AI Frontier Institute

Making improvements to transparency and accountability in the prior authorization determination process.

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Engrossed Second Substitute Senate Bill 5395 (Chapter 157, Laws of 2026) is law. The Governor signed it March 23, 2026. It takes effect June 11, 2026, except sections 3 and 7, which take effect January 1, 2027. The act addresses transparency and accountability in prior authorization decisions by health carriers. Section 1 says the legislature found that carriers are increasingly using artificial intelligence (AI) in coverage decisions. It says licensed physicians and licensed health professionals must remain responsible for determinations, and that AI used to aid decisions needs standards. It also states intent to extend these protections to managed care organizations as soon as feasible. Sec. 2 amends RCW 48.43.830 (and Sec. 3 reenacts and amends it, effective January 1, 2027, adding a requirement that clinical review criteria for mental health and substance use disorder prior authorization meet RCW 48.43.766). Under these sections: (1) Only a licensed physician or licensed health professional working within their scope of practice may deny a prior authorization request on medical necessity grounds. (2) AI cannot be the sole means to deny, delay, or modify care. (3) Algorithms may process and approve requests but may not deny care for medical necessity without human review. (4) Carriers using AI, directly or through a contractor, must ensure it relies on the enrollee's clinical history and individual circumstances and not solely on a group data set. (5) The AI must comply with state and federal law, must not discriminate, and must be fairly and equitably applied. (6) The carrier's AI policies and procedures must be open to audit by the insurance commissioner. (7) Carriers must periodically review the AI's performance, and patient data cannot be used beyond its stated purpose, consistent with chapter 70.02 RCW and HIPAA. The sections also add definitions of AI, generative AI and machine learning. They require carriers to post prior authorization policy changes in one place on their website. They also keep or set prior authorization API requirements and give the commissioner rulemaking authority. Sec. 4 applies parallel standards to health plans for public employees, retirees and dependents under RCW 41.05.845, and gives the Health Care Authority rulemaking authority. Sec. 5 amends RCW 48.43.525 to bar carriers from retrospectively denying or downgrading care that had approved prior authorization, with limited exceptions. If the authorization was valid, it is deemed approved and payable, with interest at one percent per month. Enrollees and providers may go directly to independent review. Secs. 6 and 7 amend RCW 48.43.535 on independent review (Sec. 7 adds mental health and substance use disorder review consistent with RCW 48.43.766). Sec. 8 amends RCW 48.43.0161 so that, starting October 1, 2026 and annually after, larger carriers report prior authorization data to the commissioner. The data includes the percentage of denials aided by AI, the share of late determinations, and the number of nonelectronic requests. Sec. 9 expires sections 2 and 6 on January 1, 2027, and Sec. 10 sets the January 1, 2027 effective date for sections 3 and 7.

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