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SB63 • 2026

Health care plans; to regulate the use of artificial intelligence in determinations of coverage

Health care plans; to regulate the use of artificial intelligence in determinations of coverage

Healthcare Labor Technology
Enacted

This bill passed the Legislature and reached final enactment based on the latest official action.

Sponsor
Orr
Last action
2026-04-17
Official status
Enacted
Effective date
2026-10-01

Plain English Breakdown

The official text provided ends abruptly while describing penalties for repeat violations; it is unclear if there are additional penalty tiers or conditions beyond those partially listed.

Rules for Using Artificial Intelligence in Health Insurance Decisions

This law sets rules for health insurers in Alabama who use artificial intelligence to decide if medical care should be covered, requiring decisions based on individual patient details and human review before denying or changing coverage.

What This Bill Does

  • Requires AI coverage decisions to rely on an individual's specific medical history, unique clinical circumstances, and additional clinical information instead of group data.
  • Mandates that a licensed physician or other competent health care professional must make the final decision if an insurer denies, delays, or modifies a prior authorization request based on AI recommendations.
  • Orders insurers to clearly state in their policies when they use artificial intelligence for coverage reviews.
  • Requires insurers to review their AI systems periodically to ensure accuracy and reliability, and ensures patient data is not used beyond its intended purpose.
  • Allows the Department of Insurance to investigate violations and impose corrective plans; for frequent violations indicating a general business practice, it may fine companies up to $5,000 or suspend/revoke their license.

Who It Names or Affects

  • Health benefit plan providers operating in Alabama that use artificial intelligence for coverage decisions.
  • Enrollees (individuals covered by health plans) who request prior authorization for medical services.
  • Licensed physicians and other competent health care professionals who review AI recommendations before denying or modifying care.
  • The Department of Insurance of the State of Alabama, which enforces these rules.

Terms To Know

Prior Authorization
A written or oral decision by an insurance provider that a specific medical service is covered and medically necessary based on the patient's clinical circumstances before payment is made.
Enrollee
An individual to whom a health benefit plan provider is contractually obligated to pay for or provide medical benefits.
Utilization Review
The process of determining requests for prior authorization according to the rules and guidelines adopted by the insurance provider or required by law.

Limits and Unknowns

  • This law does not apply to accident-only, specified disease, individual hospital indemnity, credit, dental-only, Medicare supplement, long-term care, disability income, or other limited benefit health insurance policies.
  • The official text provided is truncated and cuts off while listing the specific conditions for imposing fines on repeat violations.

Amendments

These notes stay tied to the official amendment files and metadata from the legislature.

TBV8D95-1

R 1307

Adopted

Plain English: This amendment requires health insurance companies to have licensed doctors make final decisions when denying care, even if they used AI tools during the review process.

  • Insurance companies must use a patient's full medical history and unique situation when using AI to decide on coverage requests.
  • Companies cannot let AI rely only on general group data; it must be fair and not discriminate against any specific groups of people.
  • A licensed doctor or qualified health professional must personally make the final decision if an insurance company denies, delays, or changes a request for care based on medical necessity.
  • The provided text cuts off at the end and does not include details about how often companies must review their AI systems.
  • The amendment defines specific terms but does not list all possible penalties for breaking these rules in this section.
G359Y22-1

R 1308

Adopted

Plain English: This amendment adds specific penalties for health insurance companies that repeatedly break rules about using artificial intelligence, including fines up to $5,000 and the loss of their business license.

  • The state department can fine a company up to $5,000 if it breaks the rules often enough to show a general pattern of bad behavior.
  • For repeated violations showing a pattern, the department can also suspend or cancel the health plan provider's certificate of authority (business license).
  • Companies that break these rules must pay back the state for all costs spent investigating and enforcing the law against them.
  • The amendment text only shows specific changes to penalty sections, so it does not explain what the original rules about artificial intelligence are.
  • Some sentences in the provided text appear incomplete or cut off due to formatting errors (for example, 'annually to the department that the'), making those parts unclear.
NRSWP8T-1

R 476 • Orr

Adopted

Plain English: This amendment requires health insurers in Alabama to have qualified medical professionals make final decisions on denying coverage and bans relying only on artificial intelligence for these choices.

  • Insurers cannot use artificial intelligence alone to decide if a patient's request for care should be approved or denied; a licensed doctor must always review the decision before it is finalized.
  • If an insurer uses AI tools, they must base their decisions on the specific patient's medical history and unique clinical situation rather than just general data groups.
  • Insurers must tell patients or employers if artificial intelligence was used to help make coverage decisions for health plans.
  • The Alabama Department of Insurance is given the power to investigate insurers and take action against them if they break these new rules.
  • The provided text cuts off at Page 5, so the full details on exactly how disclosures must be written or delivered are not included.
  • Specific penalties for breaking the law are mentioned as possible but their exact amounts or types are not detailed in this excerpt.

Bill History

  1. 2026-04-17 Senate

    Enacted

  2. 2026-04-09 House

    Signature Requested

  3. 2026-04-09 Senate

    Delivered to Governor

  4. 2026-04-09 Senate

    Enrolled

  5. 2026-04-08 House

    Motion to Read a Third Time and Pass as Amended - Adopted Roll Call 1309 (Yeas 102, Nays 0)

  6. 2026-04-08 House

    Motion to Adopt - Adopted Roll Call 1308 (Yeas 104, Nays 0)

  7. 2026-04-08 House

    Motion to Adopt - Adopted Roll Call 1307 (Yeas 103, Nays 0)

  8. 2026-04-08 Senate

    Gudger Motion to Concur In and Adopt House Amendment - Adopted Roll Call 1261 (Yeas 33, Nays 0)

  9. 2026-04-08 Senate

    Ready to Enroll

  10. 2026-04-08 House

    Shaw 1st Amendment Offered

  11. 2026-04-08 House

    Insurance Engrossed Substitute Offered

  12. 2026-04-08 House

    Third Reading in Second House

  13. 2026-03-17 House

    Read for the Second Time and placed on the Calendar

  14. 2026-03-17 House

    Reported Out of Committee Second House

  15. 2026-02-19 Senate

    Motion to Read a Third Time and Pass as Amended - Adopted Roll Call 477 (Yeas 27, Nays 0)

  16. 2026-02-19 Senate

    Orr motion to Adopt - Adopted Roll Call 476 (Yeas 27, Nays 0)

  17. 2026-02-19 Senate

    Third Reading in House of Origin (Yeas 27, Nays 0)

  18. 2026-02-19 House

    Pending Committee Action in Second House

  19. 2026-02-19 House

    Read for the first time and referred to the House Committee on Insurance

  20. 2026-02-19 Senate

    Engrossed

  21. 2026-02-19 Senate

    Healthcare 1st Substitute Offered

  22. 2026-02-12 Senate

    Read for the Second Time and placed on the Calendar

  23. 2026-02-11 Senate

    Reported Out of Committee House of Origin

  24. 2026-02-11 Senate

    Healthcare 1st Substitute

  25. 2026-01-13 Senate

    Pending Committee Action in House of Origin

  26. 2026-01-13 Senate

    Read for the first time and referred to the Senate Committee on Healthcare

Official Summary Text

"This act: (1) establishes minimum standards for the use of artificial intelligence (AI) by health insurers to determine if health care services requested for an insured person should be covered, including that the decision should be based on the insured’s medical history, unique clinical circumstances, and clinical information; (2) requires insurers to annually certify to the Department of Insurance of the State of Alabama that such AI systems do not use group datasets and are applied fairly and indiscriminately to all insureds; (3) requires licensed health care professionals who are competent to evaluate a recommendation made by AI to make the decision to deny, delay, or modify a prior authorization request; (4) requires insurers to prominently disclose that AI is used in coverage decisions, ensures these AI systems are periodically reviewed for accuracy and reliability, and ensures patient data is not used beyond authorized manners; (5) authorizes the department to investigate, and require a response of, insurers reasonably believed to be violating this act; and (6) upon an unsatisfactory response and a hearing thereon, authorizes the department to impose a corrective compliance plan on the insurer, and in the case of frequent violations that indicate a general business practice, impose an administrative fine of up to $5,000 or suspend or revoke the insurer’s certificate of authority.

Current Bill Text

Read the full stored bill text
SB63 ENROLLED
Page 0
SB63
TBV8D95-2
By Senator Orr
RFD: Healthcare
First Read: 13-Jan-26
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SB63 Enrolled
Page 1
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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SB63 Enrolled
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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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SB63 Enrolled
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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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