SB 1261

This bill requires a health insurance issuer that uses an artificial intelligence, algorithm, or other software tool for the purpose of utilization review or utilization management functions, based in whole or in part on medical necessity, or that contract s with or otherwise works through an entity that uses an artificial intelligence, algorithm, or other software tool for the purpose of utilization review or utilization management functions, based in whole or in part on medical necessity, to ensure that th e artificial intelligence, algorithm, or other software tool adheres to all of the following:  Bases its determination on the following information, as applicable : (i) an enrollee's medical or other clinical history; (ii) individual clinical circumstances as presented by the requesting provider; and (iii) other relevant clinical information contained in the enrollee's medical or other clinical record .  Does not base its determination solely on a group dataset .  Uses criteria and guidelines that comply with th e insurance laws of this state and other applicable state and federal law .  Does not supplant healthcare provider decision-making .  Does not discriminate, or is not used to discriminate, directly or indirectly, against an enrollee in violation of state or federal law, and is otherwise fairly and equitably applied, including in accordance with regulations and guidance issued by the federal department of health and human services .  Does not directly or indirectly cause harm to an enrollee. This bill requi res a health insurance issuer to do all of the following:  I nclude disclosures pertaining to the use and oversight of the artificial intelligence, algorithm, or other software tool in the health insurance issuer's written policies and procedures.  P eriodically review its use of the artificial intelligence, algorithm, or other software tool, as well as the artificial intelligence, algorithm, or other software tool's performance and outcomes, and revise the uses, performance, and outcomes to maximize accuracy and reliability.  If the artificial intelligence, algorithm, or other software tool is used for the purpose of utilization review or utilization management functions, ensure that patient data is not used beyond its intended and stated purpose, consistent with the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) , as applicable.  C omply with applicable federal rules and guidance issued by the federal department of health and human services regarding the use of artificial intelligence, algorithms, or other software tools. As used in this bill, a "health insurance issuer"" includes the TennCare program or another plan managed by the health care finance and administration division of the department of finance and administrat ion, and the group insurance plans offered to state and local governmental employees . This bill prohibits the artificial intelligence, algorithm, or other software tool from deny ing, delay ing, or modify ing healthcare services based, in whole or in part, on medical necessity. A determination of medical necessity must be made only by a licensed physician or a licensed healthcare professional competent to evaluate the specific clinical issues involved in the healthcare services requested by the provider by reviewing and considering the requesting provider's recommendation, the enrollee's medical or other clinical history, as applicable, and individual clinical circumstances. This bill applies to utilization review or utilization management functions that p rospectively, retrospectively, or concurrently review requests for covered health care services. However, if compliance by a health insurance issuer would result in the loss of federal funding, then this bill does not apply to the extent that the complian ce would result in the loss of federal funding. This bill provides that a violation constitutes an unfair claims practice, punishable pursuant to the insurance laws of this state. In addition to the remed ies provided in such laws, an individual aggrieve d by a violation may bring a private cause of action in a court of competent jurisdiction. If the court finds that a health insurance issuer violated this bill, then the court must award to the plaintiff a ctual damage s, p unitive damages, and r easonable co urt costs and attorneys' fees. RULEMAKING This bill authorizes the department of commerce and insurance to promulgate rules to effectuate this bill."