarifies that these penalties are cumulative with any other applicable remedies.
(f) The superintendent shall promulgate all rules and regulations necessary for the implementation of this section.
Subsection (f) grants the Superintendent authority to promulgate all rules and regulations necessary for the implementation of the section. This is a standard delegation of rulemaking authority and creates no independent compliance obligation on covered entities.
This act shall take effect on the sixtieth day after it shall have become a law. Effective immediately, the addition, amendment and/or repeal of any rule or regulation necessary for the implementation of this act on its effective date are authorized to be made and completed on or before such effective date.
Section 2 provides that the act takes effect on the sixtieth day after becoming law. It also authorizes immediate commencement of rulemaking necessary for implementation, allowing the superintendent to begin drafting regulations before the effective date so that rules can be in place when the substantive requirements become operative.