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With legislation and rulemaking at the federal level stalled, many states have moved to fill the regulatory gap by placing guardrails on artificial intelligence (AI) usage in the healthcare sector. While varied, these efforts generally fall within the following categories: 1) AI use from payers in prior authorization and claims decisions, 2) limiting AI decision-making in the provision of healthcare services, and 3) disclosure requirements intended to increase transparency.
Below our team outlines select developments from Maryland and beyond.
Noteworthy Legislation From Across the United States
Indiana: HB 1271 is unique in that it specifically addresses the issue of downcoding. “Downcoding” is the process insurance companies use to change higher-cost procedures or codes submitted by a medical provider to less-complex, lower-cost codes. This Indiana law prohibits AI from downcoding a claim without a healthcare professional’s review of the patient’s medical record. The law also prevents healthcare providers from using AI to submit claims without review from a billing professional or healthcare provider.
Utah: SB 319 requires that insurers disclose to the Utah Insurance Department, providers, and enrollees if AI was used to review prior authorizations. Also, the law requires healthcare professionals to render adverse determinations based on their independent medical judgement, separate from AI recommendations.
Washington: SB 5395 prohibits health carriers, benefits managers, and public employee health plans from using AI to deny, delay, or limit the services provided in the prior authorization process. Further, the law requires that only licensed or qualified health professionals make adverse decisions on prior authorization requests. Any AI used must account for the individual patient’s clinical conditions and undergo performance reviews. Lastly, the law requires insurers to report to the insurance commissioner the number of prior authorization requests denied with the use of AI.
Georgia: State legislators took a different approach with SB 444 – the law specifically authorizes the use of AI in the prior authorization decision making process. However, the law prohibits insurers from using AI to make adverse determinations without review from a licensed healthcare provider.
How Is Maryland Addressing These Issues?
Legislators in Annapolis have not been passive on this topic. Maryland passed HB 820 in 2025, requiring insurance carriers to make detailed quarterly disclosures to the Insurance Commissioner, including information on whether AI was used in making any adverse coverage decisions. The law also requires that insurance carriers, benefits managers, and private review agents ensure that any AI tools used:
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