The provider-specific law, Healthcare Services: Artificial Intelligence, requires health facilities, clinics, physicians offices and medical practices to display generative AI disclosures prominently throughout interactions with California patients when applicable. For audio communications, there will be a verbal disclaimer provided at the start and the end of the interaction. Experts say the law could have an impact on clinical documentation, which is a popular space in healthcare AI.
The California Medical Association and California Hospital Association declined to comment on the legislation.
The health plan law, The Physicians Make Decisions Act, requires insurers to consider California members' medical history and clinical factors when using AI for prior authorization and coverage determinations. Insurers must, under the law, ensure AI tools are being equitably applied and not making determinations based on a patient’s age, gender, race or disability. A licensed clinician must make the final decision regarding whether services are medically necessary.
The California Medical Association applauded the passage of the legislation, which was also supported by the California Hospital Association. Several insurance companies face lawsuits alleging they inappropriately use automated tools, including AI, to automate prior authorization and claim denials. The California Association of Health Plans, which removed its opposition to the legislation in July, declined to offer further comment.
California’s push to regulate AI is happening as the federal government attempts to thread the needle of providing guardrails that spur adoption while not hampering innovation or model development. While many AI stakeholders say federal legislation is necessary, Congress doesn't appear close to passing any bills. Policy experts predict legislatures will follow the blueprint from California and other states, such as Utah and Colorado, that have passed AI legislation.
Newsom vetoed a fourth bill, Safe and Secure Innovation for Frontier Artificial Intelligence Models Act, on Sunday. The bill would have given the state’s attorney general power to bring legal action against AI model developers and provide whistleblower protection for employees, contractors and subcontractors disclosing information to regulators. Newsom said in a news release he rejected the bill because, in his view, it was not the right approach to regulating the technology.
