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1 State of Arkansas As Engrossed: H2/27/25
2 95th General Assembly
A Bill
3 Regular Session, 2025 HOUSE BILL 1297
4
5 By: Representative L. Johnson
6 By: Senator Irvin
7
8 For An Act To Be Entitled
9 AN ACT CONCERNING ARTIFICIAL INTELLIGENCE,
10 ALGORITHMS, AND OTHER AUTOMATED TECHNOLOGIES; TO
11 REGULATE CERTAIN PRACTICES OF HEALTHCARE INSURERS;
12 AND FOR OTHER PURPOSES.
13
14
15 Subtitle
16 CONCERNING ARTIFICIAL INTELLIGENCE,
17 ALGORITHMS, AND OTHER AUTOMATED
18 TECHNOLOGIES; AND TO REGULATE CERTAIN
19 PRACTICES OF HEALTHCARE INSURERS.
20
21 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS:
22
23 SECTION 1. Arkansas Code Title 23, Chapter 63, is amended to add an
24 additional subchapter to read as follows:
25
26 Subchapter 21 -- Artificial Intelligence, Algorithms, and Other Automated
27 Technologies
28
29 23-63-2101. Definitions.
30 As used in this subchapter:
31 (1) "Artificial intelligence" means a machine-based system that
32 for a given set of human-defined objectives, can make predictions,
33 recommendations, or decisions influencing real or virtual environments;
34 (2) "Enrollee" means an individual who is entitled to receive
35 healthcare services under the terms of a health benefit plan;
36 (3)(A) "Health benefit plan" means:
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1 (i) An individual, blanket, or group plan, or a
2 policy or contract for healthcare services offered, issued, renewed,
3 delivered, or extended in this state by a healthcare insurer; and
4 (ii) A health benefit program receiving state or
5 federal appropriations from the State of Arkansas, including the Arkansas
6 Medicaid Program and the Arkansas Health and Opportunity for Me Program or
7 any successor program.
8 (B) "Health benefit plan" includes indemnity and managed care
9 plans.
10 (C) "Health benefit plan" does not include:
11 (i) A plan that provides only dental benefits or eye
12 and vision care benefits;
13 (ii) A disability income plan;
14 (iii) A credit insurance plan;
15 (iv) Insurance coverage issued as a supplement to
16 liability insurance;
17 (v) A medical payment under an automobile or
18 homeowners insurance plan;
19 (vi) A health benefit plan provided under Arkansas
20 Constitution, Article 5, � 32, the Workers' Compensation Law, � 11-9-101 et
21 seq., or the Public Employee Workers' Compensation Act, � 21-5-601 et seq.;
22 (vii) A plan that provides only indemnity for
23 hospital confinement;
24 (viii) An accident-only plan;
25 (ix) A specified disease plan;
26 (x) A long-term-care-only plan; or
27 (xi) A nonfederal governmental plan as defined in 29
28 U.S.C. � 1002(32), as it existed on January 1, 2025;
29 (4)(A) "Healthcare insurer" means an insurance company, hospital
30 and medical service corporation, or health maintenance organization that
31 issues or delivers health benefit plans in this state and is subject to:
32 (i) The insurance laws of this state;
33 (ii) Section 23-75-101 et seq., pertaining to
34 hospital and medical service corporations; or
35 (iii) Section 23-76-101 et seq., pertaining to
36 health maintenance organizations.
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1 (B) "Healthcare insurer" does not include an entity that
2 provides only dental benefits or eye and vision care benefits;
3 (5) "Healthcare provider" means a type of provider that renders
4 healthcare services to patients for compensation, including a doctor of
5 medicine or another licensed healthcare professional acting within the
6 professional's licensed scope of practice; and
7 (6) "Managed care entity" means an insurance company, hospital
8 or medical service plan, healthcare provider network, physician hospital
9 organization, health maintenance organization, healthcare service
10 corporation, employer or employee organization, or managed care contractor.
11
12 23-63-2102. Disclosure of algorithm use -- Privacy and data
13 accessibility.
14 (a)(1) On and after January 1, 2026, a healthcare insurer that offers,
15 issues, renews, delivers, or extends a health benefit plan in this state
16 shall disclose to the following through an applied model card the strengths
17 and limitations of artificial intelligence-based algorithms, including
18 without limitation known biases, performance variability, and populations
19 where artificial based-intelligence algorithms are more less effective, used
20 or to be used in the healthcare insurer's utilization review process:
21 (A) The Insurance Commissioner;
22 (B) A healthcare provider in the healthcare insurer's
23 network;
24 (C) An enrollee; and
25 (D) The general public on the healthcare insurer's
26 publicly accessible website.
27 (2) The disclosure under subdivision (a)(1) of this section
28 shall include:
29 (A) The algorithm criteria;
30 (B) Data sets used to train the algorithm, including
31 mitigation of any known bias;
32 (C) The algorithm itself;
33 (D) A description of how the algorithm is used in an
34 applied use case;
35 (E) The outcomes of the software or workflow in which the
36 algorithm is used; and
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1 (F) Any results of independent third-party validation for
2 improved transparency and trustworthiness.
3 (b) A healthcare insurer shall ensure that:
4 (1) An algorithm should leverage federated data-sharing models
5 to minimize data centralization and protect enrollee privacy;
6 (2) An algorithm is compliant with national interoperability
7 standards, including Fast Healthcare Interoperability Resources and the
8 United States Core Data for Interoperability;
9 (3) Enrollee data that is used for training or validation of
10 artificial intelligence models are following privacy and security standards
11 that align with the Trusted Exchange Framework and Common Agreement; and
12 (4) Established mechanisms document and obtain explicit enrollee
13 consent for using health data in artificial development and validation.
14
15 23-63-2103. Explanation of artificial intelligence-based algorithm
16 recommendations.
17 (a) If artificial intelligence-based algorithms are used in the
18 utilization review process, the artificial intelligence-based algorithm
19 recommendations shall be supported by an explanation, understandable at all
20 literacy levels, of the rationale used by the healthcare insurer-operated
21 algorithm or system used in making a recommendation to deny, delay, or modify
22 healthcare services covered under a health benefit plan.
23 (b)(1) A healthcare insurer using an automated decision-making system
24 shall identify and cite peer-reviewed studies assessing the automated
25 decision-making system's accuracy measured against enrollee outcomes and the
26 validity of automated decision-making systems.
27 (2) The peer-reviewed studies under subdivision (b)(1) of this
28 section shall be concordant or based on easily accessible evidence-based
29 clinical guidelines, as opposed to proprietary healthcare insurer criteria.
30 (3) An enrollee shall be provided a process for contesting
31 enrollee outcomes.
32
33 23-63-2104. Clinician supervision of artificial intelligence.
34 (a) A healthcare insurer shall not make a decision regarding the care
35 of enrollees based solely on the results derived from the use or application
36 of artificial intelligence.
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1 (b) A healthcare provider who participates in a utilization review
2 process for a healthcare insurer that initially uses artificial intelligence-
3 based algorithms for a utilization review determination shall:
4 (1) Ensure that a utilization review entity guarantees that an
5 initial adverse prior authorization determination or appeal of an adverse
6 prior authorization determination or precertification determination is
7 reviewed by a healthcare provider who:
8 (A) Possesses a current and valid nonrestricted license to
9 practice medicine in this state;
10 (B) Has experience treating patients with the medical
11 condition or disease for which the healthcare service or supply is being
12 requested under initial prior authorization determination or appeal;
13 (C) Is not employed by a utilization review entity, is not
14 under contract with a utilization review entity other than to participate in
15 one (1) or more of the utilization review entity's healthcare provider
16 networks or to perform reviews of appeals, and does not otherwise have a
17 financial interest in the outcome of the appeal;
18 (D) Has not been directly involved in making the adverse
19 determination; and
20 (E)(i) Has considered known clinical aspects of the
21 healthcare service under review, including without limitation:
22 (a) A review of pertinent medical records
23 provided to the utilization review entity by the enrollee's healthcare
24 provider;
25 (b) Relevant records provided to the
26 utilization review entity by a healthcare facility; and
27 (c) Medical literature provided to the
28 utilization review entity by the healthcare provider.
29 (ii) If the decision is an adverse determination,
30 the healthcare provider shall complete and sign the denial notice, providing
31 the required information described under this subdivision (b)(1); and
32 (2) Open and document the review of the individual clinical
33 records or data before the individualized documented decision of a denial.
34 (c) The healthcare insurer shall submit to the Insurance Commissioner,
35 in the form and manner as the commissioner may require, data on the amount of
36 time a human reviewer spends examining an adverse organizational
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1 determination before signing off on each denial under subsection (b) of this
2 section.
3 (d) An artificial intelligence-based algorithm shall not be the sole
4 basis of a decision to deny, delay, or modify healthcare services based in
5 whole or in part on medical necessity.
6 (e) An adverse determination of medical necessity shall be made only
7 by a healthcare provider or a licensed healthcare professional competent to
8 evaluate the specific clinical issues involved in the healthcare services
9 requested by the healthcare provider as required under subdivision (b)(1) of
10 this section, by reviewing and considering the requesting healthcare
11 provider's recommendation, the enrollee's medical or other clinical history,
12 as applicable, and individual clinical circumstances.
13 (f) A healthcare insurer that uses clinical supervision of artificial
14 intelligence under this section shall provide ongoing education and
15 certification, if applicable, for a clinician reviewing artificial
16 intelligence determinations to ensure the clinician's ability to critically
17 assess artificial intelligence outputs.
18
19 23-63-2105. State audit automated utilization management system.
20 (a) The Insurance Commissioner may audit at any time a healthcare
21 insurer's automated utilization management system.
22 (b) The commissioner may contract with a third-party entity to perform
23 an audit under subsection (a) of this section.
24 (c) A healthcare insurer that uses an automated decision-making system
25 shall:
26 (1) Engage in a regular system audit to ensure use of the
27 automated decision-making system is not increasing overall or disparate
28 claims denials or coverage limitations or otherwise decreasing access to
29 care; and
30 (2) Publish statistics regarding the automated decision-making
31 systems' approval, denial, and appeal rates on the payor's website or another
32 publicly available website in a readily accessible format with enrollee
33 population demographics to report and contextualize equity implications of
34 automated decisions.
35
36 23-63-2106. Use of artificial intelligence to shift coverage
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1 prohibited.
2 (a) A healthcare insurer shall:
3 (1) Reference publicly accessible internal coverage criteria
4 that are based on current evidence in widely used treatment guidelines or
5 clinical literature; or
6 (2) Use artificial intelligence-based algorithms solely to
7 implement internal coverage criteria that have been made public and adopted
8 in compliance with this subchapter.
9 (b) A healthcare insurer shall not use artificial intelligence-based
10 algorithms that:
11 (1) Rely on any information not in compliance with this section;
12 or
13 (2) Independently change or create coverage criteria.
14
15 23-63-2107. Quality assurance testing of artificial intelligence.
16 (a)(1) A healthcare insurer shall establish an ongoing, biannual
17 quality assurance testing process that meets requirements established by rule
18 by the Insurance Commissioner that specify defined parameters on safety and
19 efficacy of an artificial intelligence-based algorithm.
20 (2) The requirements under subdivision (a)(1) of this section
21 shall meet standardized benchmarks or definitions achieved by consensus-
22 building at a national level.
23 (b) A healthcare insurer shall ensure that the artificial
24 intelligence-based algorithms used in the quality assurance testing process
25 under subsection (a) of this section are consistent with state and federal
26 antidiscrimination laws and meet certain parameters of safety and fairness.
27 (c) A healthcare insurer shall submit the results of the quality
28 assurance testing under subsection (a) of this section to the commissioner at
29 the time and in the form and manner as the commissioner may specify, but not
30 less frequently than semiannually.
31 (d) The results submitted under subsection (c) of this section shall
32 be published on a public website within thirty (30) days of the submission of
33 the results to the commissioner.
34 (e) Any quality assurance testing shall include:
35 (1) Validation for generalizability as well as mechanisms to
36 support local site testing, where necessary, and on-site monitoring
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1 applicability for artificial intelligence solutions to ensure safety,
2 robustness, adaptability, and fairness; and
3 (2) Testing based on the risk level of the model's intended use,
4 with higher-risk applications requiring more rigorous evaluation and
5 monitoring.
6 (f)(1) A healthcare insurer shall build capabilities for generating
7 and curating real-world evidence to ensure artificial intelligence-based
8 algorithms are tested for the highest standards for safety, accuracy, and
9 reliability to identify potential risks.
10 (2) All artificial intelligence solutions shall undergo
11 benchmarking against standardized metrics approved by the commissioner,
12 including without limitation safety, efficacy, and reliability in
13 representative enrollee populations from Arkansas.
14 (g) Quality assurance testing datasets under this section shall:
15 (1) Be multi-institutional and representative of Arkansas's
16 demographic makeup;
17 (2) Explain data provenance and origin;
18 (3) Contain relevant characteristics pertaining to the
19 artificial intelligence being used; and
20 (4) Be updated regularly to ensure the highest quality data is
21 used at all times.
22 (h) The commissioner shall allocate resources to federally qualified
23 health centers, critical access hospitals, and rural clinics in this state to
24 enable participation in quality assurance testing.
25
26 23-63-2108. Healthcare insurer requirements.
27 (a) Except as provided in subsection (b) of this section, this
28 subchapter applies to a healthcare insurer offering a health benefit plan in
29 this state.
30 (b) This subchapter does not apply to a managed care entity or
31 healthcare service contractor that is:
32 (1) Majority-owned or controlled by a nonprofit hospital,
33 hospital system, or managed care entity; or
34 (2) A nonprofit legal entity under 26 U.S.C. � 501(c) that
35 provides a majority of covered professional services in a specific geographic
36 area through employed healthcare providers or a single contracted medical
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1 group.
2
3 23-63-2109. Enforcement -- Penalties.
4 If the Insurance Commissioner determines that a healthcare insurer is
5 not in compliance with this subchapter, the commissioner may impose:
6 (1) A penalty, including without limitation:
7 (A) A civil money penalty of not more than twenty-five
8 thousand dollars ($25,000) for each determination of noncompliance;
9 (B) A civil money penalty of not more than ten thousand
10 dollars ($10,000) for each week beginning on and after the date on which a
11 civil money penalty under subdivision (a)(1)(A) of this section is imposed by
12 the commissioner during which the deficiency that is the basis of a
13 determination of noncompliance exists; and
14 (C) Suspension of enrollment of individuals in health
15 benefit plans offered by the healthcare insurer on and after the date the
16 commissioner notifies the healthcare insurer of a determination of
17 noncompliance and until the commissioner is satisfied that the basis for the
18 determination has been corrected and is not likely to recur;
19 (2) Administrative fees, including a fee charged or allocated
20 for collection activities conducted by the commissioner that will be passed
21 on to a health benefit plan on a pro-rata basis and added to a civil money
22 penalty under subdivision (a)(1) of this section collected from the health
23 benefit plan;
24 (3) If the commissioner determines that a healthcare provider or
25 enrollee was adversely affected by the noncompliance of the healthcare
26 insurer, an amount necessary to compensate the healthcare provider or
27 enrollee for the harm attributable to the noncompliance that is not otherwise
28 compensated and may require the healthcare insurer to pay the amount,
29 including appropriate interest, to the healthcare provider or enrollee in
30 addition to any other penalties under this section; or
31 (4) Any other remedy available to the commissioner under state
32 law.
33
34 23-63-2110. No waiver, modification, or nullification by contract.
35 (a) Except as provided in subsection (b) of this section, a writing or
36 other agreement shall not contain a provision that constitutes a waiver,
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1 modification, or nullification of a requirement or remedy under this
2 subchapter.
3 (b) This section does not prohibit a writing or other agreement that
4 grants to a healthcare provider more protection or remedy than contained in
5 this subchapter or a waiver given in settlement of a dispute or action.
6
7 23-63-2111. Private right of action.
8 (a) The Attorney General may bring a civil action in an appropriate
9 court for declaratory or injunctive relief as is necessary to carry out this
10 subchapter.
11 (b) A person who is aggrieved by a violation of this subchapter may
12 provide written notice of the violation to the Insurance Commissioner.
13 (c) If the violation of this subchapter is not corrected within ninety
14 (90) days after receipt of a notice under subsection (b) of this section, the
15 aggrieved person may bring a civil action in an appropriate court for
16 declaratory or injunctive relief with respect to the violation.
17 (d) In a civil action under this section, the court may allow the
18 prevailing party, other than the state, reasonable attorney's fees, including
19 litigation expenses, and costs.
20
21 23-63-2112. Education artificial intelligence tools.
22 The Insurance Commissioner may:
23 (1) Collaborate with academic institutions and healthcare
24 organizations to establish training programs for ethical artificial
25 intelligence deployment; and
26 (2) Fund public-private partnerships to create education
27 initiatives for a healthcare provider to use artificial intelligence tools.
28
29 23-63-2113. Rules.
30 The Insurance Commissioner shall promulgate rules to:
31 (1) Strengthen oversight and enforcement of existing rules to
32 ensure health benefit plan compliance with applicable legal and contractual
33 requirements for coverage and appeals;
34 (2) Ensure compliance with quality and performance standards;
35 (3) Ensure that health benefit plan compliance with this
36 subchapter is not eroded by using artificial intelligence tools, including
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1 auto-denial software;
2 (4) Include continuous post-deployment monitoring of artificial
3 intelligence to ensure models maintain efficacy and safety; and
4 (5) Establish a process for biannual reporting and public
5 disclosure of quality assurance outcomes.
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7 /s/L. Johnson
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11 02-27-2025 11:07:44 ANS071Every fact on this page links to its source, starting with the official bill record.