HEALTH/ACC INSURANCE: Establishes requirements for health insurance issuers using artificial intelligence or automated decision systems. (8/1/26)
SB 246 would regulate how health insurance issuers, pharmacy benefit managers, and independent review entities use artificial intelligence and automated decision systems in utilization review and coverage determinations. The bill defines both “artificial intelligence” and “automated decision system,” and it requires insurers to tell enrollees and the Department of Insurance when such tools were used in a decision. It also expands notice requirements for adverse determinations to include whether AI or an automated system played a role.
The bill places significant limits on automated decision-making in health coverage decisions. It prohibits AI or automated systems from discriminating unlawfully, violating federal HHS guidance, or delaying, denying, or modifying healthcare services. It also bars decisions based solely on group data and requires decisions to be grounded in the insured’s medical history, individual clinical circumstances, and other relevant clinical information. The bill further requires that adverse determinations be signed by a licensed physician who personally reviewed the record, and it mandates independent human judgment for claims involving medical necessity or prior authorization.
SB 246 also creates new appeal and oversight rights. If an insured learns that an adverse determination involved AI or an automated decision system, the insured may appeal, and such a determination is presumed invalid unless the insurer proves it was independently reached through documented clinical judgment without reliance on algorithmic output. If the appeal is based on AI use, the insurer may not use AI in later review of that claim. The commissioner is given authority to inspect and audit these systems, request data sources and validation methods, and require independent review at the insurer’s expense. Covered persons may also obtain copies of documents relevant to AI use in the review process.
The bill would amend existing insurance statutes and add new provisions to Louisiana insurance law, including changes to R.S. 22:1260.44 and new sections R.S. 22:1260.49 and 2401(4). It would apply to new policies issued on or after January 1, 2027, and to existing policies upon renewal, no later than January 1, 2028. In practical terms, it would impose compliance, disclosure, documentation, and audit obligations on insurers and related entities that use AI in claims review.
The overall sentiment reflected in the bill materials is cautious and consumer-protective, with the legislation framed as a safeguard to ensure human oversight in insurance decisions. The committee amendments suggest support for strengthening the bill’s enforcement and oversight provisions, including physician sign-off, disclosure, audit authority, and invalidation of AI-influenced adverse determinations. No committee transcript or vote record is provided, and the bill was ultimately withdrawn from the Senate files, so there is no recorded floor vote or direct debate in the materials provided.
SB 246 would add new restrictions and disclosure requirements to Louisiana’s insurance code governing utilization review and appeals. It would require insurers and related entities to disclose AI or automated decision system use, preserve human clinical judgment in adverse determinations, provide insureds access to AI-related documents, and submit to regulatory inspection and possible independent review. The bill would affect health insurers, pharmacy benefit managers, independent review organizations, covered persons, and the Department of Insurance, while creating new statutory definitions and enforcement standards for AI in health coverage decisions.
The bill appears to have been developed with a strong consumer-protection and oversight focus, emphasizing transparency, physician involvement, and limits on automated denials of care. The committee amendments indicate support for tightening the measure and clarifying its application rather than weakening it. However, because there are no transcripts or votes in the record and the bill was withdrawn from the Senate files, the available materials do not show final legislative consensus or opposition positions.
The main points of contention likely concern the extent to which insurers may rely on AI in utilization review and whether a presumption of invalidity should attach when AI materially contributes to an adverse determination. Another likely issue is the administrative and compliance burden on insurers, including physician sign-off, disclosure of data sources and validation methods, commissioner audits, and insurer-paid independent reviews. The bill also raises privacy and operational questions around access to algorithmic documentation and the use of patient data under HIPAA. These concerns would primarily involve insurers, pharmacy benefit managers, and regulators, while consumer advocates would likely support the added protections.