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SB63 ENROLLED
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SB63
TBV8D95-2
By Senator Orr
RFD: Healthcare
First Read: 13-Jan-26
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First Read: 13-Jan-26
Enrolled, An Act,
Relating to health insurance; to impose limitations on
the use of artificial intelligence by health benefit plan
providers in making determinations of coverage under health
benefit plans; and to authorize the Department of Insurance of
the State of Alabama to investigate and impose disciplinary
action for violations.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. (a) For the purposes of this section, the
following terms have the following meanings:
(1) ARTIFICIAL INTELLIGENCE. A machine-based system
that may include software or physical hardware that performs
tasks, based upon data set inputs, which require human-like
perception, cognition, planning, learning, communication, or
physical action and which is capable of improving performance
based upon learned experience without significant human
oversight toward influencing real or virtual environments.
(2) DEPARTMENT. The Department of Insurance of the
State of Alabama.
(3) ENROLLEE. An individual to whom a health benefit
plan provider is contractually obligated to pay for or provide
medical benefits under a health benefit plan.
(4) GROUP PLAN. A health benefit plan that is sponsored
by an employer or other entity on behalf of group members.
(5) HEALTH BENEFIT PLAN. a. Any plan, policy, or
contract issued, delivered, or renewed in this state that
provides medical benefits that include payment for
hospitalization, physician care, treatment, surgery, therapy,
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hospitalization, physician care, treatment, surgery, therapy,
drugs, equipment, and any other medical expense, regardless of
whether the plan is for a group or individual.
b. The term does not include accident-only, specified
disease, individual hospital indemnity, credit, dental-only,
Medicare supplement, long-term care, disability income, or
other limited benefit health insurance policies, or coverage
issued as supplemental to liability insurance, workers'
compensation, or automobile medical payment insurance.
(6) HEALTH BENEFIT PLAN PROVIDER. The term includes all
of the following:
a. Any entity that issues, delivers, or renews a health
benefit plan, including a person as defined in Section 27-1-2,
Code of Alabama 1975; a health maintenance organization
established under Chapter 21A of Title 27, Code of Alabama
1975; a nonprofit health care services plan established under
Article 6, Chapter 20 of Title 10A, Code of Alabama 1975; or a
nonprofit agricultural organization that offers health care
benefits pursuant to Chapter 33 of Title 2, Code of Alabama
1975.
b. Any department or office internal to an entity
described in paragraph a. which performs utilization review.
c. Any separate entity that performs utilization review
as a contractor or agent of an entity described in paragraph
a.
(7) HEALTH CARE SERVICE. Diagnosing, testing,
monitoring, or treating a human disease, disorder, syndrome,
illness, or injury that may include, but not be limited to,
hospitalization, physician care, treatment, surgery, therapy,
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hospitalization, physician care, treatment, surgery, therapy,
drugs, or medical equipment.
(8) INDIVIDUAL PLAN. A health benefit plan that is
purchased directly by an individual.
(9) PRIOR AUTHORIZATION. A written or oral
determination made by a health benefit plan provider that a
health care service is a benefit covered under the applicable
health benefit plan which, under the enrollee's clinical
circumstances, is medically necessary or satisfies another
requirement imposed by the health benefit plan provider or law
and thus satisfies the requirements for payment or
reimbursement.
(10) UTILIZATION REVIEW. The determination of requests
for prior authorization under a health benefit plan according
to the rules, health care service policies, and guidelines
adopted by a health benefit plan provider, or requirements
imposed by law, and applicable to a health benefit plan.
(b)(1) A health benefit plan provider that uses
artificial intelligence to make determinations of medical
necessity on requests for prior authorization under health
benefit plans shall base determinations on all of the
following:
a. The enrollee's medical history.
b. Any clinical circumstances unique to the enrollee
which are presented by the requesting health care provider.
c. Additional clinical information about the enrollee
which may be present in the enrollee's medical record.
(2) A health benefit plan provider shall certify
annually to the department that the artificial intelligence
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annually to the department that the artificial intelligence
used to make determinations of medical necessity on requests
for prior authorization complies with all of the following:
a. The artificial intelligence does not rely on a group
dataset to make determinations.
b. The artificial intelligence is fairly and equitably
applied, including in accordance with any applicable
regulations and guidance issued by the U.S. Department of
Health and Human Services.
c. The artificial intelligence does not discriminate,
directly or indirectly, against any subscriber group or
enrollee in violation of state or federal law, including any
regulation or guidance issued by the U.S. Department of Health
and Human Services.
(3) In addition to the requirements listed in
subdivisions (1) and (2), a determination to deny, delay, or
modify a request for prior authorization based on medical
necessity shall always be made by a licensed physician or
other health care professional who is competent to evaluate
any recommendation or conclusion of artificial intelligence in
the light of the specific clinical issues involved in the
health care service requested which are unique to the
enrollee's circumstances or as recommended by the treating
health care provider.
(c) A health benefit plan provider shall do all of the
following:
(1) Make prominent written disclosure regarding its use
of artificial intelligence in utilization review in its
policies and procedures.
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policies and procedures.
(2) Ensure that its use of artificial intelligence and
the outcomes that it generates are reviewed on a periodic
basis to maximize accuracy and reliability to ensure its use
of artificial intelligence in utilization review complies with
the requirements of subsection (b).
(3) Ensure that patient data used in utilization review
functions by artificial intelligence is not used beyond its
intended and stated purpose consistent with the federal Health
Insurance Portability and Accountability Act (HIPAA), 42
U.S.C. § 1320d et seq.
(4) The requirements under subsection (b) and this
subsection shall be satisfied by an attestation by an
authorized representative of the health benefit plan provider
based on reasonable reliance upon internal policies,
procedures, and third-party vendors.
(d)(1) When the department has reasonable grounds to
believe that a health benefit plan provider has or is engaged
in conduct that violates subsection (b), including making
determinations of prior authorization adverse to an enrollee
without taking into consideration the enrollee's medical
history and relevant clinical circumstances, the department
may notify the health benefit plan provider of the alleged
violation and the health benefit plan provider shall respond
to the notice within 30 days.
(2) If the department finds the response required in
subdivision (1) to be unsatisfactory, the department may hold
a hearing as provided in Article 1, Chapter 2 of Title 27,
Code of Alabama 1975.
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Code of Alabama 1975.
(3)a. If, upon hearing the case, the department
determines that the health benefit plan provider has or is
engaged in conduct that violates subsection (b), including
making determinations of prior authorization adverse to an
enrollee without taking into consideration the enrollee's
medical history and relevant clinical circumstances, the
department may impose a plan upon the health benefit plan
provider to correct procedures, policies, and guidelines to
bring the health benefit plan provider's utilization review
into compliance with this section.
b. For repeat violations of subsection (b), the
department may also exercise either or both of the following
disciplinary powers:
1. Impose an administrative fine of not more than five
thousand dollars ($5,000) for a violation that occurred with
such frequency as to indicate a general business pattern or
practice. Administrative fines collected by the department
shall be deposited in the State Treasury to the credit of the
State General Fund.
2. Suspend or revoke the certificate of authority of
the health benefit plan provider for a violation that occurred
with such frequency as to indicate a general business pattern
or practice.
(4) The department shall require the health benefit
plan provider to reimburse the department the administrative
expenses incurred by the department in the investigation and
enforcement pursuant to this subsection. Administrative
expenses collected by the department shall be deposited in the
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expenses collected by the department shall be deposited in the
State Treasury to the credit of the Special Examination
Revolving Fund.
(e) The department shall adopt rules to enforce this
section.
Section 2. This act shall become effective on October
1, 2026.
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1, 2026.
________________________________________________
President and Presiding Officer of the Senate
________________________________________________
Speaker of the House of Representatives
SB63
Senate 19-Feb-26
I hereby certify that the within Act originated in and passed
the Senate, as amended.
Patrick Harris,
Secretary.
House of Representatives
Amended and passed: 08-Apr-26
Senate concurred in House amendment 08-Apr-26
By: Senator Orr
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