AI Frontier Institute

AN ACT to amend Tennessee Code Annotated, Title 8, Chapter 27; Title 56 and Title 71, relative to health insurance.

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Tennessee HB 1382 / SB 1261 has been introduced but not enacted. If enacted, it would add a new section to Tenn. Code Ann. Title 56, Chapter 6, Part 7 regulating health insurance issuers (including insurers, HMOs, PBMs, TPAs, TennCare, CoverKids, Access Tennessee, and state group insurance plans) that use artificial intelligence, algorithms, or other software tools for utilization review or management based on medical necessity. Under subsection (b), the tool must base determinations on the enrollee's clinical history, the requesting provider's circumstances, and other relevant clinical records. It may not rely solely on group datasets, supplant provider decision-making, discriminate, or cause harm to enrollees. Subsection (c) requires disclosures about AI use and oversight in written policies. Subsection (d) requires periodic review of the tool's performance. Subsection (e) requires that patient data be used only for its stated purpose, consistent with HIPAA. Subsection (f) bars the tool from denying, delaying, or modifying care based on medical necessity. Only a licensed physician or competent licensed healthcare professional may make those determinations. Subsection (h) requires compliance with federal HHS rules and guidance. Subsection (i) exempts compliance that would cost federal funding. Under subsection (j), violations are unfair claims practices, and aggrieved individuals may sue for actual and punitive damages plus costs and attorneys' fees. Subsection (k) lets the Department of Commerce and Insurance make rules. Under Section 2, rulemaking authority takes effect upon becoming law, and the rest takes effect July 1, 2025.

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