On November 25, 2024, the Illinois State Legislature launched Home Invoice 5918 IL HB5918, the Synthetic Intelligence Programs Use in Well being Insurance coverage Act (“AI Act”). It supplies the Illinois Division of Insurance coverage (the “Division”) regulatory oversight of insurers utilizing synthetic intelligence for determinations that have an effect on customers. The proposed invoice grants the Division the flexibility to undertake guidelines, together with emergency guidelines per the Illinois Administrative Process Act, to implement and administer the AI Act.
The AI Act requires regulatory oversight of using AI programs and disclosure of AI utilization. The main focus of the regulatory oversight of AI programs surrounds using AI in making or supporting hostile determinations that might have an effect on customers.
The AI Act permits the Division to watch the conduct of all insurers who function in Illinois, together with insurers’ improvement, implementation, and use of AI-driven fashions in protection determinations. Beneath the invoice, such conduct is topic to investigation or market conduct motion. The invoice expands the Division’s investigative instruments as they might (1) inquire additional on related inquiries to particular fashions, AI programs, or functions of a mannequin or AI system; and (2) additionally make requests for data and documentation of AI programs governance, danger administration, AI use protocols, data and documentation referring to the insurer’s preacquisition and pre-utilization diligence, monitoring, auditing of knowledge or AI programs developed by a 3rd social gathering, and knowledge and documentation referring to implementation and compliance with the insurer’s AI programs program.
For insurers working in Illinois, the AI Act prevents insurers from issuing an hostile shopper consequence on the denial, discount, or termination of advantages or insurance coverage the place the insurers solely use an AI system or predictive mannequin. Insurers should meaningfully assessment such selections when using an AT system or predictive mannequin is concerned.
To reinforce transparency and promote shopper belief, the Division has the flexibility to undertake guidelines that will require the insurer to reveal its AI use. Whereas the AI Act itself doesn’t go into additional element on such guidelines, the Division has the authority to set guidelines that require full and honest disclosure on the way and content material of the insurers’ AI use.
Insurers approved to conduct enterprise in Illinois should adjust to the AI Act. Any determination that impacts the buyer that includes superior analytical and computational applied sciences (together with AI programs and machine studying), requires the insurers to adjust to relevant federal and State legal guidelines, rules, and guidelines, together with each insurance coverage legal guidelines and legal guidelines addressing unfair commerce practices and unfair discrimination.
Whereas the AI Act could also be a proposed invoice, the Facilities for Medicare & Medicaid Providers (“CMS”) took a stance on AI assessment of denial, discount or termination of insurance coverage when it issued a Final Rule in April 2023 that turned efficient in January 2024. CMS’ Ultimate Rule made clear that Medicare Benefit plans should make medical necessity determinations primarily based on the enrollee’s particular circumstances as an alternative of counting on algorithms. Moreover, such determinations have to be reviewed by a doctor or acceptable healthcare skilled.
As extra legal guidelines and rules enter the insurance coverage AI area, insurers might want to take a better take a look at their compliance applications and insurance policies and modify their operations. There are quite a few dangers when utilizing AI and its algorithms, and the rising use of AI within the healthcare and insurance coverage industries has raised important considerations in regards to the opacity of the AI-driven selections. Furthermore, the elevated reliance on AI fashions for claims adjudication, protection determinations, and pricing can result in conditions the place a shopper is denied protection or advantages primarily based on elements which might be unclear or obscure.
As public scrutiny of well being insurers is on the rise, the probability of AI-focused litigation will even enhance. In an ever-evolving and dynamic authorized panorama of AI in insurance coverage regulation, it’s important for insurers to have their authorized groups help with the assessment, upkeep, and maintenance of their AI insurance policies.
