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HB1240 would create a new subtitle in the Health-General Article and a parallel provision in the Insurance Article regulating the use of artificial intelligence in health care decision making by providers and health insurance carriers. The bill defines artificial intelligence broadly and applies to a wide range of health care providers and carriers, including hospitals, HMOs, outpatient clinics, medical laboratories, crisis centers, insurers, nonprofit health service plans, and dental plan organizations.
The bill prohibits providers and carriers from using AI systems that are designed only to reduce costs if doing so would reduce the quality of patient care, delay care, or deny coverage for care. It also requires any provider or carrier using AI to influence health care decisions to publish annual website disclosures beginning July 1, 2026, including certain decision-review thresholds, overturn rates, denial rates, and other required data. In addition, covered entities must undergo annual third-party audits to assess whether AI-driven decisions align with medical and ethical standards and whether they excessively delay care, and they must provide proof of the audit to the Department or Commissioner upon request.
The bill would give the Maryland Department of Health and the Maryland Insurance Commissioner enforcement authority, including the ability to adopt regulations and impose civil penalties of up to $10,000 per offense for violations. It would therefore add a new layer of oversight and transparency to how AI is used in clinical and coverage decisions, affecting both health care delivery and insurance utilization review or claims-related decision processes.
The overall sentiment reflected by the bill text is precautionary and consumer-protective, aiming to ensure AI is not used to prioritize cost savings over patient care. Because there are no committee transcripts or recorded votes provided, there is no direct evidence of support or opposition in the available context. The bill’s structure suggests an intent to regulate AI use rather than ban it outright, which may appeal to advocates of oversight while still allowing operational use of AI under disclosure and audit requirements.
The main point of contention likely concerns the scope of the restrictions and reporting burdens, especially for providers and carriers that rely on AI for utilization management, triage, or administrative decision support. Potential concerns include whether the bill could increase compliance costs, create ambiguity around what counts as AI “designed only to reduce costs,” and expose proprietary decision criteria through public reporting. Supporters would likely emphasize patient safety, transparency, and accountability, while opponents may argue the bill could chill beneficial AI use or duplicate existing medical and insurance oversight.
HB1240 would add new statutory restrictions and compliance obligations to Maryland health and insurance law by creating a dedicated artificial intelligence subtitle in the Health-General Article and a new insurance provision governing carriers. It would prohibit certain cost-driven AI uses, require annual public reporting and third-party audits for AI-influenced health care decisions, and authorize enforcement by the Department of Health and the Insurance Commissioner, including civil penalties and rulemaking authority. The bill would affect health care providers, insurers, HMOs, and related entities that use AI in clinical, coverage, or utilization decisions.
The bill appears generally favorable toward patient protection and oversight, with an emphasis on preventing AI from being used to cut costs at the expense of care quality or access. The available materials do not include committee testimony or vote data, so there is no recorded legislative debate to indicate formal support or opposition. Based on the text alone, the measure is framed as a regulatory safeguard rather than a prohibition on AI use.
The likely areas of contention are the breadth of the definition of artificial intelligence, the reach of the bill to both providers and carriers, and the required annual disclosures and audits. Providers and insurers may object to administrative burden, compliance costs, and the public release of decision metrics and criteria, while supporters are likely to argue that transparency is necessary to prevent delayed care, denials, and quality reductions. Another possible dispute is how regulators would interpret the ban on AI systems designed only to reduce costs, since intent and system design may be difficult to prove in practice.