Bill > SB1261

This bill establishes comprehensive regulations for health insurance issuers in Tennessee regarding the use of artificial intelligence (AI), algorithms, and software tools in utilization review and management processes. The bill defines artificial intelligence as machine-based systems capable of making predictions, recommendations, or decisions with minimal human oversight, and applies to a wide range of health insurance providers including insurance companies, health maintenance organizations, and Medicaid programs. The legislation requires that AI tools used in healthcare decision-making must base determinations on individual patient clinical history, individual clinical circumstances, and relevant medical records, and cannot rely solely on group datasets. The bill mandates that these AI tools cannot replace healthcare provider decision-making, must not discriminate against patients, and cannot cause direct or indirect harm to patients. Health insurance issuers must develop written policies disclosing their AI use, periodically review the performance of these tools, and ensure patient data is used only for its intended purpose and in compliance with HIPAA. Critically, the bill stipulates that determinations of medical necessity must be made exclusively by licensed physicians or healthcare professionals, not by AI systems. Violations of these provisions can result in penalties, including unfair claims practice sanctions and potential private lawsuits where plaintiffs may be awarded actual and punitive damages, as well as legal costs. The bill will take full effect on July 1, 2025, with rules implementation beginning immediately upon becoming law.

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https://wapp.capitol.tn.gov/apps/Billinfo/default.aspx?BillNumber=SB1261&ga=114