Insurer Accountability Act

Model Policy

Section 1. Short Title.
This Act may be cited as the “[___________________] Act of 202__”.

Section. 2. Definitions. In this Act:

1. “Commissioner” means the insurance commissioner of this state.
2. “Enrollee” means an individual who is enrolled in a health benefits plan offered by a health carrier.
3. “Facility” means an institution providing health care services or a health care setting, including but not limited to hospitals and other licensed inpatient centers, ambulatory surgical or treatment centers, skilled nursing centers, residential treatment centers, diagnostic, laboratory and imaging centers, and rehabilitation and other therapeutic health settings.
4. “Health benefits plan” means a policy, contract, certificate or agreement offered or issued by a health carrier to provide, deliver, arrange for, pay for or reimburse any of the costs of health care services.
5. “Health care professional” means a physician or other health care practitioner licensed, accredited or certified to perform specified health care services consistent with state law.
6. “Health care provider” or “provider” means a health care professional or facility.
7. “Health care services” means services for the diagnosis, prevention, treatment, cure or relief of a health condition, illness, injury or disease.
8. “Health care supplier” or “supplier” means a pharmacy or medical equipment supplier licensed, accredited or certified to furnish supplies in the state consistent with state law.
9. “Health carrier” or “carrier” means an entity subject to the insurance laws and regulations of this state, or subject to the jurisdiction of the Commissioner, that contracts or offers to contract to provide, deliver, arrange for, pay for or reimburse any of the costs of health care services, or any other entity providing a plan of health insurance, health benefits (as defined by the Commissioner) or health care services, including a preferred provider organization, or health maintenance organization, and such other entities as the Commissioner may specify.
10. “Health care supplies” or “supplies” means items associated with the diagnosis, prevention, treatment, cure or relief of a health condition, illness, injury or disease ordered or prescribed by a health care provider, including medical equipment, prosthetics, orthotics, drugs, including those covered under the medical benefit, and such other items as the Commissioner may specify.
11. “Medically Necessary Health Care Services” means any health care service that a prudent clinician would provide to a patient for the purpose of preventing, diagnosing or treating an illness, injury, disease or its symptoms in a manner that is:
    • (A) in accordance with generally accepted standards of medical practice; and
    • (B) clinically appropriate in terms of type, frequency, extent, site and duration.
12. “Urgent health care services” means a health care service with respect to which the application of the time periods for making a non-expedited prior authorization, which, in the opinion of an attending physician with direct knowledge of the enrollee’s medical condition could seriously jeopardize the life or health of the enrollee or the ability of the enrollee to regain maximum function; or
13. “Utilization review entity” means an individual or entity that performs prior authorization for one or more of the following entities:
    • (A) an employer with employees in this state who are covered under a health benefits plan; and
    • (B) a health carrier (as defined in section 2(9)) that offers a health benefits plan.
14. “Prior Authorization” means:
    • (A) means the process by which utilization review entities determine the medical necessity or medical appropriateness of otherwise covered health care services prior to the rendering of such health care services; and
    • (B) includes any health carrier’s or utilization review entity’s requirement that an enrollee or health care provider notify the health carrier or utilization review entity prior to providing a health care service, including any advance notification or any other circumstances where the health carrier is conducting a full medical necessity review ahead of service completion.

Section. 3. Health Carrier Requirements.
(a) Except as provided in subsection (b), each health carrier offering a health benefits plan in this state shall be subject to the requirements of this Act.
(b) Exemption for Nonprofit Hospital-owned and Nonprofit Managed Care Entities:

1. This Act does not apply to a to a managed care entity or health care service contractor that is:
   • i. majority-owned or controlled by a nonprofit hospital, hospital system or managed care entity; or
   • ii. a nonprofit legal entity pursuant to paragraphs (3) or (4) of section 501(c) of the Internal Revenue Code of 1986 (26 U.S.C. 501(c)) that provides a majority of covered professional services in a specific geographic area through employed physicians or a single contracted medical group.
2. Managed care entity defined. In this section, the term “managed care entity” includes an insurance company, hospital or medical service plan, health care provider network, physician hospital organization, health maintenance organization, health care service corporation, employer or employee organization, or managed care contractor.

Section 4. Requirements Applicable to the Physicians Who Make Initial Adverse Prior Authorization Determinations or Review Appeals.
(a) Utilization Review Entity Requirements. Each utilization review entity (as defined in section 2(13)), must ensure that each initial adverse prior authorization determination or appeal of an adverse prior authorization or pre-certification determination is reviewed by a physician or other health care professional with expertise in the field of medicine appropriate to the requested service that meets the requirements described in subsection (b).
(b) Reviewer Requirements. The requirements described in this subsection are as follows:

1. The physician or other health care professional must possess a current and valid nonrestricted license in this state.
2. The physician or other health care professional must have experience treating patients with the medical condition or disease for which the health care service or supply is being requested under initial prior authorization determination or appeal.
3. The physician shall not be compensated or otherwise incentivized based on the outcome of the utilization decisions.
4. If the decision in question is an appeal of an adverse determination, the physician shall not have been directly involved in making the adverse determination.
5. The physician shall consider all known clinical aspects of the health care service under review, including but not limited to, a review of all pertinent medical records provided to the utilization review entity by the enrollee’s health care provider, any relevant records provided to the utilization review entity by a health care facility, and any medical literature provided to the utilization review entity the health care provider.
6. If the decision is an adverse determination, the physician shall complete and sign the denial notice, providing the required information described in subsection (d).

(c) Denial Notice. The denial notice described in this subsection shall contain the following information:

1. A statement in understandable language of the reasons for the denial, the specific coverage or clinical criteria, if any, that were not satisfied, and a description of the reconsideration and appeals processes.
2. The signature or digital signature of the physician making the determination regarding an initial determination or appeal of a prior authorization or pre-certification determination.
3. The full name of the physician described in paragraph (2).
4. The physician’s National Provider Identification (NPI) number.
5. The credentials of the physician described in paragraph (1), including any board certifications and areas of specialty expertise and training, as applicable.
6. The taxonomy code of the physician described in paragraph (1).
7. An attestation by the physician described in paragraph (1) that such reviewer has the appropriate training and expertise in the field of medicine that is sufficient to make an informed decision regarding the medical necessity of the health care service or supply being requested on behalf of the enrollee in the health benefits plan, and that they have no conflicts of interest that would interfere with their ability to make an impartial determination based on the merits of the specific patient case.
8. Documentation of the amount of time the physician spent evaluating the medical record or other information related to the review before confirming the determination.
9. An indication of whether the reviewer reviewed a prepared summary of the patient’s medical records or the patient’s actual medical records in making their determination.

(d) Delivery of Decision to Provider and Patient. The health carrier shall transmit the denial notice to the requesting health care provider and the patient in a timely manner, consistent with the timelines specified in section 104, containing an explanation of the decision that meets the requirements of section 111(a)(2), and meets such other requirements as the Commissioner may specify.

Section 5. Utilization Review Entity’s Obligations with Respect to Prior Authorizations in Non-Urgent Circumstances.
(a) If a health carrier or health benefits plan requires prior authorization of a health care service or supply, any utilization review entity (as defined in section 2(13)) must make a prior authorization or adverse determination and notify the enrollee and the enrollee’s health care provider of the prior authorization or adverse determination within 48 hours of obtaining all necessary information to make the prior authorization or adverse determination.

Section 6. Utilization Review Entities’ Obligations with Respect to Prior Authorizations Concerning Urgent Health Care Services
(a) A utilization review entity must render a prior authorization or adverse determination concerning urgent care services (as defined in section 2(12)) and notify the enrollee and the enrollee’s health care provider of that prior authorization or adverse determination not later than 24 hours after receiving all information needed to complete the review of the requested health care services.

Section 7. No Retrospective Denial.
(a) Absent fraud or provider misrepresentation of essential information in prior authorization request, A utilization review entity may not revoke, limit, condition or restrict a prior authorization approved under an enrollee’s health benefits plan for medical necessity reasons if the health care provider previously received such prior authorization.

Section 8. Length of Prior Authorization.
(a) Authorization timeframes. Except as provided in section 105(b)(2)(A), an approved prior authorization request shall be valid for at least 1 year from the date the health care provider receives the prior authorization and the authorization period shall be effective as long as the enrollees medical condition is stable regardless of any changes in the level of health care service or dosage or amount of a supply (including a prescription drug) prescribed by the health care provider.
(b) Active courses of treatment. For enrollees undergoing an active course of treatment, the following rules apply to utilization review entities:

1. Avoiding disruptions in care.—Approval of a prior authorization request for a course of treatment must be valid for as long as medically necessary to avoid disruptions in care, in accordance with applicable coverage criteria, the individual patient’s medical history, and the treating provider’s recommendation. Nothing in this subsection requires a health carrier to pay for services that are not covered services under the enrollee’s health benefit plan.
2. Active courses of treatment:
   • (i) A utilization review entity must provide for at least a 90-day transition period for any active course of treatment (as defined in subsection (c)(2)) when an enrollee has enrolled in an health benefits plan after starting a course of treatment, even if the service is furnished by an out-of-network provider.
   • (ii) Applicable to new enrollees.—The requirement of subparagraph (A) applies to enrollees who initiated the active course of treatment described in such subparagraph prior to enrolling in the health benefits plan or in any health benefits plan offered by the health carrier.
   • (iii) Reauthorizations prohibited for 90 days.—The utilization review entity must not disrupt or require reauthorization for an active course of treatment for enrollees described in subparagraph (B) for a period of at least 90 days.
   • (iv) Nothing in this subsection requires a health carrier to pay for services that are not covered services under the enrollee’s health benefit plan

(c) Active Course of Treatment; Course of Treatment Defined. In this section:

1. Course of treatment. The term “course of treatment” means as a prescribed order or ordered course of treatment for a specific individual with a specific condition is outlined and decided upon ahead of time with the patient and health care provider and may be, but is not required to be, part of a treatment plan.
2. Active course of treatment. The term “active course of treatment” means a course of treatment in which a patient is actively seeing the health care provider and following the course of treatment.

Section 9: Continuity of Care for Enrollees.
(a) Honoring New Enrollee Prior Authorizations. On receipt of information documenting a prior authorization from the enrollee or from the enrollee’s health care provider, a utilization review entity shall honor a prior authorization granted to an enrollee from a previous utilization review entity for at least the initial 90 days of an enrollee’s coverage under a new health benefits plan. This provision does not require a health carrier to pay for services that are not covered services under the enrollee’s health benefit plan.
(b) Authority to Reconsider Prior Authorizations. During the time period described in subsection (a), a utilization review entity may conduct its own review to determine whether to continue a prior authorization described in subsection (a) after such time period ends.
(c) Coverage Changes. If there is a change in coverage of, or approval criteria for, a previously authorized health care service, the change in coverage or approval criteria does not affect an enrollee who received prior authorization before the effective date of the change for the remainder of the enrollee’s plan year.
(d) Changes Between Health Carrier Plans. A utilization review entity shall continue to honor a prior authorization it has granted to an enrollee when the enrollee changes health benefits plans under the same health carrier.

Section 10. Electronic Standards for Prior Authorization.
(a) No later than January 1, [202___,] the health carrier must accept and respond to prior authorization requests under the pharmacy benefit through a secure electronic transmission using the National Council for Prescription Drug Programs (NCPDP) SCRIPT standards for electronic prior authorization (ePA) transactions.
(b) EHR Integration. A utilization review entity may not require submission of information via facsimile, propriety payer portals, electronic forms, or any other technology not directly integrated with a physician’s electronic health record.
(c) Compliance Federal Prior Authorization Application Programming Interface (API) Requirements. No later than [January 1, 202__], the health carrier must accept and respond to prior authorization requests under the medical benefit through the use of an application programming interface that meets the requirements described in section 422.122(b) of title 42, Code of Federal Regulations.
(d) Update of Technical Guidelines. The Commissioner shall develop appropriate rules, regulations and guidance to facilitate the application of the standards described in subsection (c) to health carriers offering health benefits plans in this state in order to promote administrative efficiency and promote consistency with federally regulated plans.

Section 11. Health Care Services Deemed Authorized If a Utilization Review Entity Fails to Comply with the Requirements of This Act.
(a) Any failure by a utilization review entity to comply with the deadlines and other requirements specified in this Act will result in any health care services subject to review to be automatically deemed authorized by the utilization review entity as defined in section 2(13).

Section 12: Notice of Denial.
(a) Determinations by a utilization review entity.

1. A utilization review entity shall have a procedure for making prior authorization determinations regarding whether an individual enrolled with the health benefits plan of a health carrier is entitled to receive a health care service or supply under such plan.
2. Explanation of determination.—A determination described in paragraph (1) that denies coverage, in whole or in part, shall be in writing and shall include a statement in understandable language of the reasons for the denial, the specific coverage or clinical criteria, if any, that were not satisfied, and a description of the reconsideration and appeals processes.

(b) Timeliness of notice of denial.—The procedures described in subsection (a) shall provide for such determination to be made and communicated to the enrollee and the health care provider on a timely basis consistent with the timelines specified in section 104, including the explanation described in subsection (a)(2).

Section 13. Utilization Management Committees.
(a) Establishing A Utilization Management Committee. A health carrier that uses utilization management policies and procedures, including prior authorization, shall establish a utilization management committee that performs the duties described in subsection (b).Duties.

1. The committee shall:
   • i. at least annually, review the policies and procedures for all utilization management, including prior authorization, used by the health benefits plan and the elements described in paragraph (2).
   • ii. use management policies and procedures that:
     1. use or impose coverage criteria that comply with the requirements and standards in subsection (c);
     2. use prior authorization policies only for:
        • a. confirming the presence or diagnosis or other medical criteria that are the basis for coverage determinations for the specific item or service;
        • b. ensuring that an item or service is medically necessary; or
        • c. ensuring that an item or service is clinically appropriate;
     3. use practice guidelines and utilization management guidelines that:
        • a. are based on current evidence in widely used treatment guidelines or clinical literature;
        • b. consider the needs of the enrolled population;
        • c. are developed in consultation with contracting physicians; and
        • d. are reviewed and updated periodically;
        • e. make medical necessity determinations based on:
          • i. published coverage and benefit criteria; and
          • ii. the enrollee’s medical history.

(c) revise the utilization management policies and procedures as necessary to comply with the standards in this section, including removing requirements for utilization management for services and items that no longer warrant utilization management;
(d) clearly articulate and document processes to determine that the requirements under subsection (b) have been met, including the determination by an objective party of whether disclosed financial interests are conflicts of interest and the management of any recusals due to such conflicts;
(e) document in writing the reason for its decisions regarding the development of utilization management policies and make this documentation available to the Commissioner and contracted providers upon request; and
(f) demonstrate that any coverage criteria provide clinical benefits that are highly likely to outweigh any clinical harms.
(g) Review elements. The review described in paragraph (1)(A) must consider:

1. the items or services to which the utilization management applies; and
2. relevant current clinical guidelines.
3. Utilization Management Committee Composition. The committee must:
   • i. include a majority of members who are practicing physicians;
   • ii. include at least one practicing physician who is independent and free of conflict relative to the health carrier;
   • iii. include at least one practicing physician contracted to participate in the health benefit plan’s network;
   • iv. Include members representing various clinical specialties to ensure that a wide range conditions are adequately considered in the development of utilization management policies; and
   • v. beginning January 1, 202__, include at least one member with expertise in health equity.

(h) Requirements and Standards. The utilization management policies and procedures approved by the committee must meet the following requirements:

1. Creation of internal coverage criteria. The committee may create publicly accessible internal coverage criteria that are based on current evidence in widely used treatment guidelines or clinical literature.
2. Publication of internal coverage policies. For internal coverage policies, the health carrier must provide in a publicly accessible way.
   • i. the internal coverage criteria in use and a summary of evidence that was considered during the development of the internal coverage criteria used to make medical necessity determinations;
   • ii. a list of the sources of such evidence; and
   • iii. an explanation of the rationale that supports the adoption of the coverage criteria used to make a medical necessity determination.

Section 14. No Compensation Incentives for Denials.
Notwithstanding any other provision of law, a utilization review entity may not:

1. be compensated based on its volume of denials; or
2. base any incentive or penalty for a medical reviewer of such entity based on the volume of denials such reviewer issues or upholds.

Section 15. Disclosure and Review of Prior Authorization Requirements.
(a) Disclosure of prior authorization requirements:

1. A utilization review entity or health benefits plan shall make any current prior authorization requirements and restrictions readily accessible on its website to enrollees, health care professionals, and the general public, including the written clinical criteria.
2. Requirements shall be described in detail but also in easily understandable language.
3. By [insert date here] the utilization review entity or health benefits plan shall also ensure transparency of prior authorization criteria by implementing the standards described in section 302(b)(3)(A).
4. New or amended prior authorization requirements. If a utilization review entity or health benefits plan intends either to implement a new prior authorization requirement or restriction, or amend an existing requirement or restriction, the utilization review entity or health benefits plan shall ensure that the new or amended requirement is not implemented unless the utilization review entity’s web site has been updated and API updated to reflect the new or amended requirement or restriction.
5. Written notice for new or amended prior authorization requirements. If a utilization review entity or health benefits plan intends either to implement a new prior authorization requirement or restriction, or amend an existing requirement or restriction, the utilization review entity or health benefits plan shall provide contracted health care providers of enrollees written notice of the new or amended requirement or amendment no less than 60 days before the requirement or restriction is implemented and shall publicly post such new or amended requirement of restriction on the health carrier’s Internet website.

(b) Review of prior authorization requirements.

1. Public availability of statistics. Health carriers using prior authorization (either directly or through a utilization review entity) shall make statistics available regarding prior authorization approvals and denials on their Internet website in a readily accessible format including information in the categories described in paragraph (2).
2. Categories. The categories described in this paragraph are as follows:
   • i. The percentage of standard prior authorization requests that were approved, aggregated for all items and services and drugs subject to the medical benefit.
   • ii. The percentage of standard prior authorization requests that were denied, aggregated for all items and services and drugs subject to the medical benefit;
   • iii. The percentage of standard prior authorization requests that were approved after appeal, aggregated for all items and services and drugs subject to the medical benefit;
   • iv. The percentage of prior authorization requests for which the timeframe for review was extended and the request was approved, aggregated for all items and services and drugs subject to the medical benefit;
   • v. The percentage of expedited prior authorization requests that were approved, aggregated for all items and services and drugs subject to the medical benefit;
   • vi. The percentage of expedited prior authorization requests that were denied, aggregated for all items and services and drugs subject to the medical benefit;
   • vii. The average and median time that elapsed between the submission of a request and a decision by the payer, plan or issuer for standard prior authorizations, aggregated for all items and services and drugs subject to the medical benefit; and
   • viii. The average and median time that elapsed between the submission of a request and a decision by the payer, plan or issuer for expedited prior authorizations, aggregated for all items and services and drugs subject to the medical benefit.
3. Annual updates; submission to commissioner. The health carrier shall annually:
   • i. update the statistics described in paragraph (1); and
   • ii. submit such statistics to the Commissioner at such time and in such form and manner as the Commissioner may require.
   • iii. Annual reports to State Legislature and public posting. Not later than [_days] after the end of a year (beginning with [202]), the Commissioner shall submit to the state legislature and publish on a public website a report including:
     1. a summary of the information submitted for such year under subsection (b);
     2. an analysis on the plan level and statewide level of trends shown by such information submitted under subsection (b) for health benefits plans that are not offered by integrated health systems; and
     3. separately from the analysis described in paragraph (2), an analysis on the plan level and statewide level of trends shown by such information submitted under subsection (b) for health benefits plans that are offered by integrated health systems.

Section 16. Prompt Payment Requirements.
Each health carrier offering a health benefits plan in this state:

1. shall provide prompt payment of claims submitted by health care providers for services and supplies furnished to enrollees of its health benefits plans in accordance with the requirements of this title;
2. may not pend or delay adjudication of claims for any reason not specified in this title; and
3. shall be subject to the penalties associated with noncompliance with this title for any circumstance where a delay in processing or payment is made due to the health benefit plans’ mistake or error.

Section 17. Prompt Payment of Clean Claims Required for Services Furnished by Providers and Suppliers Contracting with Health Carriers.
(a) Prompt Pay Requirement.

1. With respect to claims filed on or after [January 1, 2026], each health carrier offering a health benefits plan in this state shall provide that, in accordance with the provisions of this subsection, payment shall be issued, mailed, or otherwise transmitted, with respect to each clean claim submitted for health care services or supplies furnished by a health care provider or supplier to enrollees of such plan by no later than the applicable number of calendar days after the date on which the claim is received, if such items or services are furnished under a contract between such organization and the health care provider or supplier.
2. Date of receipt of claim or other information. In this subsection, a claim (or other information) is considered to have been received:
   • i. with respect to claims (or information) submitted electronically, on the date on which the claim (or information) is transferred to the health benefits plan; and
   • ii. with respect to claims (or information) submitted otherwise, on the 5th day after the postmark date of the claim (or information) or the date specified in the time stamp of the transmission.
3. Applicable number of calendar days defined. In this subsection, the term ‘applicable number of calendar days” means:
   • i. with respect to claims submitted electronically, 14 calendar days; and
   • ii. with respect to claims submitted otherwise, 30 calendar days.

(b) Clean Claims; Procedures Involving Claims.

1. Clean claim defined. In this subsection, the term “clean claim” means a claim that has no defect or impropriety (including any lack of any required substantiating documentation) or particular circumstances requiring special treatment that prevents timely payment from being made on the claim under this part.
2. Claim deemed to be clean. A claim for items or services furnished by a health care provider or supplier to an individual enrolled in a health benefits plan offered by a health carrier shall be deemed to be a clean claim under this paragraph and shall be paid by the health carrier in accordance with paragraph (1) in each of the following cases:
   • i. Claims satisfying specified criteria. In the case that the claim satisfies the criteria specified in subparagraphs (A) and (B) of paragraph (3).
   • ii. Claims for which timely deficiency notification is not provided. In the case that the health carrier does not provide notice to the health care provider or supplier of any deficiency in the claim by not later than the deficiency notification date specified in paragraph (5).
   • iii. Claims for which timely determination not provided after submission of additional information. In the case that additional documentation is requested pursuant to paragraph (6) for such claim, if the health carrier does not provide notice to the provider of services or supplier of any defect or impropriety in the claim not later than 10 days after the date on which additional information is received (as determined under subsection (a)(2)) by the health carrier in response to such request under paragraph (4).
   • iv. Claims for which plans fail to timely act. In the case that the claim is not paid or contested by the health carrier within the applicable number of calendar days (as defined in subsection (a)(3)) after the date on which the claim is received.
3. Claim criteria described. For purposes of paragraph (2)(A), the criteria described in this clause, with respect to a claim for items or services furnished by a health care provider or supplier to an individual enrolled in the health benefits plan, are that:
   • i. the claim satisfies the standards and includes the data elements adopted under paragraph (1) of section 1173(a) of the Social Security Act for transactions described in paragraph (2)(A) of such section (including with respect to identifying the item or service furnished, the provider of services or supplier, the individual furnished the item or service, the date and location the item or service was furnished, and any information with respect to any applicable prior authorization requirement); and
   • ii. the claim submission includes all documentation required under the contract between the plan and the provider or supplier with respect to payment for the items or services.
   • iii. Claim determined not to be a clean claim. If a health carrier determines that a claim submitted with respect to a provider of services or supplier is not a clean claim, the health carrier shall, not later than the deficiency notification date described in subparagraph (E), notify the provider of services or supplier of such determination. Such notification shall specify all defects or improprieties in the claim and shall list all additional information or documents necessary for the proper processing and payment of the claim. Any subsequent request by the health carrier for additional information or documents for the proper processing and payment of the claim shall be limited to addressing the defects and improprieties identified in the notification provided pursuant to the previous sentence and to the additional information and documents listed in such notification.
   • iv. Deficiency notification date. For purposes of this subparagraph, the deficiency notification date, with respect to a claim, is:
     1. with respect to a claim submitted electronically, the date that is 10 calendar days after the date on which the claim is received; and
     2. with respect to a claim submitted otherwise, the date that is 15 calendar days after the date on which the claim is received.

(c) Interest Payment.

1. Subject to paragraph (2), if payment is not issued, mailed, or otherwise transmitted within the applicable number of calendar days (as defined in subsection (a)(3)) after a clean claim is received, the health carrier shall pay interest to the provider or supplier that submitted the claim at a rate equal to the weighted average of interest on 3-month marketable Treasury securities determined for such period, increased by 0.1 percentage point for the period beginning on the day after the required payment date and ending on the date on which payment is made (as determined under subparagraph (C)). Interest amounts paid under this subparagraph shall not be counted against the administrative costs of a health benefits plan for purposes of determining the medical loss ratio of the plan.
2. Authority not to charge interest. The Commissioner may provide that a health carrier is not charged interest under paragraph (1) in the case in which there are exigent circumstances, including natural disasters and other unique and unexpected events that prevent the timely processing of claims.
3. Date of payment of claim. Payment of a clean claim under paragraph (1) is considered to have been made on the date on which:
   • i. with respect to claims paid electronically, the payment is transferred; and
   • ii. with respect to claims paid otherwise, the payment is submitted to the United States Postal Service or a common carrier for delivery.

(d) Electronic Funds Transfer. A health carrier shall pay all clean claims submitted electronically (and any interest charged under paragraph (3)(A) with respect to such claims) in the manner selected by the provider, including by the standards for electronic fund transfers established by section 1173 of the Social Security Act (42 U.S.C. 1320d–2), which shall be subject to no transactional fee assessed by the health plan or any vendor acting on its behalf.
(e) Protecting the Rights of Claimants.

1. In general. Nothing in this paragraph shall be construed to prohibit or limit a claim or action not covered by the subject matter of this paragraph that any individual or organization has against a provider or a health carrier.
2. Anti-retaliation. Consistent with applicable Federal and State laws, a health carrier shall not retaliate against an individual or provider for exercising a right of action under this subparagraph.

(f) Rule of construction. A determination under this section that a claim submitted by a provider services or supplier is a clean claim shall not be construed as a positive determination regarding eligibility for payment under this title, nor is it an indication of government approval of, or acquiescence regarding, the claim submitted. The determination shall not relieve any party of civil or criminal liability with respect to the claim, nor does it offer a defense to any administrative, civil, or criminal action with respect to the claim.
(g) Data Submissions and Reporting

1. Annual plan submissions. Beginning on [January 1, 202__], and each subsequent year, a contract under this section with an health carrier offering one or more health benefits plans shall require the health carrier to submit annually to the Commissioner (in such form and manner as specified by the Commissioner) the following information with respect to each such plan and year:
   • i. The total number of claims submitted for items and services furnished to individuals enrolled under such plan by providers of services and suppliers with which the plan has a contract with respect to furnishing such items and services.
   • ii. The total number of claims described in subparagraph (A) that were determined to be clean claims and the total number of such claims that were determined not to be clean claims, including a percentage of the total number of clean claims relative to the total number of claims.
   • iii. The ten most frequently specified reasons for which a claim described in subparagraph (A) was determined to not be a clean claim.
   • iv. The total number of, the percent of, and the average dollar amount of claims described in subparagraph (A) that are claims for inpatient items or services and for which itemized billing is requested by the health benefits plan.
   • v. With respect to requests made by the health benefits plan for additional information or documents to process and pay claims described in subparagraph (A)
     1. the average number of such requests made by the health benefits plan per such claim;
     2. the total number of such requests made by the health benefits plan;
     3. the reasons for making such requests; and
     4. the outcomes of the determinations made pursuant to such requests with respect to such claims.
     5. The average period between the date on which providers of services and suppliers submitted additional information or documents requested by the plan for purposes of processing and paying claims described in subparagraph (E)(i) and the date on which the plan notified the providers of services and suppliers of the plan determination for such claims.
     6. The average period between the date of submission of claims described in subparagraph (E)(i) determined to be clean claims and the date on which the provider of services or supplier received from the plan full payment of such claims.

(h) The average period between the date of submission of claims described in subparagraph (A) determined to not be clean claims and the date on which the provider of services or supplier received from the plan full payment of such claims.
(i) The percentage of all claims described in subparagraph (A), if any, fully paid by the plan within 30 days of the date of submission of the claim.
(j) Such other information as specified by the Commissioner.
(k) Annual reports to State Legislature and public posting. Not later than [_ days] after the end of a year (beginning with [202_]), the Commissioner shall submit to the state legislature and publish on a public website a report including:

1. a summary of the information submitted for such year under paragraph (1);
2. a summary of the complaints relating to timely payment of claims submitted to health benefits plans during such year; and
3. an analysis on the plan level and statewide level of trends shown by such information submitted under paragraph (1) and such complaints described in subparagraph (B).

Section 18. Requirements Regarding the Use of Artificial Intelligence.
(a) Each health carrier that offers a health benefits plan in this state shall comply with the requirements of this title regarding the use of artificial intelligence.
(b) Artificial Intelligence Defined. In this title, the term ‘‘artificial intelligence’’ means a machine-based system that can, for a given set of human-defined objectives, make predictions, recommendations or decisions influencing real or virtual environments. Artificial intelligence systems use machine and human-based inputs to:

1. perceive real and virtual environments;
2. abstract such perceptions into models through analysis in an automated manner; and
3. use model inference to formulate options for information or action.

Section 19. Disclosure of Algorithm Use.
(a) In General. Each health carrier shall disclose to the Commissioner, each health care provider in its network, each enrollee in a health benefits plan offered by the carrier, and on its public Internet website if artificial intelligence-based algorithms are used or will be used in the health carriers’ utilization review process.
(b) Information Disclosed. Each health carrier shall disclose information about the use of artificial intelligence-based algorithms in its utilization review process on the health carrier’s publicly accessible Internet website.
(c) Further Disclosure for Use of AI. If artificial intelligence-based algorithms are used in the utilization review process, the health carrier shall disclose the algorithm criteria, data sets used to train the algorithm, the algorithm itself, and the outcomes of the software in which the algorithm is used.

Section 20. Explanation of Algorithm-Based Recommendations.
If algorithms are used in the utilization review process, the algorithms recommendation shall be supported by a plain language explanation of the rationale used by the health carrier-operated algorithm or systemin making its recommendation to deny, delay, or modify health care services covered under a health benefits plan.

Section 21. Clinician Supervision of Artificial Intelligence.
(a) A health carrier shall not make any decision regarding coverage of, including payment for, the care of patients based solely on the results derived from the use or application of artificial intelligence.
(b) Review by Specialist Prior to Denial.

1. In general. Any physician who participates in a utilization review process for a health carrier that initially uses artificial intelligence-based algorithms for a utilization review shall:
   • i. meet the requirements described in section 101(b); and
   • ii. open and document the review of the individual clinical records or data prior to the individualized documented decision of a denial.

Section 22. No Use of Artificial Intelligence to Independently Shift Coverage.
Artificial intelligence-based algorithms may not independently change or create coverage criteria.

Section 23. Quality Assurance Testing of Artificial Intelligence.
(a) Establishment of Quality Assurance Programs.

1. Each health carrier shall establish an ongoing quality assurance testing process that meets such requirements as the Commissioner may specify with defined parameters on safety and efficacy of all artificial intelligence-based algorithms.
2. No discrimination using artificial intelligence. The quality assurance testing process described in paragraph (1) shall ensure that artificial intelligence-based algorithms described in such paragraph are consistent with state and federal antidiscrimination laws.

(b) Submission to Commissioner. Each health carrier shall submit the results of this quality assurance testing described in subsection (a) to the Commissioner at such time and in such form and manner as the Commissioner may specify, but not less frequently than semiannually.
(c) Public Posting. The results submitted under subsection (b) shall be published on a public Internet website within 30 days of the submission of such results to the Commissioner.

Section 24. State Oversight.
The Commissioner shall promulgate rules and regulations:

1. to strengthen oversight and enforcement of existing rules to ensure plan compliance with applicable legal and contractual requirements for coverage and appeals;
2. to ensure compliance with quality and performance standards; and
3. to ensure plan compliance with these requirements is not eroded by using new artificial intelligence tools, including auto-denial software.

Section 25. Penalties for Noncompliance.
(a) Determination of Noncompliance. If the Commissioner determines that a health carrier is not in compliance with any provision of this title, the Commissioner may impose any or all of the penalties described in subsection (b), including administrative fees described in subsection (c) and restitution described in subsection (d), or any other remedy available to the Commissioner under state law.
(b) Penalties. The remedies described in this paragraph are:

1. civil money penalties of not more than $25,000 for each determination under subsection (a);
2. in addition to any civil money penalty imposed under paragraph (1), civil money penalties of not more than $10,000 for each week beginning on and after the date on which a civil money penalty under paragraph (1) is imposed by the Commissioner during which the deficiency that is the basis of a determination under subsection (a) exists; and
3. suspension of enrollment of individuals in health benefits plans offered by the health carrier on and after the date the Commissioner notifies the organization of a determination under subsection (a) and until the Commissioner is satisfied that the basis for such determination has been corrected and is not likely to recur.

(c) Administrative fees. Any fee charged or allocated for collection activities conducted by the Commissioner will be passed on to a health benefits plan on a pro-rata basis and added to any penalty fee collected from the plan.
(d) Restitution to health care providers and enrollees.—If the Commissioner determines that any health care provider or enrollee was adversely affected by the noncompliance of the health carrier described in subsection (a), the Commissioner may determine an amount necessary to compensate such provider or enrollee for the harm attributable to such noncompliance that is not otherwise compensated and may require the health carrier to pay such amount, including appropriate interest, to such provider or enrollee in addition to any other penalties under this section.

Section 26. No Waiver, Modification or Nullification by Contract.
(a) Subject to subsection (b), no writing or other agreement may contain any provision which constitutes a waiver, modification or nullification of any requirement or remedy created by this Act.
(b) No Prohibition on Greater Protections. Nothing in this section prohibits any writing or other agreement that grants to a health care provider more protection or remedy than contained in this Act or a waiver given in settlement of a dispute or action.

Section 27. Private Right of Action.
(a) Attorney General. The Attorney General of this state may bring a civil action in an appropriate court for such declaratory or injunctive relief as is necessary to carry out this Act.
(b) Private Right of Action.

1. Notification of commissioner. A person who is aggrieved by a violation of this chapter may provide written notice of the violation to the Commissioner.
2. Civil action. If the violation is not corrected within 90 days after receipt of a notice under paragraph (1), the aggrieved person may bring a civil action in an appropriate court for declaratory or injunctive relief with respect to the violation.

(c) Attorney’s fees. In a civil action under this section, the court may allow the prevailing party (other than the state) reasonable attorney fees, including litigation expenses, and costs.
(d) Relation to other laws.

1. Additional rights and remedies. The rights and remedies established by this section are in addition to all other rights and remedies provided by law, and neither the rights and remedies established by this section nor any other provision of this Act shall supersede, restrict, or limit the application of any provision of state or federal law.
2. No prohibited conduct. Nothing in this section authorizes or requires conduct that is prohibited by state or federal law.

Section 28. Supremacy of Federal Law.
None of the sections within this act are intended to conflict with federal law, which supersedes this Act.