IA HF2635: A bill for an act relating to health carriers standards of conduct; utilization review organizations, artificial intelligence, audits, and prior auth…

In one paragraph

Iowa's HF 2635 is a health insurance and certificate-of-need law. Its AI rule (Iowa Code § 514F.8(2A)) lets a utilization review organization use an AI-based algorithm or system for the initial review of a prior authorization request, but for a request based on medical necessity AI may not be the sole basis for denying, delaying or downgrading it. The act also requires denials to be made by a same- or similar-specialty physician or clinical peer, sets audit deadlines, bars prior authorization for certain cancer screenings and inpatient emergencies, and raises certificate-of-need thresholds. Signed May 13, 2026 (Acts Chapter 1087); effective July 1, 2026, with many rules applying from 2027.

Plain-English summary, written with AI assistance. The official text controls.

What it means for business

Utilization review organizations may use AI for initial prior authorization review but not as the sole basis to deny, delay or downgrade medical-necessity requests; insurers also face peer-review, audit-deadline and prior authorization exemption rules from 2027.

Key provisions

1. 1AI in utilization review (§ 514F.8(2A)): a utilization review organization may use an AI-based algorithm or system for an initial review of a prior authorization request, but for a request based on medical necessity it may not use AI as the sole basis for a decision to deny, delay or downgrade (move an expedited or urgent request to standard, or modify the service to a lower level)
2. 2Enforcement (§ 514F.8E): noncompliance with §§ 514F.8 to 514F.8D is subject to the remedies of Iowa Code chapters 505 and 507B; on a pattern or practice of noncompliance the insurance commissioner may also suspend a utilization review organization's authority to conduct utilization review
3. 3For requests made on or after January 1, 2027 (§ 514F.8A), denials and downgrades must be made by a qualified reviewer (a physician in the same or similar specialty) or, for non-physician providers, a clinical peer, with a signed written statement of the specific reasons, an appeals explanation and a credentials attestation; peer consultation within seven business days on request; appeals heard by a different reviewer
4. 4Audits initiated on or after January 1, 2027 (§ 514F.8C): notice to the provider within 15 calendar days of selecting a claim, a determination within 45 days of receiving all documentation, 30 days to appeal and 30 days to decide; if the insurance commissioner finds a violation after a hearing, the claim must be approved and paid with interest at 10% per year. Carriers may not penalize providers for out-of-network referrals or interfere in their staffing and referral decisions (§ 514F.8D)
5. 5From January 1, 2027, state-regulated health plans, Medicaid and Hawki may not require prior authorization or extra utilization review for cancer screenings recommended under NCCN category 2A-or-lower guidelines, or for life-threatening emergency conditions arising during inpatient care
6. 6Health care providers must submit prior authorization requests made on or after July 1, 2027 to health carriers and Medicaid managed care organizations electronically, through a standards-based API or other electronic method compliant with federal interoperability rules
7. 7Certificate of need: the cost thresholds for new institutional health facilities, capital expenditures and equipment that adds a new service rise to $4 million from January 1, 2027, $4.5 million from 2032 and $5 million from 2037, with other review-process changes
8. 8Passed the House 94-1 (March 3, 2026) and the Senate 44-0 as amended (March 4); House concurred 87-0 (March 5); signed May 13, 2026 (Acts Chapter 1087); effective July 1, 2026

Latest legislative action

May 13, 2026. Signed by Governor. H.J. 1168.

Sponsors

Roll call votes