Regulations on AI in Health Insurance: Balancing Innovation and Clinical Authority
As artificial intelligence (AI) becomes increasingly integral to health insurance processes, state legislatures are enacting regulations to manage its application, particularly in areas like prior authorization and utilization review. In 2025, states such as Arizona, Maryland, Nebraska, and Texas implemented laws addressing AI in insurance decisions. More states are expected to introduce similar regulatory frameworks in early 2026.
In Pennsylvania, House Bill 1925 and Senate Bill 1113 propose allowing insurers to utilize AI in utilization reviews, provided that it supplements rather than replaces the clinical judgment of healthcare providers. These bills highlight the need for decisions to be based on clinical history and provider-determined circumstances, with insurers required to file an AI compliance statement annually with the Pennsylvania Insurance Department. Senate Bill 1113 also suggests enrollment freezes for non-compliant insurers.
New Hampshire’s House Bill 1406 aims to authorize AI as a supportive tool, mandating insurers to maintain records of AI use in provider coding decisions. Insurers must notify members and providers of adverse decisions and disclose if AI was consulted during claim reviews.
Oklahoma's proposed House Bill 3675 would permit AI in coverage determinations, but final decisions cannot rely solely on AI. Human professionals must review these determinations, though they aren't required to diverge from AI conclusions. The bill grants audit powers to Oklahoma's insurance commissioner but does not mandate public disclosure of AI use by insurers.
Indiana's House Bill 1271 establishes that AI cannot be the sole basis for downcoding unless preceded by a human review. The bill also requires insurers to disclose AI involvement in adverse decisions.
In Louisiana, Senate Bill 246 sets firm guidelines for AI in adverse determinations, reserving decision-making primarily for healthcare practitioners. AI can be a supplementary tool, with mandatory disclosure of AI use to the Louisiana Department of Insurance, subject to audits.
Alabama’s Senate Bill 63 defines AI usage standards, emphasizing non-discriminatory application in prior authorization processes. It mandates assessments by healthcare professionals before finalizing AI-influenced decisions and requires insurers to conduct periodic AI accuracy reviews and disclose AI usage to policyholders.
The evolving legislative landscape underscores the importance of balancing AI integration with maintaining clinical authority and ensuring transparency within the insurance sector.