Laws & Statutes › SD › SD-SB-169
SB-169
SD · State · USA
SD
USA
● Pending
Proposed Effective Date
2026-07-01
South Dakota Senate Bill 169 — An Act to place requirements on the use of artificial intelligence systems by health carriers in making determinations about the provision of health care services
Requires health carriers in South Dakota that use artificial intelligence, algorithms, or other software tools for utilization review — including those that contract with entities using such tools — to ensure that AI determinations are based on individualized patient clinical data rather than solely on group datasets, and that the tools are applied consistently across all patients and subscriber groups. Prohibits AI tools from independently denying, delaying, or modifying health care service determinations; adverse determinations must be made by a licensed physician or competent healthcare professional after individual clinical review. Health carriers must submit annual reports to the Executive Board of the Legislative Research Council describing their AI usage in utilization review and the degree of human oversight. The Division of Insurance may inspect carrier systems at any time and refer noncompliance to the Attorney General for cease and desist action.
Passage Likelihood
Low
Chamber No passage
Committee No action
Majority party (No data)
Bipartisan No
Prior session None
Legislative History
2026-01-29 committee referral First read in Senate and referred to Senate Health and Human Services S.J. 139
2026-02-17 other Withdrawn at the Request of the Prime Sponsor S.J. 272
Mapped Requirements
HC-01 Healthcare AI Decision Restrictions R-02 Regulatory Disclosure & Submissions
Official Sources
Full Text ↗
Entry Last Reviewed
2026-04-01
AI generated
Summary

Requires health carriers in South Dakota that use artificial intelligence, algorithms, or other software tools for utilization review — including those that contract with entities using such tools — to ensure that AI determinations are based on individualized patient clinical data rather than solely on group datasets, and that the tools are applied consistently across all patients and subscriber groups. Prohibits AI tools from independently denying, delaying, or modifying health care service determinations; adverse determinations must be made by a licensed physician or competent healthcare professional after individual clinical review. Health carriers must submit annual reports to the Executive Board of the Legislative Research Council describing their AI usage in utilization review and the degree of human oversight. The Division of Insurance may inspect carrier systems at any time and refer noncompliance to the Attorney General for cease and desist action.

Enforcement & Penalties
Enforcement Authority
The Division of Insurance may inspect a health carrier's automated system at any time to ensure compliance. If the Division determines noncompliance, it shall notify the Attorney General, who may direct the health carrier to cease and desist from further noncompliant activities. No private right of action is created. Enforcement is agency-initiated through inspection and referral to the Attorney General.
Penalties
The bill specifies only cease and desist authority directed by the Attorney General. No monetary penalties, civil penalties, statutory damages, or other remedies are enumerated in the bill text.
Who Is Covered
Compliance Obligations 5 obligations · click obligation ID to open requirement page
HC-01 Healthcare AI Decision Restrictions · HC-01.3 · Deployer · Healthcare
Section 1(1)-(2)
Plain Language
Health carriers using AI, algorithms, or other software tools for utilization review — whether directly or through contracted entities — must ensure that each determination is based on the individual patient's medical history, individual clinical circumstances as presented by the requesting provider, and other relevant clinical information in the patient's record. The tools may not base determinations solely on aggregate or group-level datasets. This applies to both the carrier's own tools and those of any entity with which the carrier contracts for utilization review.
Statutory Text
Any health carrier that makes determinations or provides advice about third-party payment for any health care services using an artificial intelligence, algorithm, or other software tool, for the purpose of utilization review and any health carrier that contracts with or otherwise works through an entity that uses an artificial intelligence, algorithm, or other software tool, for the purpose of utilization review, shall ensure the following: (1) The artificial intelligence, algorithm, or other software tool bases its determination on the following information, as applicable: (a) A patient's medical or other clinical history; (b) Individual clinical circumstances, as presented by the requesting provider; and (c) Other relevant clinical information contained in the patient's medical or other clinical record; (2) The artificial intelligence, algorithm, or other software tool does not base its determination solely on a group dataset;
HC-01 Healthcare AI Decision Restrictions · Deployer · Healthcare
Section 1(3)-(4)
Plain Language
Health carriers must ensure their AI utilization review tools are applied equally and consistently for all patients and across all subscriber groups and individuals covered by a health benefit plan. The tools must be configured so that patients with similar clinical presentations receive the same decisions, and the tools must comply with applicable HHS regulations and guidance. This is a non-discrimination and consistency requirement specific to healthcare AI utilization review that has no precise sub-obligation match in the taxonomy.
Statutory Text
(3) The artificial intelligence, algorithm, or other software tool is applied equally for all patients, including in accordance with any applicable regulations and guidance issued by the United States Department of Health and Human Services; and (4) The artificial intelligence, algorithm, or other software tool is configured and applied in a standard consistent manner for all subscriber groups and individuals covered by a health benefit plan, as defined in § 58-17-66, so that the resulting decisions are the same for all patients with similar clinical presentations and considerations.
HC-01 Healthcare AI Decision Restrictions · HC-01.1HC-01.2 · Deployer · Healthcare
Section 2
Plain Language
AI tools used for utilization review are categorically prohibited from independently denying, delaying, or modifying determinations about health care services. Every adverse determination must be made by a licensed physician or a licensed healthcare professional with competence in the specific clinical area at issue. That human reviewer must consider the requesting provider's recommendation, the patient's medical history, and the individual clinical circumstances before making the adverse determination. This is an absolute prohibition on AI-only adverse decisions — not merely a requirement for human review upon appeal.
Statutory Text
An artificial intelligence, algorithm, or other software tool used for the purpose of utilization review pursuant to section 1 of this Act may not deny, delay, or modify a determination to provide health care services. Any adverse determination may be made only by a licensed physician or a licensed healthcare professional competent to evaluate the specific clinical issues involved in the requested services, and only after reviewing and considering the requesting provider's recommendation, the patient's medical or other clinical history as applicable, and individual clinical circumstances.
R-02 Regulatory Disclosure & Submissions · R-02.1 · Deployer · Healthcare
Section 3
Plain Language
Health carriers using AI for utilization review — directly or through contracted entities — must compile and submit an annual report to the Executive Board of the Legislative Research Council by December 1 each year. The report must detail how AI tools were used in the utilization review process during the preceding fiscal year, including the nature and degree of human review and oversight applied to affirm or negate determinations. This is a legislative oversight submission rather than a regulatory-agency filing — the recipient is the Executive Board of the Legislative Research Council, not the Division of Insurance.
Statutory Text
Any health carrier that makes determinations or provides advice about third-party payment for any health care services using an artificial intelligence, algorithm, or other software tool for the purpose of utilization review or that contracts with or otherwise works through an entity that uses an artificial intelligence, algorithm, or other software tool for the purpose of utilization review shall compile an annual report detailing how, during the preceding fiscal year, the artificial intelligence, algorithm, or other software tool was used in the utilization review process and the nature and degree of human review and oversight that was used to afform or negate any determinations. The report must be forwarded to the Executive Board of the Legislative Research Council on or before December first of each year.
R-02 Regulatory Disclosure & Submissions · R-02.2 · Deployer · Healthcare
Section 4
Plain Language
The Division of Insurance has authority to inspect a health carrier's automated utilization review system at any time — no notice or triggering event is required. This means health carriers must maintain their AI systems and associated documentation in a state that can withstand regulatory inspection on demand. If the Division finds noncompliance, it must notify the Attorney General, who may then direct the carrier to cease and desist from noncompliant activities. This provision creates the enforcement mechanism for the substantive requirements in Sections 1 and 2 but also imposes an implicit readiness obligation — carriers must be able to demonstrate compliance upon inspection.
Statutory Text
The Division of Insurance may, at any time, inspect a health carrier's automated system to ensure that the health carrier's use of artificial intelligence, algorithms, or other software tools is in compliance with sections 1 and 2 of this Act. If the division determines that the automated system is not in compliance, the division shall notify the attorney general who may direct the health carrier to cease and desist from engaging in further noncompliant activities.