A bill

 

TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY ADDING Article 25 to Chapter 71, Title 38 so as to provide circumstances that must be considered when a health insurer uses artificial intelligence to make determinations relating to Prior authorizations, to provide certain disclosures to enrollees, and to provide disciplinary actions for violations.

 

Be it enacted by the General Assembly of the State of South Carolina:

 

SECTION 1.  Chapter 71, Title 38 of the S.C. Code is amended by adding:

 

Article 25

 

Prior Authorization Determinations with Artificial Intelligence

 

    Section 38-71-2510.  As used in this article:

    (1) "Artificial intelligence" means a machine-based system that may include software or physical hardware that performs tasks, based upon dataset inputs, which require human like perception, cognition, planning, learning, communication, or physical action and which is capable of improving performance based upon learned experience without significant human oversight toward influencing real or virtual environments.

    (2) "Department" means the Department of Insurance.

    (3) "Enrollee" means an individual who contracts for, subscribes to, or participates as a dependent under a health benefit plan.

    (4) "Health benefit plan" means any individual, blanket, or group plan, policy, or contract for healthcare services issued or delivered by

           (a) a healthcare insurer in this State as defined in Sections 38-71-670 and 38-71-840;

           (b) a health maintenance organization as defined in Section 38-33-20; and

           (c) the State Health Plan as provided for in Article 5, Chapter 11, Title 1.

    (5) "Healthcare service" means diagnosing, testing, monitoring, or treating a human disease, disorder, syndrome, illness, or injury that may include, but not be limited to, hospitalization, physician care, treatment, surgery, therapy, drugs, or medical equipment.

    (6) "Insurer" means:

       (a) an entity that provides health insurance coverage in this State as defined in Sections 38-71-670 and 38-71-840;

       (b) a health maintenance organization as defined in Section 38-33-20; and

       (c) the State Health Plan as provided for in Article 5, Chapter 11, Title 1.

    (7) "Prior authorization" means a written or oral determination made by an insurer that a healthcare service is a benefit covered under the applicable health benefit plan which, under the enrollee's clinical circumstances, is medically necessary or satisfies another requirement imposed by the insurer or law and thus satisfies the requirements for payment or reimbursement.

    (8) "Utilization review" means the determination of requests for prior authorization or other issues of coverage under a health benefit plan according to the rules, healthcare service policies, and guidelines adopted by an insurer, or requirements imposed by law, and applicable to a health benefit plan.

 

    Section 38-71-2520.  (A) An insurer that uses artificial intelligence, an algorithm, or other software tool to make determinations on requests for prior authorization or other decisions on coverage under healthcare plans shall base determinations on all of the following:

       (1) the enrollee's medical history;

       (2) any clinical circumstances unique to the enrollee which are presented by the requesting healthcare provider; and

       (3) additional clinical information about the enrollee which may be present in the enrollee's medical record.

    (B) An insurer shall certify annually to the department that the artificial intelligence, algorithm, or other software tool used to make determinations on requests for prior authorization complies with all of the following:

       (1) does not rely solely on a group dataset to make determinations;

       (2) is configured and applied in a fair manner for each subscriber group and enrollee such that resulting determinations are consistent for enrollees who present with similar clinical considerations; and

       (3) does not discriminate directly or indirectly against any subscriber group or enrollee in violation of state or federal law, including any regulation or guidance issued by the federal Department of Health and Human Services.

    (C) In addition to the requirements listed in subsections (A) and (B), a determination to deny, reduce, or defer a request for prior authorization shall always be made by a licensed physician or other healthcare professional who is competent to evaluate any recommendation or conclusion of artificial intelligence, algorithm, or other software tool in the light of the specific clinical issues involved in the healthcare service requested which are unique to the enrollee's circumstances or as recommended by the treating healthcare provider.

    (D) An insurer shall do all of the following:

       (1) make prominent written disclosure to enrollees that artificial intelligence, an algorithm, or other software tool is used as a tool in utilization review to contribute information;

       (2) certify annually to the department that:

           (a) use of artificial intelligence, algorithms, or other software tools, and the outcomes that they generate, are reviewed on a periodic basis to maximize accuracy and reliability; and

           (b) use of artificial intelligence, algorithms, or other software tools in utilization review complies with the requirements of this section;

       (3) make available the percentage of denials, reductions, modifications, or deferrals of treatment in relation to the total number of requests for the same or a similar healthcare service, upon request, to the department, healthcare providers, and enrollees for inspection; and

       (4) ensure that patient data used in utilization review functions by artificial intelligence, an algorithm, or other software tool is not used beyond its intended and stated purpose consistent with the federal Health Insurance Portability and Accountability Act (HIPAA), 42 U.S.C. Section 1320d, et seq.

    (E)(1) When the department has reasonable grounds to believe that an insurer has or is engaged in conduct that violates this section, including making determinations of prior authorization adverse to an enrollee without taking into consideration the enrollee's medical history and relevant clinical circumstances, the department may notify the insurer of the alleged violation and the insurer shall respond to the notice within thirty days.

       (2) If the department finds the response required in item (1) to be unsatisfactory, the department may hold a hearing as provided for by law.

       (3) If, upon hearing the case, the department determines that the insurer has or is engaged in conduct that violates this section, including making determinations of prior authorization adverse to an enrollee without taking into consideration the enrollee's medical history and relevant clinical circumstances, the department may do any of the following:

           (a) impose a plan upon the insurer to correct procedures, policies, and guidelines to bring the insurer's utilization review into compliance with this section; or

           (b) for repeat violations, impose upon the insurer the disciplinary measures provided in Section 38-71-90.

    (F) The department may adopt rules and promulgate regulations to implement the provisions of this article.

 

SECTION 2.  This act takes effect upon approval by the Governor.

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