Health Insurance; prohibiting issue of outcomes with AI; requiring decisions to be made by provider; requiring disclosures. Emergency.
SB2038 prohibits AI in health insurance outcomes, mandates provider decisions, and requires disclosures (specifics unknown). Emergency clause details not specified.
TRANSPARENCY IN DOWNCODING ACT
The Transparency in Downcoding Act prohibits automated downcoding of health insurance claims, requires decisions by a licensed physician, and enforces penalties for discriminatory practices. The Act excludes employee or employer self-insured health benefit plans under ERISA and health care provided pursuant to the Workers' Compensation Act or the Workers' Occupational Diseases Act.
TRANSPARENCY IN DOWNCODING ACT
IL HB4735: TRANSPARENCY IN DOWNCODING ACT
AI Regulation in the Healthcare Providers Industry
State legislatures across the United States are actively developing artificial intelligence regulations that directly affect Healthcare Providers companies and practitioners. These laws address a wide range of concerns including algorithmic discrimination, automated decision-making, data privacy, consumer transparency, and the use of high-risk AI systems that can materially affect individuals' lives. As of 2026, 2 states have introduced or enacted legislation with direct implications for Healthcare Providers.
Compliance requirements vary significantly by state, making it essential for Healthcare Providers legal and compliance teams to track both enacted laws and pending bills. Key obligations may include conducting algorithmic impact assessments, providing consumer disclosures when AI is used in consequential decisions, implementing risk management programs, and ensuring human-in-the-loop oversight for high-stakes outcomes. Penalties for non-compliance can be substantial — see our Penalty Tracker for details by state.
To assess your organization's specific compliance obligations under current and upcoming Healthcare Providers AI regulations, use our Am I Affected? tool. For upcoming enforcement dates, visit the Deadlines page or the Deadline Calendar. Use the Bill Comparator to analyze differences between state laws side-by-side.