Live · primary-sourcedHealthcare & coverage decisionsLast verified 8 Aug 2026 ✓
Topic dossier
AI in healthcare & coverage decisions
The rules on AI in medical-necessity, prior-authorization, utilization-review and claims decisions — where a licensed clinician has to make the call and what an insurer has to disclose. 11 obligations across 1 jurisdiction — 5 in force. Next dated deadline: 12 Aug 2026.
This is the quietest and most consequential US cluster: a near-uniform rule that an algorithm may inform a coverage decision but may not be its sole basis. Washington's SB 5395, Iowa's HF 2635, Alabama's SB 63 and Georgia's SB 444 each require human clinical review before an adverse determination; Maryland's HB 820 adds quarterly regulator audits; Utah's SB 319 and Indiana's HB 1271 add disclosure of AI use; and Illinois' SB 3114 extends the same logic to the downcoding of medical claims. The obligations below are the instruments AI Law Radar tracks under this theme, each linked to its primary source and dated to its last check.
Binds Health insurance carriers, PBMs, and private review agents conducting utilization review in Maryland. AI tools in health-care utilization review must base decisions on individual clinical information; AI subject to quarterly MIA audit.
Quarterly review of AI utilization tools for effectiveness, accuracy, and fairness required.
Stated maximum penalty — Maryland Insurance Administration (MIA) enforcement
In force · 1 Oct 2025✓ checked 8 Aug 2026HB 820 / Ch.747 ↗high confidence
Binds Private health carriers and public employee health plans using AI in prior authorization in Washington. AI cannot be sole basis for denying health care services; human clinical review required for AI-generated denials.
Annual reporting to OIC on AI-generated prior auth statistics required.
Stated maximum penalty — OIC enforcement (civil penalties; license actions)
In force · 11 Jun 2026✓ checked 8 Aug 2026SB 5395 ↗high confidence
Binds Healthcare providers and facilities using AI transcription in Rhode Island. Healthcare providers using AI transcription for clinical visits must document and notify patients.
Signed 22 June 2026 (R.I. Gen. Laws ch. 23-106); effective upon passage.
Stated maximum penalty — RI healthcare licensing enforcement
In force · 22 Jun 2026✓ checked 8 Aug 2026H 7538 ↗high confidence
Binds Health carriers and utilization review organizations operating in Iowa. AI cannot be sole basis for denying medically necessary services; human clinical review required for adverse determinations.
Electronic prior authorization required from 2027-07-01.
Stated maximum penalty — Iowa Insurance Division enforcement
In force · 1 Jul 2026✓ checked 8 Aug 2026HF 2635 ↗high confidence
Binds Health insurers and health benefit providers in Indiana. AI cannot be sole basis for claim downcoding; insurers must disclose AI use in adverse determinations.
Stated maximum penalty — Indiana DOI enforcement
In force · 1 Jul 2026✓ checked 8 Aug 2026HB 1271 / PL 88 ↗high confidence
Binds Regulated psychotherapy professionals in Colorado using AI; any entity misrepresenting AI as professional-equivalent. AI cannot deliver psychotherapy without licensed professional's real-time involvement; disclosure and written consent required.
Stated maximum penalty — Unfair trade practice (CO Consumer Protection Act; AG enforcement)
Applies 12 Aug 2026✓ checked 8 Aug 2026HB 26-1195 ↗high confidence
Binds Health insurers using AI in coverage determinations in Alabama. AI may not be sole basis for coverage denial; health insurers must disclose AI use and file annual certification with Alabama DOI.
Annual certification to Alabama DOI required.
Stated maximum penalty — Alabama DOI disciplinary action (license revocation/suspension)
Applies 1 Oct 2026✓ checked 8 Aug 2026SB 63 ↗high confidence
Binds Health insurers and utilization review entities in Georgia. AI prohibited from issuing adverse prior-authorization determinations without licensed clinical peer review.
Stated maximum penalty — Georgia Insurance Commissioner enforcement
Applies 1 Jan 2027✓ checked 8 Aug 2026SB 444 ↗high confidence
Binds Health insurers operating in Utah for prior authorization processes. Insurers must disclose AI use in prior authorization reviews; adverse determinations must reflect independent medical judgment.
Stated maximum penalty — Disclosure to Utah Insurance Department required
Applies 1 Jan 2027✓ checked 8 Aug 2026SB 319 ↗high confidence
Binds Health insurers, pharmacy benefit managers, and managed care entities using AI for utilization review in Colorado. Health insurers and managed care entities using AI for coverage determinations must require human clinician review before denying coverage; AI decisions must be individualized and non-discriminatory; periodic audits required.
Signed June 2, 2026; effective January 1, 2027.
Stated maximum penalty — State insurance enforcement; penalty amount not specified in primary source
Applies 1 Jan 2027✓ checked 8 Aug 2026HB 26-1139 ↗high confidence
Binds Health insurance issuers and managed care organizations in Illinois (excludes self-insured ERISA plans and workers' compensation). Prohibits health insurers and managed care organizations from using algorithms or automated tools to downcode medical claims without comprehensive human review; requires AMA CPT coding guideline-compliant physician review of all downcoding determinations; bans discriminatory targeting of providers treating complex/chronic patients.
Signed 2026-07-10 by Governor Pritzker; effective 2028-01-01.
Stated maximum penalty — Fines, restitution, or license suspension (IL Department of Insurance enforcement)
Not in the states tracked here. Washington, Iowa, Alabama, Georgia and Colorado all bar AI from being the sole basis of an adverse coverage or medical-necessity determination, requiring review by a licensed clinician or clinical peer before the denial issues.
Does an insurer have to disclose that it uses AI?
In several states, yes. Utah's SB 319 requires disclosure of AI use in prior-authorization review, Indiana's HB 1271 requires disclosure in adverse determinations, and Alabama's SB 63 adds an annual certification filed with the state Department of Insurance.
What about AI used in the clinic rather than by an insurer?
Rhode Island's H 7538 covers the provider side: healthcare providers using AI transcription during clinical visits document that use and notify patients. Most of the rest of this theme sits with payers and utilization-review entities.
Which jurisdictions does AI Law Radar track for healthcare & coverage decisions?
We currently track healthcare & coverage decisions obligations across 1 jurisdiction: United States. Each is dated and linked to its primary source on this page.
Not legal advice. Each obligation links to its primary source and carries the date it was last checked; verify the legal text before relying on it.