Becker’s: How states are regulating AI in health insurance coverage

Pennsylvania lawmakers introduced a bill to regulate AI use in health insurance. Pennsylvania joins a wave of states attempting to add guardrails in the payer space, especially after an early draft of the One Big Beautiful Bill Act included a decade-long ban on state regulation of AI.

While not all of these regulations are totally new, the most recent developments come just months before CMS’ AI-driven prior authorization pilot for Medicare.

California led the charge during the 2023 to 2024 legislative session with a bill specifically addressing AI use in coverage decisions. Arizona, Connecticut, Maryland, Nebraska and Texas legislatures presented similar bills that have since been approved by the governor or formally signed into law. 

“An artificial intelligence-based algorithm shall not be the sole basis of a utilization review agent’s decision to deny, delay or modify healthcare services based, in whole or in part, on medical necessity,” the Nebraska legislation said.

“This law ensures that a doctor, not a computer, is making medical decisions,” said Arizona House Majority Whip Julie Willoughby, a Republican, about her state’s act. Arizona’s law will take effect July 2026.

Pennsylvania‘s bill also ensures that insurers “do not use [AI] to perpetuate potentially harmful biases in the medical field,” according to state Rep. Arvind Venkat, a Democrat.

Some states outlined specific disclosure and reporting requirements for carriers to follow, as well, to better understand the role of AI in adverse coverage decisions.

This article was originally published on Becker’s.