89R849 SCL-F
By: Campbell S.B. No. 1411
A BILL TO BE ENTITLED
AN ACT
relating to the use of artificial intelligence-based algorithms by
health benefit plan issuers, utilization review agents, health care
providers, and physicians.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 544, Insurance Code, is amended by
adding Subchapter O to read as follows:
SUBCHAPTER O. ARTIFICIAL INTELLIGENCE USE
Sec. 544.701. DEFINITIONS. In this subchapter:
(1) "Adverse determination" has the meaning assigned
by Section 4201.002.
(2) "Artificial intelligence-based algorithm" means
any artificial system that:
(A) performs tasks under varying and
unpredictable circumstances without significant human oversight;
or
(B) is able to learn from experience and improve
performance when exposed to data sets.
(3) "Enrollee" means an individual entitled to
coverage under a health benefit plan.
(4) "Health benefit plan" means a plan that provides
benefits for medical, surgical, or other treatment expenses
incurred as a result of a health condition, a mental health
condition, an accident, sickness, or substance abuse, including an
individual, group, blanket, or franchise insurance policy or
insurance agreement, a group hospital service contract, or an
individual or group evidence of coverage or similar coverage
document.
(5) "Health benefit plan issuer" means an insurance
company, association, organization, group hospital service
corporation, or health maintenance organization that delivers or
issues for delivery a health benefit plan. The term includes:
(A) a life, health, and accident insurance
company operating under Chapter 841 or 982;
(B) a general casualty insurance company
operating under Chapter 861;
(C) a statewide mutual assessment company
operating under Chapter 881;
(D) a mutual life insurance company operating
under Chapter 882;
(E) a mutual insurance company operating under
Chapter 883 that writes coverage other than life insurance;
(F) a stipulated premium company operating under
Chapter 884;
(G) a fraternal benefit society operating under
Chapter 885;
(H) a local mutual aid association operating
under Chapter 886;
(I) a mutual assessment company or mutual
assessment life, health, and accident association operating under
Chapter 887;
(J) a Lloyd's plan operating under Chapter 941;
and
(K) a reciprocal exchange operating under
Chapter 942.
(6) "Health care," "health care provider," "medical
care," and "physician" have the meanings assigned by Section
74.001, Civil Practice and Remedies Code.
(7) "Specialist" means a physician or health care
provider whose practice is not limited to primary medical or health
care services and who has additional postgraduate or specialized
training, has board certification, or practices in a licensed
specialized area of medicine or health care.
(8) "Utilization review" and "utilization review
agent" have the meanings assigned by Section 4201.002.
Sec. 544.702. PROHIBITED DISCRIMINATION. (a) A health
benefit plan issuer may not discriminate on the basis of race,
color, national origin, gender, age, vaccination status, or
disability through the use of clinical artificial
intelligence-based algorithms in the issuer's decision making.
(b) This section does not prohibit the use of clinical
artificial intelligence-based algorithms that rely on variables to
appropriately make decisions, including to identify, evaluate, and
address medical or health care.
Sec. 544.703. DISCLOSURE OF UTILIZATION REVIEW USE. A
health benefit plan issuer shall publish on a publicly accessible
part of the issuer's Internet website and provide in writing to each
enrollee, and any physician or health care provider contracting
with the issuer or providing services to an enrollee, a disclosure
regarding whether the issuer uses or may use artificial
intelligence-based algorithms in the issuer's utilization review
process.
Sec. 544.704. SUBMISSION OF ALGORITHM AND TRAINING DATA TO
DEPARTMENT. (a) A health benefit plan issuer shall submit an
artificial intelligence-based algorithm and training data sets
that are used or may be used in the issuer's utilization review
process to the department in the form and manner prescribed by the
commissioner.
(b) The commissioner shall develop and implement a process
for the department to certify that an artificial intelligence-based
algorithm and related data sets submitted to the department under
Subsection (a) have minimized the risk of discrimination prohibited
by Section 544.702 and adhere to evidence-based clinical
guidelines.
Sec. 544.705. UTILIZATION REVIEW BY SPECIALIST REQUIRED. A
utilization review agent that uses artificial intelligence-based
algorithms to perform an initial review shall require that a
specialist open and document the utilization review of an
individual's clinical records or data before making an adverse
determination against that individual.
Sec. 544.706. ANNUAL CONSUMER REPORT CARDS. (a) The office
of public insurance counsel shall include in the office's annual
consumer report cards developed and issued under Section 501.252
information identifying and comparing, on an objective basis, the
use of artificial intelligence-based algorithms by health benefit
plan issuers and utilization review agents in this state.
(b) The department and the Health and Human Services
Commission shall collaborate with and provide assistance to the
office of public insurance counsel in developing the information
required by this section to be included in the annual consumer
report cards.
SECTION 2. Subtitle A, Title 3, Occupations Code, is
amended by adding Chapter 117 to read as follows:
CHAPTER 117. USE OF ARTIFICIAL INTELLIGENCE
Sec. 117.001. DEFINITIONS. In this chapter:
(1) "Artificial intelligence-based algorithm" has the
meaning assigned by Section 544.701, Insurance Code.
(2) "Commission" means the Health and Human Services
Commission.
(3) "Health care," "health care provider," "medical
care," and "physician" have the meanings assigned by Section
74.001, Civil Practice and Remedies Code.
Sec. 117.002. PROHIBITED DISCRIMINATION. (a) A physician
or health care provider may not discriminate on the basis of race,
color, national origin, gender, age, vaccination status, or
disability through the use of clinical artificial
intelligence-based algorithms when providing a medical or health
care service.
(b) This section does not prohibit the use of clinical
artificial intelligence-based algorithms that rely on variables to
appropriately make decisions, including to identify, evaluate, and
address medical or health care.
Sec. 117.003. OVERSIGHT. The office of inspector general
for the commission shall conduct investigations into fraud and
abuse related to use of artificial intelligence-based algorithms in
medical or health care and violations of this chapter.
Sec. 117.004. NOTICE OF VIOLATION OR UNSUBSTANTIATED
COMPLAINT. (a) Not later than the 15th day after the date the
inspector general determines that a violation of this chapter has
occurred, the inspector general shall provide written notice by
certified mail to the affected physician or health care provider
that:
(1) includes:
(A) a brief summary of the alleged violation; and
(B) a statement of the recommended penalty and
administrative action; and
(2) informs the physician or provider of the
physician's or provider's right to a hearing.
(b) A physician or health care provider must submit a
written request for a hearing not later than the 30th business day
after the date the physician or provider receives the notice
described by Subsection (a).
(c) Not later than the 10th day after the date the inspector
general determines that a violation of this chapter has not
occurred after receiving a complaint, the inspector general shall
provide written notice to the affected physician or health care
provider of findings that the allegations in the complaint are not
substantiated.
Sec. 117.005. ENFORCEMENT. (a) Subject to this section, a
physician or health care provider who violates this chapter is
subject to:
(1) suspension or revocation of the physician's or
provider's license, certificate, or other authority to provide
medical or health care services in this state;
(2) refusal, for a period not to exceed one year, to
issue a new license, certificate, or other authority to provide
medical or health care services in this state to the physician or
provider;
(3) a fine of not more than $5,000 for each violation;
(4) a fine of not more than $10,000 for each
intentional violation; or
(5) a combination of the penalties described by
Subdivisions (1), (2), (3), and (4).
(b) A fine imposed under Subsection (a) may not exceed
$50,000 in the aggregate during a single calendar year.
(c) Sanctions provided by this section are in addition to
any other sanction provided by this code or other applicable laws,
including:
(1) Chapter 106, Civil Practice and Remedies Code;
(2) Chapter 81D, Health and Safety Code; or
(3) a civil rights law.
Sec. 117.006. PUBLIC AWARENESS AND EDUCATION CAMPAIGN. (a)
The commission, in consultation with the Texas Department of
Insurance, shall develop and implement a public awareness and
education campaign designed to educate the public on:
(1) a person's rights with respect to the use of, and
the limits on the use of, artificial intelligence-based algorithms
in connection with medical and health care and health benefits;
(2) the value and availability of artificial
intelligence-based algorithms, and their limitations, in
connection with medical and health care and health benefits; and
(3) the method for reporting allegations of wrongdoing
related to the use of artificial intelligence-based algorithms in
connection with medical and health care and health benefits.
(b) The commission may coordinate the implementation of the
campaign with any other state outreach campaign or activity
relating to artificial intelligence-based algorithms.
SECTION 3. The provisions of this Act are severable, and if
any provision of this Act or the application of the provision to any
person or circumstance is declared invalid for any reason, the
declaration does not affect the validity of the remaining portions
of this Act.
SECTION 4. (a) Subchapter O, Chapter 544, Insurance Code,
as added by this Act, applies only to a health benefit plan
delivered, issued for delivery, or renewed on or after January 1,
2026.
(b) Chapter 117, Occupations Code, as added by this Act,
applies only to a medical or health care service provided on or
after January 1, 2026.
SECTION 5. This Act takes effect September 1, 2025.