NY State Senate Bill 2025-S7896

Senate Bill S7896

2025-2026 Legislative Session

Relates to the use of an artificial intelligence, algorithm, or other software tool for the purpose of utilization review

download bill text pdf

Current Bill Status - In Senate Committee Health Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
May 13, 2025	referred to health

2025-S7896 (ACTIVE) - Details

See Assembly Version of this Bill:: A8556
Current Committee:: Senate Health
Law Section:: Public Health Law
Laws Affected:: Add §4905-a, Pub Health L; add §4905-a, Ins L

2025-S7896 (ACTIVE) - Summary

Prescribes requirements and safeguards for the use of an artificial intelligence, algorithm, or other software tool for the purpose of utilization review for health and accident insurance.

2025-S7896 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S7896

SPONSOR: GONZALEZ
 
TITLE OF BILL:

An act to amend the public health law and the insurance law, in relation
to the use of an artificial intelligence, algorithm, or other software
tool for the purpose of utilization review

 
PURPOSE OR GENERAL IDEA OF BILL:

The purpose of this bill is to ensure that use of artificial intelli-
gence and other software to conduct utilization review is based on a
patient's clinical record and does not supplant health care provider
decision-making.

 
SUMMARY OF PROVISIONS:

Section 1 amends the public health law by adding a new section 4905-a,
which sets out the requirements for the use of software tools for utili-
zation review for covered health care services.

Section 2 amends the insurance law by adding a new section 4905-a, which
sets out the requirements for the use of software tools for utilization
review for disability insurance.

Section 3 is the effective date.

 
JUSTIFICATION:

As the entire US economy increasingly turns to Al to automate business
tasks, health and disability insurers are leveraging this technology to
process plan utilization requests and adjudicate claims. As a complex
business with multiple interdependencies and levels of human workers, it
is not hard to see why insurers would want to benefit from the putative
efficiency and financial gains from increased software use. However,
health and disability insurers make consequential decisions that affect
the availability of health care, with life- or livelihood-impacting
outcomes.

Just as with any software application, if the inttrtrpliail input into
the system is not relevant or sufficiently specific, one cannot expect a
reliably good output. If the algorithms powering a tool are not well
understood, it could be entirely inappropriate for use in the healthcare
context. As an illustration of what can go wrong when artificial intel-
ligence is used in healthcare decision-making, United Healthcare has
been accused of using an artificial intelligence system to review claims
from sick elderly customers that their doctors approved but allegedly
had a 90% error rate.

Existing law regulates the utilization review process, including proce-
dures for appeals of denials and required contents of notice of an
adverse determination, however, it does not address the use of artifi-
cial intelligence or other software tools .conducting the utilization
review process. This bill will ensure that utilization review conducted
by artificial intelligence and other software tools does not deny cover-
age based on inapplicable or unacceptable factors.

 
PRIOR LEGISLATIVE HISTORY:
New bill.

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

To be determined.

 
EFFECTIVE DATE:
This act shall take effect immediately.

2025-S7896 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7896
 
                        2025-2026 Regular Sessions
 
                             I N  S E N A T E
 
                               May 13, 2025
                                ___________
 
 Introduced  by Sen. GONZALEZ -- read twice and ordered printed, and when
   printed to be committed to the Committee on Health
 
 AN ACT to amend the public health law and the insurance law, in relation
   to the use of an artificial intelligence, algorithm, or other software
   tool for the purpose of utilization review

   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  The  public health law is amended by adding a new section
 4905-a to read as follows:
   § 4905-A.  USE OF ARTIFICIAL INTELLIGENCE, ALGORITHM, OR  OTHER  SOFT-
 WARE TOOL FOR THE PURPOSE OF UTILIZATION REVIEW. 1. A UTILIZATION REVIEW
 AGENT THAT USES AN ARTIFICIAL INTELLIGENCE, ALGORITHM, OR OTHER SOFTWARE
 TOOL FOR THE PURPOSE OF UTILIZATION REVIEW, BASED IN WHOLE OR IN PART ON
 MEDICAL  NECESSITY, OR THAT CONTRACTS WITH OR OTHERWISE WORKS THROUGH AN
 ENTITY THAT USES AN ARTIFICIAL INTELLIGENCE, ALGORITHM, OR  OTHER  SOFT-
 WARE  TOOL  FOR  THE PURPOSE OF UTILIZATION REVIEW, BASED IN WHOLE OR IN
 PART ON MEDICAL NECESSITY, SHALL COMPLY  WITH  THIS  SECTION  AND  SHALL
 ENSURE ALL OF THE FOLLOWING:
   (A)  THE  ARTIFICIAL  INTELLIGENCE,  ALGORITHM, OR OTHER SOFTWARE TOOL
 BASES ITS DETERMINATION ON THE FOLLOWING INFORMATION, AS APPLICABLE:
   (I) AN ENROLLEE'S MEDICAL OR OTHER CLINICAL HISTORY;
   (II) INDIVIDUAL CLINICAL CIRCUMSTANCES AS PRESENTED BY THE  REQUESTING
 PROVIDER; AND
   (III)  OTHER RELEVANT CLINICAL INFORMATION CONTAINED IN THE ENROLLEE'S
 MEDICAL OR OTHER CLINICAL RECORD.
   (B) THE ARTIFICIAL INTELLIGENCE, ALGORITHM,  OR  OTHER  SOFTWARE  TOOL
 DOES NOT BASE ITS DETERMINATION SOLELY ON A GROUP DATASET.
   (C)  THE  ARTIFICIAL INTELLIGENCE, ALGORITHM, OR OTHER SOFTWARE TOOL'S
 CRITERIA AND GUIDELINES COMPLIES WITH THIS ARTICLE, INCLUDING,  BUT  NOT
 LIMITED TO ANY OTHER APPLICABLE STATE AND FEDERAL LAW.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD08449-01-5
 S. 7896                             2

 
   (D)  THE  ARTIFICIAL  INTELLIGENCE,  ALGORITHM, OR OTHER SOFTWARE TOOL
 DOES NOT SUPPLANT HEALTH CARE PROVIDER DECISION-MAKING.
   (E)  THE USE OF THE ARTIFICIAL INTELLIGENCE, ALGORITHM, OR OTHER SOFT-
 WARE TOOL DOES NOT DISCRIMINATE, DIRECTLY OR INDIRECTLY, AGAINST  ENROL-
 LEES IN VIOLATION OF STATE OR FEDERAL LAW.
   (F)  THE ARTIFICIAL INTELLIGENCE, ALGORITHM, OR OTHER SOFTWARE TOOL IS
 FAIRLY AND EQUITABLY APPLIED, INCLUDING IN ACCORDANCE WITH ANY  APPLICA-
 BLE  REGULATIONS AND GUIDANCE ISSUED BY THE FEDERAL DEPARTMENT OF HEALTH
 AND HUMAN SERVICES.
   (G) THE ARTIFICIAL INTELLIGENCE, ALGORITHM, OR OTHER SOFTWARE TOOL  IS
 OPEN TO INSPECTION FOR AUDIT OR COMPLIANCE REVIEWS BY THE DEPARTMENT.
   (H)  DISCLOSURES PERTAINING TO THE USE AND OVERSIGHT OF THE ARTIFICIAL
 INTELLIGENCE, ALGORITHM, OR OTHER SOFTWARE TOOL  ARE  CONTAINED  IN  THE
 WRITTEN  POLICIES  AND  PROCEDURES,  AS  REQUIRED  BY SECTION FORTY-NINE
 HUNDRED TWO OF THIS TITLE.
   (I) THE ARTIFICIAL INTELLIGENCE, ALGORITHM, OR OTHER  SOFTWARE  TOOL'S
 PERFORMANCE,  USE, AND OUTCOMES ARE PERIODICALLY REVIEWED AND REVISED TO
 MAXIMIZE ACCURACY AND RELIABILITY.
   (J) PATIENT DATA IS NOT USED BEYOND ITS INTENDED AND  STATED  PURPOSE,
 CONSISTENT  WITH THIS SECTION AND THE FEDERAL HEALTH INSURANCE PORTABIL-
 ITY AND ACCOUNTABILITY ACT OF 1996 (PUBLIC LAW 104-191), AS APPLICABLE.
   (K) THE ARTIFICIAL INTELLIGENCE, ALGORITHM,  OR  OTHER  SOFTWARE  TOOL
 DOES NOT DIRECTLY OR INDIRECTLY CAUSE HARM TO THE ENROLLEE.
   2.  NOTWITHSTANDING  SUBDIVISION  ONE  OF THIS SECTION, THE ARTIFICIAL
 INTELLIGENCE, ALGORITHM, OR OTHER SOFTWARE TOOL SHALL NOT  DENY,  DELAY,
 OR  MODIFY  HEALTH  CARE SERVICES BASED, IN WHOLE OR IN PART, ON MEDICAL
 NECESSITY. A DETERMINATION OF MEDICAL NECESSITY SHALL BE MADE ONLY BY  A
 LICENSED  PHYSICIAN  OR A LICENSED HEALTH CARE PROFESSIONAL COMPETENT TO
 EVALUATE THE SPECIFIC  CLINICAL  ISSUES  INVOLVED  IN  THE  HEALTH  CARE
 SERVICES  REQUESTED  BY  THE  PROVIDER,  AS  PROVIDED  IN THIS TITLE, BY
 REVIEWING AND CONSIDERING THE REQUESTING PROVIDER'S RECOMMENDATION,  THE
 ENROLLEE'S  MEDICAL  OR OTHER CLINICAL HISTORY, AS APPLICABLE, AND INDI-
 VIDUAL CLINICAL CIRCUMSTANCES.
   3. FOR PURPOSES OF THIS SECTION, "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 THE  INPUT
 IT  RECEIVES  HOW  TO  GENERATE  OUTPUTS  THAT CAN INFLUENCE PHYSICAL OR
 VIRTUAL ENVIRONMENTS.
   4. THIS SECTION SHALL APPLY TO UTILIZATION REVIEWS THAT PROSPECTIVELY,
 RETROSPECTIVELY, OR CONCURRENTLY REVIEW REQUESTS FOR COVERED HEALTH CARE
 SERVICES.
   5. A HEALTH CARE SERVICE PLAN SUBJECT TO  THIS  SECTION  SHALL  COMPLY
 WITH APPLICABLE FEDERAL RULES AND GUIDANCE ISSUED BY THE FEDERAL DEPART-
 MENT OF HEALTH AND HUMAN SERVICES REGARDING THE USE OF ARTIFICIAL INTEL-
 LIGENCE,  ALGORITHM,  OR  OTHER SOFTWARE TOOLS. THE DEPARTMENT MAY ISSUE
 GUIDANCE TO IMPLEMENT THIS SECTION WITHIN ONE YEAR OF  THE  ADOPTION  OF
 FEDERAL  RULES  OR THE ISSUANCE OF GUIDANCE BY THE FEDERAL DEPARTMENT OF
 HEALTH AND HUMAN SERVICES REGARDING THE USE OF ARTIFICIAL  INTELLIGENCE,
 ALGORITHM,  OR  OTHER SOFTWARE TOOLS. SUCH GUIDANCE SHALL NOT BE SUBJECT
 TO THE STATE ADMINISTRATIVE PROCEDURE ACT.
   6. FOR PURPOSES OF IMPLEMENTING THIS SECTION, THE DEPARTMENT MAY ENTER
 INTO EXCLUSIVE OR NONEXCLUSIVE CONTRACTS, OR AMEND  EXISTING  CONTRACTS,
 ON A BID OR NEGOTIATED BASIS. CONTRACTS ENTERED INTO OR AMENDED PURSUANT
 TO THIS SUBDIVISION SHALL BE EXEMPT FROM ARTICLES NINE AND ELEVEN OF THE
 STATE FINANCE LAW, AND SHALL NOT BE SUBJECT TO REVIEW OR APPROVAL OF ANY
 OTHER STATE AGENCY OR ENTITY.
 S. 7896                             3
 
   7. THIS SECTION APPLIES ONLY TO THE EXTENT THAT THE DEPARTMENT OBTAINS
 ANY  NECESSARY FEDERAL APPROVALS, AND FEDERAL FINANCIAL PARTICIPATION IS
 NOT OTHERWISE JEOPARDIZED.
   §  2.  The  insurance law is amended by adding a new section 4905-a to
 read as follows:
   § 4905-A.  USE OF ARTIFICIAL INTELLIGENCE, ALGORITHM, OR  OTHER  SOFT-
 WARE  TOOL FOR THE PURPOSE OF UTILIZATION REVIEW. 1. A DISABILITY INSUR-
 ER, INCLUDING A SPECIALIZED  HEALTH  INSURER  THAT  USES  AN  ARTIFICIAL
 INTELLIGENCE,  ALGORITHM,  OR  OTHER  SOFTWARE  TOOL  FOR THE PURPOSE OF
 UTILIZATION REVIEW OR UTILIZATION MANAGEMENT FUNCTIONS, BASED  IN  WHOLE
 OR  IN  PART  ON  MEDICAL NECESSITY, OR THAT CONTRACTS WITH OR OTHERWISE
 WORKS THROUGH AN ENTITY THAT USES AN ARTIFICIAL INTELLIGENCE, ALGORITHM,
 OR OTHER SOFTWARE TOOL FOR THE PURPOSE OF UTILIZATION REVIEW OR UTILIZA-
 TION MANAGEMENT FUNCTIONS, BASED IN WHOLE OR IN PART ON MEDICAL NECESSI-
 TY, SHALL COMPLY WITH THIS SECTION AND SHALL ENSURE ALL OF  THE  FOLLOW-
 ING:
   (A)  THE  ARTIFICIAL  INTELLIGENCE,  ALGORITHM, OR OTHER SOFTWARE TOOL
 BASES ITS DETERMINATION ON THE FOLLOWING INFORMATION, AS APPLICABLE:
   (I) AN INSURED'S MEDICAL OR OTHER CLINICAL HISTORY;
   (II) INDIVIDUAL CLINICAL CIRCUMSTANCES AS PRESENTED BY THE  REQUESTING
 PROVIDER; AND
   (III)  OTHER  RELEVANT CLINICAL INFORMATION CONTAINED IN THE INSURED'S
 MEDICAL OR OTHER CLINICAL RECORD.
   (B) THE ARTIFICIAL INTELLIGENCE, ALGORITHM,  OR  OTHER  SOFTWARE  TOOL
 DOES NOT BASE ITS DETERMINATION SOLELY ON A GROUP DATASET.
   (C)  THE  ARTIFICIAL INTELLIGENCE, ALGORITHM, OR OTHER SOFTWARE TOOL'S
 CRITERIA AND GUIDELINES COMPLIES WITH THIS CHAPTER AND APPLICABLE  STATE
 AND FEDERAL LAW.
   (D)  THE  ARTIFICIAL  INTELLIGENCE,  ALGORITHM, OR OTHER SOFTWARE TOOL
 DOES NOT SUPPLANT HEALTH CARE PROVIDER DECISION-MAKING.
   (E) THE USE OF THE ARTIFICIAL INTELLIGENCE, ALGORITHM, OR OTHER  SOFT-
 WARE  TOOL  DOES  NOT  DISCRIMINATE,  DIRECTLY  OR  INDIRECTLY,  AGAINST
 INSUREDS IN VIOLATION OF STATE OR FEDERAL LAW.
   (F) THE ARTIFICIAL INTELLIGENCE, ALGORITHM, OR OTHER SOFTWARE TOOL  IS
 FAIRLY  AND EQUITABLY APPLIED, INCLUDING IN ACCORDANCE WITH ANY APPLICA-
 BLE REGULATIONS AND GUIDANCE ISSUED BY THE FEDERAL DEPARTMENT OF  HEALTH
 AND HUMAN SERVICES.
   (G)  THE ARTIFICIAL INTELLIGENCE, ALGORITHM, OR OTHER SOFTWARE TOOL IS
 OPEN TO INSPECTION FOR AUDIT OR COMPLIANCE  REVIEWS  BY  THE  DEPARTMENT
 PURSUANT TO APPLICABLE STATE AND FEDERAL LAW.
   (H)  DISCLOSURES PERTAINING TO THE USE AND OVERSIGHT OF THE ARTIFICIAL
 INTELLIGENCE, ALGORITHM, OR OTHER SOFTWARE TOOL  ARE  CONTAINED  IN  THE
 WRITTEN  POLICIES  AND  PROCEDURES,  AS  REQUIRED  BY SECTION FORTY-NINE
 HUNDRED TWO OF THIS TITLE.
   (I) THE ARTIFICIAL INTELLIGENCE, ALGORITHM, OR OTHER  SOFTWARE  TOOL'S
 PERFORMANCE,  USE, AND OUTCOMES ARE PERIODICALLY REVIEWED AND REVISED TO
 MAXIMIZE ACCURACY AND RELIABILITY.
   (J) PATIENT DATA IS NOT USED BEYOND ITS INTENDED AND  STATED  PURPOSE,
 CONSISTENT  WITH  STATE LAW AND THE FEDERAL HEALTH INSURANCE PORTABILITY
 AND ACCOUNTABILITY ACT OF 1996 (PUBLIC LAW 104-191), AS APPLICABLE.
   (K) THE ARTIFICIAL INTELLIGENCE, ALGORITHM,  OR  OTHER  SOFTWARE  TOOL
 DOES NOT DIRECTLY OR INDIRECTLY CAUSE HARM TO THE INSURED.
   2.  NOTWITHSTANDING  SUBSECTION  ONE  OF  THIS SECTION, THE ARTIFICIAL
 INTELLIGENCE, ALGORITHM, OR OTHER SOFTWARE TOOL SHALL NOT  DENY,  DELAY,
 OR  MODIFY  HEALTH  CARE SERVICES BASED, IN WHOLE OR IN PART, ON MEDICAL
 NECESSITY. A DETERMINATION OF MEDICAL NECESSITY SHALL BE MADE ONLY BY  A
 S. 7896                             4
 
 LICENSED  PHYSICIAN  OR  LICENSED  HEALTH CARE PROFESSIONAL COMPETENT TO
 EVALUATE THE SPECIFIC  CLINICAL  ISSUES  INVOLVED  IN  THE  HEALTH  CARE
 SERVICES  REQUESTED  BY  THE  PROVIDER,  AS  PROVIDED  IN THIS TITLE, BY
 REVIEWING  AND CONSIDERING THE REQUESTING PROVIDER'S RECOMMENDATION, THE
 INSURED'S MEDICAL OR OTHER CLINICAL HISTORY, AS APPLICABLE, AND INDIVID-
 UAL CLINICAL CIRCUMSTANCES.
   3. FOR PURPOSES OF THIS SECTION, "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 THE  INPUT
 IT  RECEIVES  HOW  TO  GENERATE  OUTPUTS  THAT CAN INFLUENCE PHYSICAL OR
 VIRTUAL ENVIRONMENTS.
   4. THIS SECTION SHALL  APPLY  TO  UTILIZATION  REVIEW  OR  UTILIZATION
 MANAGEMENT FUNCTIONS THAT PROSPECTIVELY, RETROSPECTIVELY, OR CONCURRENT-
 LY REVIEW REQUESTS FOR COVERED HEALTH CARE SERVICES.
   5.  AN  INSURER  SUBJECT  TO THIS SECTION SHALL COMPLY WITH APPLICABLE
 FEDERAL RULES AND GUIDANCE ISSUED BY THE FEDERAL  DEPARTMENT  OF  HEALTH
 AND  HUMAN  SERVICES REGARDING THE USE OF ARTIFICIAL INTELLIGENCE, ALGO-
 RITHM, OR OTHER SOFTWARE TOOLS. THE DEPARTMENT  MAY  ISSUE  GUIDANCE  TO
 IMPLEMENT  THIS  PARAGRAPH  WITHIN  ONE  YEAR OF THE ADOPTION OF FEDERAL
 RULES OR THE ISSUANCE OF GUIDANCE BY THE FEDERAL  DEPARTMENT  OF  HEALTH
 AND  HUMAN  SERVICES REGARDING THE USE OF ARTIFICIAL INTELLIGENCE, ALGO-
 RITHM, OR OTHER SOFTWARE TOOLS. SUCH GUIDANCE SHALL NOT  BE  SUBJECT  TO
 THE STATE ADMINISTRATIVE PROCEDURE ACT.
   6. FOR PURPOSES OF IMPLEMENTING THIS SECTION, THE DEPARTMENT MAY ENTER
 INTO  EXCLUSIVE  OR NONEXCLUSIVE CONTRACTS, OR AMEND EXISTING CONTRACTS,
 ON A BID OR NEGOTIATED BASIS. CONTRACTS ENTERED INTO OR AMENDED PURSUANT
 TO THIS SUBDIVISION SHALL BE EXEMPT FROM ARTICLES NINE AND ELEVEN OF THE
 STATE FINANCE LAW, AND SHALL NOT BE SUBJECT TO REVIEW OR APPROVAL OF ANY
 OTHER STATE AGENCY OR ENTITY.
   § 3. This act shall take effect on the ninetieth day  after  it  shall
 have become a law.

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