BILL ANALYSIS

S.B. 815

By: Schwertner

Insurance

Committee Report (Unamended)

BACKGROUND AND PURPOSE

The bill sponsor has informed the committee that policymakers and health care professionals have expressed concerns that, with respect to the health benefit claims process, relying solely on artificial intelligence (AI) algorithms to determine medical necessity may lead to inappropriate denials, delays, or modifications of care and that, as AI-driven systems become more prevalent in medical decision-making, decisions affecting patient care should remain in the hands of licensed medical professionals rather than being dictated exclusively by AI-based algorithms. S.B. 815 seeks to introduce limitations on the role of AI in utilization review by explicitly prohibiting the use of AI-based algorithms as the sole basis for denying, delaying, or modifying health care services. The bill requires that only licensed medical professionals can determine medical necessity or appropriateness of care, ensuring that human judgment remains central to critical health care decisions.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

S.B. 815 amends the Insurance Code to expand the definition of "adverse determination," for purposes of provisions relating to utilization review agents, to include a determination by a utilization review agent that health care services provided or proposed to be provided to a patient are not medically appropriate and to set out provisions regarding the use of an automated decision system for such determinations. The bill defines the following terms for purposes of those provisions:

· "algorithm" as a computerized procedure consisting of a set of steps used to accomplish a determined task;

· "artificial intelligence system" as any machine learning-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, and recommendations, that can influence physical or virtual environments; and

· "automated decision system" as an algorithm, including an algorithm incorporating an artificial intelligence system, that uses data-based analytics to make, suggest, or recommend certain determinations, decisions, judgments, or conclusions.

S.B. 815 prohibits a utilization review agent from using an automated decision system to make, wholly or partly, an adverse determination. The bill authorizes the commissioner of insurance to audit and inspect at any time a utilization review agent's use of an automated decision system for utilization review. These provisions expressly do not prohibit the use of an algorithm, artificial intelligence system, or automated decision system for administrative support or fraud-detection functions.

S.B. 815, with respect to the requirement in current law that a notice of an adverse determination contain certain information, provides the following:

· requires the notice to contain both a description of and the source of the screening criteria used as guidelines in making the adverse determination and accordingly removes the option for one or the other of those to be included in such a notice; and

· requires the notice to contain a description of and the source of the review procedures used in those guidelines in making the adverse determination.

S.B. 815 applies only to utilization review conducted for a health benefit plan delivered, issued for delivery, or renewed on or after January 1, 2026. Utilization review conducted for a health benefit plan delivered, issued for delivery, or renewed before that date is governed by the law as it existed immediately before the bill's effective date, and that law is continued in effect for that purpose.

EFFECTIVE DATE

September 1, 2025.