The fiscal implications of SB 815 are uncertain due to the lack of data on the extent to which managed care organizations (MCOs) currently use automated decision systems in processing health benefit claims. Without clear information on how widespread AI-driven claims processing is within the healthcare industry, it is difficult to estimate the financial impact of the bill.

One potential area of fiscal impact is Medicaid client services, but the extent of this effect remains undetermined. If Medicaid-related managed care organizations rely heavily on AI for claim determinations, requiring additional disclosures or human oversight could result in administrative costs. However, the Legislative Budget Board (LBB) notes that any costs associated with the bill could likely be absorbed using existing resources at the Texas Department of Insurance (TDI) and the Health and Human Services Commission (HHSC).

For local governments, the bill is not expected to have a significant fiscal impact. The regulatory requirements in SB 815 primarily affect state agencies and private insurers, rather than local governmental entities. Overall, while there may be some administrative costs associated with compliance and oversight, the state's ability to absorb these costs suggests a minimal immediate fiscal burden.

SB 815 addresses the growing role of artificial intelligence (AI) in healthcare claims processing and utilization review. The bill seeks to increase transparency by requiring insurers and health maintenance organizations (HMOs) to disclose when AI is used in coverage determinations and utilization reviews. It also prohibits AI from being the sole factor in adverse determinations, ensuring that a licensed healthcare professional is involved in the decision-making process. Additionally, the bill grants the Texas Department of Insurance (TDI) the authority to audit and inspect AI usage in claims processing.

While the bill takes an important step in protecting consumers from potentially biased or inaccurate AI-driven claim denials, concerns remain about its potential impact on innovation and administrative costs. The Committee Substitute has moved away from outright restricting AI use and instead focuses on transparency and oversight, which is a more balanced approach. However, the bill still places new compliance requirements on insurers that could lead to higher costs and potential inefficiencies in claims processing.

Given the lack of data on how widespread AI is in healthcare claim determinations, amendments should focus on clarifying regulatory expectations, ensuring that TDI oversight remains targeted and reasonable, and preventing unintended consequences that could discourage technological advancements in claims processing. With these adjustments, SB 815 could achieve its goal of ensuring fairness in AI-driven decisions while maintaining efficiency in healthcare administration. As such, Texas Policy Research recommends that lawmakers vote NO unless amended s described above.

• HB 2922 (Same As)