AI Frontier Institute

Relating to use of artificial intelligence in utilization review conducted for health benefit plans.

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Texas H.B. 4018, introduced by Representative Lalani, amends Chapter 4201 of the Insurance Code by adding Section 4201.156 to regulate the use of artificial intelligence in utilization review for health benefit plans. The bill defines 'artificial intelligence' as an engineered or machine-based system that infers from inputs how to generate outputs influencing physical or virtual environments. Under Section 4201.156(b), a utilization review agent using an AI-based algorithm or software tool must ensure the tool bases determinations on individual enrollee medical history, clinical circumstances presented by the provider of record, and other relevant clinical information — not solely on group datasets. The tool must comply with state and federal law, must not override physician or health care provider decision-making, must not discriminate against enrollees, must be fairly and equitably applied, must be available for review and inspection under Section 4201.154, must disclose its use and oversight procedures in writing to enrollees per commissioner rule, must be periodically reviewed for accuracy and reliability, and must not use patient information beyond its stated purpose. Under Section 4201.156(c), AI tools are expressly prohibited from serving as the sole basis for denying, delaying, or modifying health care services on medical necessity grounds; only a physician or licensed health care provider may make medical necessity determinations. The Act takes effect September 1, 2025.

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