AI Frontier Institute

Health insurance

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South Carolina S. 920, introduced by Senators Leber and Blackmon, adds Article 25 to Chapter 71, Title 38 of the South Carolina Code of Laws to regulate the use of artificial intelligence (AI) in health insurance prior authorization decisions. Under Section 38-71-2520, insurers that use AI, algorithms, or other software tools to make prior authorization or coverage determinations must base those determinations on the enrollee's medical history, unique clinical circumstances presented by the requesting healthcare provider, and any additional clinical information in the enrollee's medical record. Insurers must certify annually to the Department of Insurance that their AI tools do not rely solely on group datasets, are applied fairly and consistently across enrollees with similar clinical circumstances, and do not discriminate in violation of state or federal law. Any decision to deny, reduce, or defer a prior authorization request must be made by a licensed physician or other qualified healthcare professional—not AI alone. Insurers must also make prominent written disclosure to enrollees that AI is used in utilization review, periodically review AI outcomes for accuracy and reliability, make denial rate data available to the Department, providers, and enrollees upon request, and restrict patient data use to its intended purpose consistent with HIPAA (42 U.S.C. Section 1320d et seq.). The Department of Insurance may investigate violations, require a response from the insurer within 30 days, hold hearings, impose corrective plans, or—for repeat violations—apply disciplinary measures under Section 38-71-90. The act takes effect upon approval by the Governor.

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