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Bill

Bill

S 920

Health insurance

2025-2026 Regular Session Introduced by Allen Blackmon and 1 co-sponsor

Requires AI-based health insurance determinations for prior auth to be transparent, fair, clinically reviewed, and annually certified with oversight.

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Bill Summary · S 920

Summary of Bill S 920 (2025-2026) – South Carolina

Purpose and Intent

  • This bill adds a new Article 25 to Chapter 71, Title 38 of the South Carolina Code to regulate the use of artificial intelligence (AI) in health insurance prior authorization determinations and other coverage decisions.
  • The overarching goal is to ensure AI-based utilization review is transparent, fair, non-discriminatory, and accountable, with protections for enrollees and requirements for insurer oversight.

Key Provisions

Definitions (Section 38-71-2510)

  • Establishes common terms for the article, including:
    • Artificial intelligence: machine-based systems that perform perception, cognition, planning, learning, or action with potential improvement from experience, with limited human oversight.
    • Department: South Carolina Department of Insurance.
    • Enrollee: individual covered by a health benefit plan.
    • Health benefit plan: plans/policies issued or delivered by insurers, HMOs, or the State Health Plan in SC.
    • Healthcare service: a broad range of medical services and related supplies.
    • Insurer: entities providing health insurance or related plans, including the State Health Plan.
    • Prior authorization: insurer determination that a service is covered and medically necessary (or otherwise meets plan/law requirements).
    • Utilization review: determinations related to prior authorization and coverage.

Requirements for AI-Based Determinations (Section 38-71-2520)

  • Insurers using AI/algorithms to decide prior authorizations or coverage must base determinations on:

    • The enrollee’s medical history.
    • Clinical circumstances unique to the enrollee presented by the provider.
    • Additional clinical information in the enrollee’s records.

  • Annual certification to the Department:

    • The tool must not rely solely on a group dataset.
    • Determinations must be configured to be fair across subscriber groups and enrollees with similar clinical situations.
    • Must not discriminate in violation of state or federal law.

  • Clinical safeguards for adverse determinations:

    • Denials/reductions/deferrals must be reviewed or determined by a licensed physician or competent healthcare professional who can evaluate the AI tool in light of the specific clinical issues.

  • Transparency and oversight requirements:

    • Prominent written disclosures that AI/algorithms are used as a tool in utilization review.
    • Annual certifications that:
    • AI tooling and outcomes are regularly reviewed for accuracy and reliability.
    • Utilization review with AI complies with the statute.
    • Public disclosure on request of the percentage of denials/reductions/modifications/deferrals relative to total requests for similar services.
    • Protections for patient data, ensuring use is limited to its stated purpose and compliant with HIPAA.

Enforcement and Remedies (Section 38-71-2520, continued)

  • Departmental enforcement process:
    • If there are reasonable grounds to believe a violation exists, the Department may notify the insurer (30-day response required).
    • If the response is unsatisfactory, a hearing may be held.
    • If violations are confirmed, the Department may:
    • Impose corrective measures to align procedures/policies/guidelines with the statute, or
    • Impose disciplinary measures for repeat violations under Section 38-71-90.

General Provisions

  • The Department may adopt rules/regulations to implement the article.

Affected Parties and Scope

  • Insurers operating in South Carolina that use AI/algorithms in prior authorization or other utilization review decisions for health benefit plans.
  • Enrollees (patients) covered under these health plans.
  • Healthcare providers who request prior authorizations on behalf of enrollees.
  • The State Health Plan and HMOs regulated under the defined statutes.

Procedural and Timeline Aspects

  • Effective date: The act becomes effective upon the Governor’s approval.
  • Ongoing oversight: Annual certifications required; periodical reviews of AI tools.
  • Enforcement: Department has a formal process (notice, hearing, potential corrective actions or disciplinary measures) for violations.

Potential Impacts

  • Increased transparency around AI usage in prior authorizations.
  • Enhanced protections against biased or inconsistent AI determinations.
  • Greater clinician involvement in adverse determinations to ensure clinical context is considered.
  • Data access provisions may enable providers and enrollees to review AI-driven denial statistics.
  • Administrative burden on insurers to document, certify, and report yearly AI use and outcomes.

If you’d like, I can provide a one-page explainer diagram or a side-by-side comparison with current SC law on prior authorizations.

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

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