States Tighten Rules on AI Health Coverage Decisions

For AI and ML practitioners building systems for health insurers, expanding state restrictions raise audit, documentation, and human-in-the-loop requirements for prior authorization workflows. Reported: According to Sheppard Mullin's Healthcare Law Blog as summarized by PYMNTS, several states are enacting laws that allow AI to assist in administrative tasks but prohibit algorithms from making final "medical necessity" determinations without a qualified human clinical reviewer. Reported: The American Medical Association's November 2025 legislative review lists enacted laws in Arizona, Illinois, Maryland, Nebraska, and Texas that constrain insurer use of AI, including reporting and non-discrimination requirements. Reported: A Colorado Legislative Council memo, citing the National Conference of State Legislatures, documents a surge in activity, noting growth from 15 AI-and-health bills in 2023 to 168 in 2025 and at least 247 health-and-AI bills introduced across 41 states.