HB0035eng 104TH GENERAL ASSEMBLY

HB0035 Engrossed LRB104 03558 BAB 13582 b

AN ACT concerning regulation.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Artificial Intelligence Systems Use in Health Insurance Act.

Section 5. Definitions. In this Act:

"Adverse consumer outcome" means a decision by a health insurance issuer that is subject to insurance regulatory standards enforced by the Department that adversely impacts the consumer in a manner that violates those standards or any claim denial as determined by the use of an AI system.

"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments. AI system includes artificial intelligence.

"AI systems program" means the health insurance issuer's controls and processes for the responsible use of AI systems, including governance, risk management, and internal audit functions, which take into account third-party AI systems and data.

"Algorithm" means a clearly specified mathematical process for computation and a set of rules that, if followed, will give a prescribed result.

"Artificial intelligence" or "AI" has the meaning given to the term "artificial intelligence" in Section 2-101 of the Illinois Human Rights Act.

"Company" has the meaning given to that term in Section 2 of the Illinois Insurance Code.

"Department" means the Department of Insurance.

"Health insurance coverage" has the meaning given to that term in Section 5 of the Illinois Health Insurance Portability and Accountability Act. "Health insurance coverage" includes excepted benefits under the Department's jurisdiction other than insurance under the Illinois Insurance Code that falls outside Class 1(b) or 2(a) of Section 4 of that Code.

"Health insurance issuer" has the meaning given to that term in Section 5 of the Illinois Health Insurance Portability and Accountability Act. "Health insurance issuer" includes a company offering accident and health insurance under Class 1(b) or 2(a) of Section 4 of the Illinois Insurance Code, a dental service plan corporation, a health maintenance organization, a limited health service organization, a limited health services organization, or a health services plan corporation transacting or authorized to transact business under the Department's jurisdiction.

"Machine learning" means a field within artificial intelligence that focuses on the ability of computers to learn from provided data without being explicitly programmed.

"Predictive model" means the processing of historic data using algorithms or machine learning to identify patterns and predict outcomes that can be used to make decisions or support decision-making.

"Third party" means an organization other than the health insurance issuer that provides services, data, or other resources related to AI, including any person who develops or uses AI to support the health insurance issuer in administering its health insurance coverage.

Section 10. Regulatory oversight of the use of AI systems.

(a) The Department's regulatory oversight of health insurance coverage includes oversight of the use of AI systems or predictive models to make or support adverse consumer outcomes. The Department's authority in an investigation or market conduct action includes review regarding the development, implementation, and use of AI systems or predictive models and the outcomes from the use of those AI systems or predictive models. The Department may also request other information or documentation relevant to an investigation or market conduct action, and a health insurance issuer or any other person described in subsection (b) of Section 132 of the Illinois Insurance Code must comply with that request. The Department's inquiries may include, but are not limited to, questions regarding any specific model, AI system, or application of a model or AI system. The Department may also make requests for information and documentation relating to AI systems governance, risk management, and use protocols; information and documentation relating to the health insurance issuer's preacquisition and preutilization diligence, monitoring, and auditing of data or AI systems developed or used by a third party; and information and documentation relating to implementation and compliance with the health insurance issuer's AI systems program.

(b) A health insurance issuer authorized to do business in this State shall not issue an adverse consumer outcome with regard to the denial, reduction, or termination of health insurance coverage or benefits that result solely from the use or application of any AI system or predictive model. Any decision-making process concerning the denial, reduction, or termination of insurance plans or benefits that results from the use of AI systems or predictive models shall be meaningfully reviewed, in accordance with review procedures established by Department rules, by an individual with authority to override the AI systems and the determinations of the AI systems. When an adverse consumer outcome is an adverse determination regulated under the Managed Care Reform and Patient Rights Act, the individual with authority to override the AI systems and the determinations of the AI systems shall be a clinical peer as required and defined under that Act.

Section 15. Disclosure of AI system utilization. The Department of Insurance may adopt rules that include standards for the full and fair disclosure of a health insurance issuer's use of AI systems that may impact consumers, that set forth the manner, content, and required disclosures including notice before the use of AI systems, notice after an adverse decision, the way personal information is used to inform decisions, a process for correcting inaccurate information, and instructions for appealing decisions.

Section 20. Compliance with Act.

(a) All health insurance issuers authorized to do business in Illinois shall comply with this Act regarding any decisions impacting consumers that are made or supported by AI systems and machine learning, and must comply with all applicable insurance laws and regulations, including laws addressing unfair trade practices and unfair discrimination. All decisions made and actions taken by authorized health insurance issuers using AI systems must comply with applicable federal and State laws, regulations, and rules.

(b) A health insurance issuer shall ensure that its health insurance coverage is administered in conformity with this Act. The health insurance issuer's AI systems program shall include policies and procedures to ensure such conformity by all employees, directors, trustees, agents, representatives, and persons directly or indirectly contracted to administer the health insurance coverage. The health insurance issuer shall be responsible for any noncompliance under this Act with respect to its health insurance coverage. Nothing in this Section relieves any other person from liability for failure to comply with the Department's investigations or market conduct actions related to a health insurance issuer's compliance with this Act.

Section 95. The Voluntary Health Services Plans Act is amended by adding Section 15.35 as follows:

(215 ILCS 165/15.35 new)

Sec. 15.35. Artificial Intelligence Systems Use in Health Insurance Act. A health service plan corporation is subject to the provisions of the Artificial Intelligence Systems use in Health Insurance Act.