89R849 SCL-F     By: Campbell S.B. No. 1411       A BILL TO BE ENTITLED   AN ACT   relating to the use of artificial intelligence-based algorithms by   health benefit plan issuers, utilization review agents, health care   providers, and physicians.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Chapter 544, Insurance Code, is amended by   adding Subchapter O to read as follows:   SUBCHAPTER O. ARTIFICIAL INTELLIGENCE USE          Sec. 544.701.  DEFINITIONS. In this subchapter:                (1)  "Adverse determination" has the meaning assigned   by Section 4201.002.                (2)  "Artificial intelligence-based algorithm" means   any artificial system that:                      (A)  performs tasks under varying and   unpredictable circumstances without significant human oversight;   or                      (B)  is able to learn from experience and improve   performance when exposed to data sets.                (3)  "Enrollee" means an individual entitled to   coverage under a health benefit plan.                (4)  "Health benefit plan" means a plan that provides   benefits for medical, surgical, or other treatment expenses   incurred as a result of a health condition, a mental health   condition, an accident, sickness, or substance abuse, including an   individual, group, blanket, or franchise insurance policy or   insurance agreement, a group hospital service contract, or an   individual or group evidence of coverage or similar coverage   document.                (5)  "Health benefit plan issuer" means an insurance   company, association, organization, group hospital service   corporation, or health maintenance organization that delivers or   issues for delivery a health benefit plan. The term includes:                      (A)  a life, health, and accident insurance   company operating under Chapter 841 or 982;                      (B)  a general casualty insurance company   operating under Chapter 861;                      (C)  a statewide mutual assessment company   operating under Chapter 881;                      (D)  a mutual life insurance company operating   under Chapter 882;                      (E)  a mutual insurance company operating under   Chapter 883 that writes coverage other than life insurance;                      (F)  a stipulated premium company operating under   Chapter 884;                      (G)  a fraternal benefit society operating under   Chapter 885;                      (H)  a local mutual aid association operating   under Chapter 886;                      (I)  a mutual assessment company or mutual   assessment life, health, and accident association operating under   Chapter 887;                      (J)  a Lloyd's plan operating under Chapter 941;   and                      (K)  a reciprocal exchange operating under   Chapter 942.                (6)  "Health care," "health care provider," "medical   care," and "physician" have the meanings assigned by Section   74.001, Civil Practice and Remedies Code.                (7)  "Specialist" means a physician or health care   provider whose practice is not limited to primary medical or health   care services and who has additional postgraduate or specialized   training, has board certification, or practices in a licensed   specialized area of medicine or health care.                (8)  "Utilization review" and "utilization review   agent" have the meanings assigned by Section 4201.002.          Sec. 544.702.  PROHIBITED DISCRIMINATION. (a) A health   benefit plan issuer may not discriminate on the basis of race,   color, national origin, gender, age, vaccination status, or   disability through the use of clinical artificial   intelligence-based algorithms in the issuer's decision making.          (b)  This section does not prohibit the use of clinical   artificial intelligence-based algorithms that rely on variables to   appropriately make decisions, including to identify, evaluate, and   address medical or health care.          Sec. 544.703.  DISCLOSURE OF UTILIZATION REVIEW USE. A   health benefit plan issuer shall publish on a publicly accessible   part of the issuer's Internet website and provide in writing to each   enrollee, and any physician or health care provider contracting   with the issuer or providing services to an enrollee, a disclosure   regarding whether the issuer uses or may use artificial   intelligence-based algorithms in the issuer's utilization review   process.          Sec. 544.704.  SUBMISSION OF ALGORITHM AND TRAINING DATA TO   DEPARTMENT. (a) A health benefit plan issuer shall submit an   artificial intelligence-based algorithm and training data sets   that are used or may be used in the issuer's utilization review   process to the department in the form and manner prescribed by the   commissioner.          (b)  The commissioner shall develop and implement a process   for the department to certify that an artificial intelligence-based   algorithm and related data sets submitted to the department under   Subsection (a) have minimized the risk of discrimination prohibited   by Section 544.702 and adhere to evidence-based clinical   guidelines.          Sec. 544.705.  UTILIZATION REVIEW BY SPECIALIST REQUIRED. A   utilization review agent that uses artificial intelligence-based   algorithms to perform an initial review shall require that a   specialist open and document the utilization review of an   individual's clinical records or data before making an adverse   determination against that individual.          Sec. 544.706.  ANNUAL CONSUMER REPORT CARDS. (a) The office   of public insurance counsel shall include in the office's annual   consumer report cards developed and issued under Section 501.252   information identifying and comparing, on an objective basis, the   use of artificial intelligence-based algorithms by health benefit   plan issuers and utilization review agents in this state.          (b)  The department and the Health and Human Services   Commission shall collaborate with and provide assistance to the   office of public insurance counsel in developing the information   required by this section to be included in the annual consumer   report cards.          SECTION 2.  Subtitle A, Title 3, Occupations Code, is   amended by adding Chapter 117 to read as follows:   CHAPTER 117. USE OF ARTIFICIAL INTELLIGENCE          Sec. 117.001.  DEFINITIONS. In this chapter:                (1)  "Artificial intelligence-based algorithm" has the   meaning assigned by Section 544.701, Insurance Code.                (2)  "Commission" means the Health and Human Services   Commission.                (3)  "Health care," "health care provider," "medical   care," and "physician" have the meanings assigned by Section   74.001, Civil Practice and Remedies Code.          Sec. 117.002.  PROHIBITED DISCRIMINATION. (a) A physician   or health care provider may not discriminate on the basis of race,   color, national origin, gender, age, vaccination status, or   disability through the use of clinical artificial   intelligence-based algorithms when providing a medical or health   care service.          (b)  This section does not prohibit the use of clinical   artificial intelligence-based algorithms that rely on variables to   appropriately make decisions, including to identify, evaluate, and   address medical or health care.          Sec. 117.003.  OVERSIGHT. The office of inspector general   for the commission shall conduct investigations into fraud and   abuse related to use of artificial intelligence-based algorithms in   medical or health care and violations of this chapter.          Sec. 117.004.  NOTICE OF VIOLATION OR UNSUBSTANTIATED   COMPLAINT. (a) Not later than the 15th day after the date the   inspector general determines that a violation of this chapter has   occurred, the inspector general shall provide written notice by   certified mail to the affected physician or health care provider   that:                (1)  includes:                      (A)  a brief summary of the alleged violation; and                      (B)  a statement of the recommended penalty and   administrative action; and                (2)  informs the physician or provider of the   physician's or provider's right to a hearing.          (b)  A physician or health care provider must submit a   written request for a hearing not later than the 30th business day   after the date the physician or provider receives the notice   described by Subsection (a).          (c)  Not later than the 10th day after the date the inspector   general determines that a violation of this chapter has not   occurred after receiving a complaint, the inspector general shall   provide written notice to the affected physician or health care   provider of findings that the allegations in the complaint are not   substantiated.          Sec. 117.005.  ENFORCEMENT. (a) Subject to this section, a   physician or health care provider who violates this chapter is   subject to:                (1)  suspension or revocation of the physician's or   provider's license, certificate, or other authority to provide   medical or health care services in this state;                (2)  refusal, for a period not to exceed one year, to   issue a new license, certificate, or other authority to provide   medical or health care services in this state to the physician or   provider;                (3)  a fine of not more than $5,000 for each violation;                (4)  a fine of not more than $10,000 for each   intentional violation; or                (5)  a combination of the penalties described by   Subdivisions (1), (2), (3), and (4).          (b)  A fine imposed under Subsection (a) may not exceed   $50,000 in the aggregate during a single calendar year.          (c)  Sanctions provided by this section are in addition to   any other sanction provided by this code or other applicable laws,   including:                (1)  Chapter 106, Civil Practice and Remedies Code;                (2)  Chapter 81D, Health and Safety Code; or                (3)  a civil rights law.          Sec. 117.006.  PUBLIC AWARENESS AND EDUCATION CAMPAIGN. (a)   The commission, in consultation with the Texas Department of   Insurance, shall develop and implement a public awareness and   education campaign designed to educate the public on:                (1)  a person's rights with respect to the use of, and   the limits on the use of, artificial intelligence-based algorithms   in connection with medical and health care and health benefits;                (2)  the value and availability of artificial   intelligence-based algorithms, and their limitations, in   connection with medical and health care and health benefits; and                (3)  the method for reporting allegations of wrongdoing   related to the use of artificial intelligence-based algorithms in   connection with medical and health care and health benefits.          (b)  The commission may coordinate the implementation of the   campaign with any other state outreach campaign or activity   relating to artificial intelligence-based algorithms.          SECTION 3.  The provisions of this Act are severable, and if   any provision of this Act or the application of the provision to any   person or circumstance is declared invalid for any reason, the   declaration does not affect the validity of the remaining portions   of this Act.          SECTION 4.  (a) Subchapter O, Chapter 544, Insurance Code,   as added by this Act, applies only to a health benefit plan   delivered, issued for delivery, or renewed on or after January 1,   2026.          (b)  Chapter 117, Occupations Code, as added by this Act,   applies only to a medical or health care service provided on or   after January 1, 2026.          SECTION 5.  This Act takes effect September 1, 2025.