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.
(a) In this section, "artificial intelligenceArtificial intelligence"Artificial intelligence" means an engineered or machine-based system that varies in autonomy and may, for explicit or implicit objectives, infer from the input the system receives how to generate outputs that can influence physical or virtual environments.Ins. Code § 4201.156(a)" means an engineered or machine-based system that varies in autonomy and may, for explicit or implicit objectives, infer from the input the system receives how to generate outputs that can influence physical or virtual environments.
Subsection (a) defines artificial intelligence for purposes of the new section. The definition tracks the NIST-influenced formulation used in recent federal and state AI legislation — an engineered or machine-based system that varies in autonomy and infers from inputs how to generate outputs influencing physical or virtual environments. This broad definition captures not only machine-learning models but also rule-based algorithmic tools used in utilization review.
(b)(1) 1 A utilization review agentUtilization review agentA utilization review agent that uses an artificial intelligence-based algorithm or other software tool for utilization review.Ins. Code § 4201.156(b) that uses an artificial intelligenceArtificial intelligence"Artificial intelligence" means an engineered or machine-based system that varies in autonomy and may, for explicit or implicit objectives, infer from the input the system receives how to generate outputs that can influence physical or virtual environments.Ins. Code § 4201.156(a)-based algorithm or other software tool for utilization review shall ensure that: (1) the algorithm or tool bases its determination on the following information, as applicable: (A) an enrollee's medical or other clinical history; (B) individual clinical circumstances as presented by the provider of record; and (C) other relevant clinical information contained in the enrollee's medical or other clinical record;
(b)(2) 1 the algorithm or tool does not base its determination solely on a group dataset;
(b)(3) 2 the algorithm's or tool's criteria and guidelines comply with this chapter and applicable state and federal law;
(b)(4) 3 the algorithm or tool does not override the decision making of a physician or health care provider;
(b)(5)–(6) 4 the use of the algorithm or tool does not discriminate, directly or indirectly, against enrollees in violation of state or federal law; (6) the algorithm or tool is fairly and equitably applied, including in accordance with any applicable commissioner rules;
(b)(7) 5 the algorithm or tool is available for review and inspection under Section 4201.154;
(b)(8) 6 the use and oversight procedures of the algorithm or tool are disclosed in writing to enrollees in the form and manner provided by commissioner rule;
(b)(9) 7 the algorithm's or tool's performance, use, and outcomes are periodically reviewed and revised to maximize accuracy and reliability;
(b)(10) 8 patient information is not used beyond its intended and stated purpose in accordance with state and federal law;
(b)(11) 9 the algorithm or tool does not directly or indirectly cause harm to the enrollee other than assisting a utilization review agentUtilization review agentA utilization review agent that uses an artificial intelligence-based algorithm or other software tool for utilization review.Ins. Code § 4201.156(b) in making an adverse determination.
Subsection (b) imposes eleven enumerated requirements on utilization review agents that use AI-based algorithms or software tools. The requirements cluster into several functional groups: individualized clinical data inputs and the prohibition on sole reliance on group datasets (paragraphs 1–2); legal compliance and nondiscrimination (paragraphs 3, 5–6); preservation of physician decision-making authority (paragraph 4); regulatory transparency and enrollee disclosure (paragraphs 7–8); periodic performance review (paragraph 9); data use limitation (paragraph 10); and a general no-harm safeguard (paragraph 11).
These requirements operate as continuous conditions on the use of AI in utilization review — not one-time pre-deployment checks. A utilization review agent using AI must ensure ongoing compliance across all eleven criteria.
(c) 10 A utilization review agentUtilization review agentA utilization review agent that uses an artificial intelligence-based algorithm or other software tool for utilization review.Ins. Code § 4201.156(b) may not use an artificial intelligenceArtificial intelligence"Artificial intelligence" means an engineered or machine-based system that varies in autonomy and may, for explicit or implicit objectives, infer from the input the system receives how to generate outputs that can influence physical or virtual environments.Ins. Code § 4201.156(a)-based algorithm or other software tool as the sole basis of a decision to wholly or partly deny, delay, or modify health care services for an enrollee on the basis of medical necessity or appropriateness of health care items and services. Only a physician or licensed health care provider acting in accordance with this chapter may determine medical necessity or appropriateness of health care items and services.
Subsection (c) contains the bill's most critical prohibition: AI-based algorithms and software tools may not serve as the sole basis for a decision to wholly or partly deny, delay, or modify health care services on the basis of medical necessity or appropriateness. The subsection affirmatively reserves medical necessity and appropriateness determinations to licensed physicians or health care providers acting under Chapter 4201. This establishes a mandatory human-in-the-loop requirement for all adverse utilization review determinations where AI is involved.
This Act takes effect September 1, 2025.
Section 2 establishes September 1, 2025 as the effective date for all provisions of this Act.