SB2768

SECTION 1. The legislature finds that there is a growing use of artificial intelligence by major health insurance providers when making coverage and claims decisions, which can adversely affect the ability of the State's residents to obtain appropriate and timely medical care. The legislature further finds that the use of artificial intelligence in health care decision-making raises serious concerns regarding transparency and accountability in health insurance decisions, particularly with regard to determining wrongful denials of health insurance claims.

The purpose of this Act is to:

(1) Regulate the use of artificial intelligence, algorithms, and other software tools for purposes of decision-making in health insurance utilization reviews; and

(2) Require a licensed physician or other licensed health care provider to review all adverse actions made by the health carrier before the health carrier may take an adverse action.

SECTION 2. Chapter 432E, Hawaii Revised Statutes, is amended by adding two new sections to part II to be appropriately designated and to read as follows:

"§432E- Artificial intelligence, algorithms, software tools; utilization review; restrictions. (a) Any health carrier or utilization review organization that uses artificial intelligence, an algorithm, or other software tool for the purpose of utilization review, or that contracts with or otherwise works through an entity that uses artificial intelligence, an algorithm, or other software tool for the purpose of utilization review shall ensure that the artificial intelligence, algorithm, or other software tool:

(1) Bases its determination on the following information, as applicable:

(A) The enrollee's medical or clinical history;

(B) Individual clinical circumstances as presented by the requesting provider; and

(2) Does not base its determination solely on a group dataset;

(3) Is fairly applied, including in accordance with any applicable federal or state regulations or with any guidance issued by the federal Department of Health and Human Services;

(4) Is configured and applied in a standard and consistent manner for all enrollees and all group health benefit plans so that all resulting decisions are the same for all patients with similar clinical presentation and considerations;

(5) Is open to inspection for audit or compliance reviews by the insurance commissioner;

(6) Does not directly or indirectly cause harm to the enrollee; and

(7) Performance, use, and outcomes are reviewed and revised at least quarterly to maximize accuracy and reliability.

(b) A health carrier or utilization review organization that uses artificial intelligence, an algorithm, or other software tool for the purpose of utilization review shall provide a written disclosure on how the artificial intelligence, algorithm, or other software tool is used in the utilization review process in each policy, plan, contract, or agreement issued by a health carrier in the State.

(c) A health carrier or utilization review organization shall not use artificial intelligence, an algorithm, or other software tool to deny, delay, or modify a determination to provide health care services.

§432E- Adverse actions; health care provider independent review. (a) Before a health carrier may issue an adverse action, including a denial of a request for prior authorization, a licensed health care provider shall conduct an independent review of the claim.

(b) The licensed health care provider's independent review shall consist of reviewing and considering the requesting provider's recommendation; the enrollee's medical or other clinical history, as applicable; and the individual clinical circumstances.

(c) When conducting the independent review of the adverse action, the licensed health care provider shall exercise independent medical judgment and shall not rely solely on recommendations from any other sources, including any artificial intelligence, algorithm, or other software tool.

(d) For the purposes of this section, "licensed health care provider" means a physician or osteopathic physician licensed pursuant to chapter 453, an advanced practice registered nurse licensed pursuant to chapter 457, a psychologist licensed pursuant to chapter 465, or any other health care provider licensed to practice in the State who is competent to evaluate the specific clinical issues involved in the health care services that are the subject of the claim."

SECTION 3. Section 432E-1, Hawaii Revised Statutes, is amended by adding three new definitions to be appropriately inserted and to read as follows:

""Algorithm" means a computerized procedure consisting of a series of analytical steps used to accomplish a determined task.

"Artificial intelligence" means an engineered or machine-based system that varies in its level of autonomy and that can, for explicit or implicit objectives, infer from inputs how to generate outputs, including content, decisions, predictions, and recommendations, that can influence physical or virtual environments.

"Prior authorization" has the same meaning as defined in section 323D-2."

SECTION 4. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	2768
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII