Health plans would need another basis for AI coverage denials

An AI algorithm could not be the only basis for denying an insurance utilization review decision. The insurance rule applies to utilization review decisions. The contract rule covers prepaid health plans and their utilization review or prior authorization decisions. The Department of Health and Human Services must amend its contracts with prepaid health plans as soon as practicable to bar AI as the sole basis for denying a utilization review or prior authorization decision. The insurance rule applies to contracts issued, amended, or renewed on or after October 1, 2026.

AI developers could not design certain billing systems, and healthcare providers could not use them, if they are meant to promote or systematically cause inflated billing codes. The rule covers developers who design, train, or materially change AI systems, and providers who use them for healthcare coding, billing, or documentation. Repeated failure to follow this rule counts as an unfair or deceptive business practice. Only the Attorney General may sue under this section; private individuals may not.

Healthcare providers or their agents must send a yearly compliance statement to the Department and a copy to the Attorney General. The duty covers each healthcare provider or the provider's agent. The statement must be signed by an authorized representative and include any supporting information required by rule. Filing is a condition of Medicaid participation. The Department may deny or end a provider's enrollment for failing to file or follow the AI billing rule. Statements begin July 1, 2027, on a yearly schedule set by the Department for each provider.