Use of Artificial Intelligence in Health Care

Plain English Breakdown

The effective date is stated as January 1, 2027, but the bill was signed in June 2026; no specific implementation timeline details are provided beyond this start date.

Rules for Using Artificial Intelligence in Health Care Coverage Decisions

Starting January 1, 2027, health care entities must follow specific rules when using artificial intelligence to decide if a patient's treatment will be covered.

What This Bill Does

• Requires AI systems used for coverage decisions to consider each patient's medical history and individual clinical circumstances instead of relying only on group data.
• Mandates that any denial of health care coverage based in whole or in part on an AI recommendation must be reviewed by a licensed clinician, physician, or other competent regulated professional.
• Prohibits the use of AI in ways that discriminate against individuals or violate state and federal laws regarding fairness.
• Requires companies to regularly check their AI systems to ensure they are accurate, reliable, and only using patient data for its intended purpose.
• Bans health insurance carriers from paying for psychotherapy sessions provided directly by an artificial intelligence system.

Who It Names or Affects

• Health insurance companies (carriers)
• Pharmacy benefit managers
• Private utilization review organizations and behavioral health administrative services organizations
• Managed care entities

Terms To Know

Utilization Review

The process of checking if a medical service is necessary before an insurance company agrees to pay for it.

Competent Regulated Professional

A licensed clinician, physician, or other qualified expert who can review specific clinical issues and coverage terms.

Limits and Unknowns

• The rules only apply to decisions made on or after January 1, 2027.
• AI systems may be used to assist in approvals, including expedited ones, but cannot solely issue denials based on medical necessity without human review.

Official Summary Text

On and after January 1, 2027, when determining coverage for health-care services, the act requires entities that use an artificial intelligence system (AI system) for the purpose of conducting utilization review of health-care services, including health insurance companies (carriers), pharmacy benefit managers, private utilization review organizations, behavioral health administrative services organizations, and managed care entities (entities), ensure that the AI system complies with certain requirements specified in the act. Specifically, an entity shall ensure that the AI system:
Makes determinations based on medical or clinical history, the patient's individual clinical circumstances, and other relevant clinical factors specified in the act, with denial of coverage reviewed by a licensed clinician or physician or other competent regulated professional who is competent to evaluate the specific clinical issues and review the health benefit plan's terms of coverage (competent regulated professional);
Does not base its determination solely on group data without reference to the individual's data;
Is not used in any way that discriminates against individuals in violation of other state or federal laws and is fairly and equitably applied, including in accordance with regulations and guidance issued by the federal department of health and human services; and
Is periodically reviewed to ensure the AI systems outcomes are accurate and reliable and that an individual's health data is not used beyond its intended or stated purpose.
Entities that use AI systems shall disclose to the division of insurance, the department of human services, or the department of health care policy and financing, as applicable, the utilization review functions for which the AI system will be used and the points in the utilization review process when it will be used, the process for human oversight of adverse coverage determinations, and the process for maintaining audit information to ensure that the use of the AI system complies with the requirements in the act.
The AI system may be used to assist in utilization review, including expedited approvals. A carrier's denial of coverage for a service based in whole or in part on medical necessity shall not be issued solely on the output of an AI system without human review by a licensed clinician or physician or other competent regulated professional.
Further, the act prohibits a carrier and a payer of services under the 'Colorado Medical Assistance Act' and the 'Children's Basic Health Plan Act' from paying for psychotherapy services that are provided directly to a client and that are conducted by an AI system.
(Note: This summary applies to this bill as enacted.)