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Bill

SB 987

Charter; City of Norfolk.

2025 Regular Session Introduced by Angelia Graves

Maryland requires AI health software to be registered with MHCC and bars insurers from using AI to decide or influence health care decisions; fines up to $10,000/day.

Acts of Assembly Chapter text (CHAP0385)
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Bill Summary · SB 987

SB 987 — Artificial Intelligence: Health Software and Health Insurance Decision Making

Status: Introduced Jan. 29, 2025; hearing scheduled Feb. 27, 2025 (1:00 p.m.). Bill text sets effective date: October 1, 2025. Companion: SB 873.

Purpose / Intent

To create a state registry and regulatory framework for artificial intelligence (AI) health software distributed or operated in Maryland and to prohibit health insurance carriers from using AI to decide or directly influence health care decisions or decisions directly related to health care.

Key provisions

  • Registry requirement (Health – General §19–150)

    • The Maryland Health Care Commission (MHCC) must maintain a registry of AI health software that may be distributed or operated in the State.
    • A person may not distribute or operate AI health software in Maryland unless the software is registered with MHCC.
    • MHCC must adopt regulations that:
    • Define “artificial intelligence health software”;
    • Specify what information must be collected for the registry; and
    • Set a registration deadline after which MHCC will begin issuing fines for unregistered distribution/operation.

  • Civil penalties (Health – General §19–150)

    • MHCC may fine violators up to $10,000 per day for each day an unregistered AI health software is distributed or operated.
    • Fines are to be calibrated based on: (1) extent of actual or potential harm; (2) investigation costs; and (3) prior violations.

  • Prohibition on carriers using AI for health-related decisions (Insurance §15–147)

    • “Carrier” is broadly defined to include insurers, nonprofit health service plans, HMOs, dental plan organizations, and any other entity providing regulated health benefit plans.
    • A carrier may not use AI to decide or directly influence a health care decision or a decision directly related to health care.
    • The prohibition does not prevent carriers from using AI for tasks or decisions that are not related to health care.

  • Definition of “artificial intelligence”

    • Uses the definition in State Finance & Procurement §3.5–801: a machine-based system that (1) makes predictions/recommendations/decisions for human-defined objectives; (2) uses machine and human inputs to perceive environments and builds models automatically; and (3) uses model inference to formulate options.

Enforcement & Administration

  • MHCC administers the registry and levies fines for unregistered AI health software.
  • The Maryland Insurance Administration (MIA) can enforce the carrier prohibition during its regular market conduct examinations.

Fiscal and operational impacts

  • MHCC special fund expenditures: estimated $86,109 in FY2026 (accounts for Oct. 1, 2025 effective date) to hire one software expert to develop/maintain the registry and support rulemaking and enforcement. Estimated ongoing costs: ~$102,500 (FY2027), increasing to ~$116,500 by FY2030.
  • Special fund revenues: indeterminate increase to the extent fines are imposed.
  • Local governments: no effect. Small business effect: minimal (per fiscal note).
  • Compliance impact: developers/distributors of AI health software will need to register and may face fines for noncompliance; health insurers/carriers must change or limit AI use for decisions that directly affect health care.

Timeline / Next steps

  • MHCC must promulgate implementing regulations (defining covered software, registry fields, and registration deadline).
  • Effective date in text: October 1, 2025 — MHCC’s registry and enforcement timeline will depend on the regulation and registration deadline it sets.

Compiled from official sources — confirm details with the bill’s official record.

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