AI Frontier Institute

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

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SB63 is now law in Alabama and takes effect October 1, 2026 (Section 2). It limits how health benefit plan providers, including insurers, HMOs, and utilization review contractors, may use artificial intelligence to decide prior authorization requests. Under Section 1(b), a provider that uses AI to decide medical necessity must base decisions on the enrollee's medical history, clinical circumstances presented by the requesting provider, and other relevant information in the medical record. Each year the provider must certify to the Department of Insurance that its AI does not rely on a group dataset, is applied fairly and equitably, and does not discriminate against any subscriber group or enrollee. Any decision to deny, delay, or modify a request on medical necessity grounds must always be made by a licensed physician or other competent health care professional who evaluates the AI's recommendation. Under Section 1(c), providers must prominently disclose their use of AI in utilization review in their policies and procedures, and must periodically review AI use and outcomes for accuracy and reliability. They must also ensure patient data is not used beyond its stated purpose, consistent with HIPAA. Providers may satisfy these requirements by an attestation from an authorized representative, based on reasonable reliance on internal policies, procedures, and third-party vendors. Under Section 1(d), if the Department has reasonable grounds to believe a provider violated subsection (b), it may send notice, and the provider must respond within 30 days. If the response is unsatisfactory, the Department may hold a hearing and impose a corrective plan. For repeat violations showing a general business pattern or practice, it may also fine the provider up to $5,000 or suspend or revoke its certificate of authority. The provider must reimburse the Department's investigation and enforcement expenses. Section 1(e) requires the Department to adopt enforcement rules.

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