Senate Study Bill 3118 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON HEALTH AND HUMAN SERVICES BILL BY CHAIRPERSON WARME) A BILL FOR An Act relating to utilization review organizations’ use of 1 artificial intelligence, prior authorization determinations 2 and exemptions, and prepayment audits, and including 3 applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 6750XC (5) 91 nls/ko

S.F. _____ DIVISION I 1 PRIOR AUTHORIZATION —— USE OF ARTIFICIAL INTELLIGENCE AND PEER 2 REVIEW 3 Section 1. Section 514F.8, subsection 1, Code 2026, is 4 amended by adding the following new paragraph: 5 NEW PARAGRAPH . 0b. “Downgrade” means a decision by a 6 health carrier or utilization review organization to change 7 an expedited or urgent request for prior authorization 8 to a standard determination, or otherwise modify a health 9 care service that is the subject of a request for prior 10 authorization to a lower-level health care service. 11 Sec. 2. Section 514F.8, Code 2026, is amended by adding the 12 following new subsection: 13 NEW SUBSECTION . 2A. A utilization review organization may 14 use an artificial intelligence-based algorithm to provide an 15 initial review of a request for prior authorization, except 16 that, for a prior authorization request for a health care 17 service based on medical necessity, a utilization review 18 organization shall not use an artificial intelligence-based 19 algorithm as the sole basis for the utilization review 20 organization’s decision to deny, delay, or downgrade the prior 21 authorization request. 22 Sec. 3. NEW SECTION . 514F.8A Prior authorizations —— peer 23 review. 24 1. For purposes of this section: 25 a. “Clinical peer” means a health care professional that 26 meets all of the following requirements: 27 (1) The health care professional practices in the same or 28 similar specialty as the health care provider that requested 29 a prior authorization. 30 (2) The health care professional has experience managing 31 the specific medical condition or administering the health care 32 service that is the subject of the prior authorization request. 33 (3) The health care professional is employed by or 34 contracted with the utilization review organization or health 35 -1- LSB 6750XC (5) 91 nls/ko 1/ 11

S.F. _____ carrier to which a health care provider submitted a request for 1 prior authorization. 2 b. “Covered person” means the same as defined in section 3 514F.8. 4 c. “Downgrade” means a decision by a health carrier 5 or utilization review organization to change an expedited 6 or urgent request for prior authorization to a standard 7 determination, or otherwise modify a health care service that 8 is the subject of a request for prior authorization to a 9 lower-level health care service. 10 d. “Health care professional” means the same as defined in 11 section 514J.102. 12 e. “Health care provider” means the same as defined in 13 section 514F.8. 14 f. “Health care services” means the same as defined in 15 section 514F.8. 16 g. “Health carrier” means the same as defined in section 17 514F.8. 18 h. “Physician” means a licensed doctor of medicine and 19 surgery or a licensed doctor of osteopathic medicine and 20 surgery licensed under chapter 148. 21 i. “Prior authorization” means the same as defined in 22 section 514F.8. 23 j. “Qualified reviewer” means a physician that meets all of 24 the following requirements: 25 (1) The physician practices in the same or a similar 26 specialty as the health care provider that requested a prior 27 authorization. 28 (2) The physician has the training and expertise to treat 29 the specific medical condition that is the subject of a 30 request for prior authorization, including sufficient knowledge 31 to determine whether the health care service that is the 32 subject of the request is medically necessary or clinically 33 appropriate. 34 (3) The physician is employed by or contracted with 35 -2- LSB 6750XC (5) 91 nls/ko 2/ 11

S.F. _____ the utilization review organization or health carrier to 1 which a health care provider submitted a request for prior 2 authorization. 3 k. “Utilization review organization” means the same as 4 defined in section 514F.8. 5 2. A utilization review organization shall not deny or 6 downgrade a request for prior authorization unless all of the 7 following requirements are met: 8 a. The decision to deny or downgrade the request is made by 9 either of the following: 10 (1) A qualified reviewer, if the health care provider 11 requesting prior authorization is a physician. 12 (2) A clinical peer, if the health care provider requesting 13 prior authorization is not a physician. 14 b. The utilization review organization provides the health 15 care provider that requested the prior authorization all of the 16 following: 17 (1) A written statement that cites the specific reasons 18 for the denial or downgrade, including any coverage criteria 19 or limits, or clinical criteria, that the utilization review 20 organization considered or that was the basis for the denial 21 or downgrade. The written statement shall be signed by either 22 of the following: 23 (a) The qualified reviewer that made the denial or downgrade 24 determination, if the health care provider that requested prior 25 authorization is a physician. 26 (b) The clinical peer that made the denial or downgrade 27 determination, if the health care provider that requested prior 28 authorization is not a physician. 29 (2) A written explanation of the utilization review 30 organization’s appeals process. The utilization review 31 organization shall also provide the written explanation to the 32 covered person for whom prior authorization was requested. 33 (3) A written attestation that is either of the following: 34 (a) If the health care provider that requested prior 35 -3- LSB 6750XC (5) 91 nls/ko 3/ 11

S.F. _____ authorization is a physician, a written attestation that 1 the qualified reviewer who made the denial or downgrade 2 determination practices in the same or a similar specialty as 3 the health care provider, and has the requisite training and 4 expertise to treat the medical condition that is the subject 5 of the request for prior authorization, including sufficient 6 knowledge to determine whether the health care service is 7 medically necessary or clinically appropriate. The attestation 8 shall include the qualified reviewer’s name, national provider 9 identifier, board certifications, specialty expertise, and 10 educational background. 11 (b) If the health care provider that requested prior 12 authorization is not a physician, a written attestation 13 that the clinical peer who made the denial or downgrade 14 determination practices in the same or a similar specialty as 15 the health care provider, and the clinical peer has experience 16 managing the specific medical condition or administering 17 the health care service that is the subject of the request 18 for prior authorization. The attestation shall include 19 the clinical peer’s name, national provider identifier, 20 board certifications, specialty expertise, and educational 21 background. 22 3. A utilization review organization that denies a request 23 for prior authorization shall, no later than seven business 24 days after the date that the utilization review organization 25 notifies the requesting health care provider of the denial, 26 conduct a consultation either in person or remotely, as 27 follows: 28 a. Between the health care provider and a qualified 29 reviewer, if the health care provider requesting prior 30 authorization is a physician. 31 b. Between the health care provider and a clinical peer, if 32 the health care provider requesting prior authorization is not 33 a physician. 34 4. a. If a utilization review organization’s decision to 35 -4- LSB 6750XC (5) 91 nls/ko 4/ 11

S.F. _____ deny or downgrade a request for prior authorization is appealed 1 by the requesting health care provider or covered person, the 2 appeal shall be conducted by either of the following: 3 (1) A qualified reviewer, if the health care provider 4 requesting prior authorization is a physician. 5 (2) A clinical peer, if the health care provider requesting 6 prior authorization is not a physician. 7 b. A qualified reviewer or clinical peer involved in the 8 initial denial or downgrade determination of a request for 9 prior authorization that is the subject of an appeal shall not 10 conduct the appeal. 11 c. When conducting an appeal of a request for prior 12 authorization, the qualified reviewer or clinical peer shall 13 consider the known clinical aspects of the health care services 14 under review, including but not limited to medical records 15 relevant to the covered person’s medical condition that 16 is the subject of the health care services for which prior 17 authorization is requested, and any relevant medical literature 18 submitted by the health care provider as part of the appeal. 19 5. The commissioner of insurance may adopt rules pursuant to 20 chapter 17A to administer this section. 21 Sec. 4. APPLICABILITY. This division of this Act applies 22 to all of the following: 23 1. Requests for prior authorization made before January 24 1, 2027, if the request has not been finally determined on or 25 before that date. 26 2. Requests for prior authorization made on or after January 27 1, 2027. 28 DIVISION II 29 PRIOR AUTHORIZATION —— CANCER-RELATED EXEMPTIONS 30 Sec. 5. NEW SECTION . 514F.8B Prior authorizations —— 31 exemptions. 32 1. For purposes of this section: 33 a. “Covered person” means the same as defined in section 34 514F.8. 35 -5- LSB 6750XC (5) 91 nls/ko 5/ 11

S.F. _____ b. “Health benefit plan” means the same as defined in 1 section 514J.102. 2 c. “Health care professional” means the same as defined in 3 section 514J.102. 4 d. “Health carrier” means an entity subject to the 5 insurance laws and regulations of this state, or subject 6 to the jurisdiction of the commissioner, including an 7 insurance company offering sickness and accident plans, a 8 health maintenance organization, a nonprofit health service 9 corporation, a plan established pursuant to chapter 509A 10 for public employees, or any other entity providing a plan 11 of health insurance, health care benefits, or health care 12 services. “Health carrier” includes the following: 13 (1) The medical assistance program under chapter 249A and 14 the healthy and well kids in Iowa (Hawki) program under chapter 15 514I. 16 (2) A managed care organization acting pursuant to a 17 contract with the department of health and human services to 18 administer the medical assistance program under chapter 249A, 19 or the healthy and well kids in Iowa (Hawki) program under 20 chapter 514I. 21 e. “Prior authorization” means the same as defined in 22 section 514F.8. 23 f. “Utilization review” means the same as defined in section 24 514F.4, subsection 3. 25 2. A health carrier shall not require prior authorization 26 for, or impose additional utilization review requirements on, a 27 covered person for a cancer-related screening or cancer-related 28 preventative health care service if the screening or service is 29 recommended by the covered person’s health care professional 30 based on the most recently updated national comprehensive 31 cancer network clinical practice guidelines in oncology. 32 3. The commissioner of insurance may adopt rules pursuant to 33 chapter 17A to administer this section. 34 Sec. 6. APPLICABILITY. This division of this Act applies 35 -6- LSB 6750XC (5) 91 nls/ko 6/ 11

S.F. _____ to all of the following: 1 1. Health benefit plans delivered, issued for delivery, 2 continued, or renewed in this state on or after January 1, 3 2027. 4 2. Requests for prior authorization for a cancer-related 5 screening or cancer-related preventative health care service 6 if the screening or service is recommended by the covered 7 person’s health care professional based on the most recently 8 updated national comprehensive cancer network clinical practice 9 guidelines in oncology, the request is made before January 1, 10 2027, and the request has not been finally determined on or 11 before that date. 12 DIVISION III 13 UTILIZATION REVIEW ORGANIZATIONS —— PREPAYMENT AUDITS 14 Sec. 7. NEW SECTION . 514F.10 Utilization review 15 organizations —— prepayment audits. 16 1. For purposes of this section: 17 a. “Health care provider” means the same as defined in 18 section 514F.8. 19 b. “Health carrier” means the same as defined in section 20 514F.8. 21 c. “Prepayment audit” means a review, investigation, or 22 request for additional documentation by a health carrier that 23 is conducted by a utilization review organization on behalf of 24 the health carrier prior to issuing payment on a claim from a 25 health care provider. 26 d. “Utilization review organization” means the same as 27 defined in section 514F.8. 28 2. A utilization review organization that conducts a 29 prepayment audit shall notify the health care provider that 30 submitted the claim of the initiation of the prepayment audit 31 no later than fifteen calendar days after the date the health 32 carrier selects the claim for prepayment audit. 33 3. A utilization review organization shall complete a 34 prepayment audit of a claim and issue a determination on the 35 -7- LSB 6750XC (5) 91 nls/ko 7/ 11

S.F. _____ claim to the health care provider that submitted the claim 1 no later than forty-five calendar days after the date that 2 the utilization review organization receives all requested 3 documentation regarding the claim from the health care 4 provider. 5 4. A health care provider that submitted a claim that is 6 the subject of a prepayment audit by a utilization review 7 organization, and that receives an adverse determination 8 regarding the claim, may appeal the adverse determination no 9 later than thirty calendar days after the date the health care 10 provider receives the prepayment audit determination. 11 5. A utilization review organization shall consider an 12 appeal under subsection 4, and issue a final determination on 13 the claim that is the subject of the appeal, no later than 14 fourteen calendar days after that date the utilization review 15 organization receives notice of the appeal. 16 6. If a utilization review organization violates this 17 section, the claim shall be automatically approved by the 18 utilization review organization and promptly paid pursuant to 19 section 507B.4A, subsection 2. 20 7. The commissioner of insurance shall adopt rules pursuant 21 to chapter 17A to administer and enforce this section. 22 Sec. 8. APPLICABILITY. This division of this Act applies to 23 prepayment audits initiated on or after January 1, 2027. 24 EXPLANATION 25 The inclusion of this explanation does not constitute agreement with 26 the explanation’s substance by the members of the general assembly. 27 This bill relates to utilization review organizations’ use 28 of artificial intelligence, prior authorization determinations 29 and exemptions, and prepayment audits. 30 DIVISION I —— PRIOR AUTHORIZATION —— USE OF ARTIFICIAL 31 INTELLIGENCE AND PEER REVIEW. Under the bill, a 32 utilization review organization (URO) may use an artificial 33 intelligence-based algorithm to provide an initial review of a 34 request for prior authorization, except that, for a request for 35 -8- LSB 6750XC (5) 91 nls/ko 8/ 11

S.F. _____ a health care service (service) based on medical necessity, a 1 URO shall not use an artificial intelligence-based algorithm 2 as the sole basis for a decision to deny, delay, or downgrade 3 the prior authorization request. “Downgrade” is defined in the 4 bill. 5 A URO shall not deny or downgrade a request for prior 6 authorization unless: (1) the decision is made by a qualified 7 reviewer or clinical peer, (2) the URO provides the health care 8 provider (provider) requesting prior authorization a written 9 statement citing the reasons for the decision, explaining the 10 appeals process, and a written attestation as described by the 11 bill. If a request for prior authorization is denied, the 12 URO shall notify the provider within seven days and conduct a 13 consultation as described by the bill. “Clinical peer” and 14 “qualified reviewer” are defined in the bill. 15 If a URO’s decision to deny or downgrade a request for prior 16 authorization is appealed by the requesting provider or covered 17 person, the appeal shall be conducted by a qualified reviewer 18 or clinical peer who was not involved in the initial denial or 19 downgrade. When conducting an appeal of a request for prior 20 authorization, the qualified reviewer or clinical peer shall 21 consider the known clinical aspects of the services under 22 review, including but not limited to medical records relevant 23 to the medical condition and any relevant medical literature 24 submitted by the provider. 25 The commissioner of insurance (commissioner) may adopt rules 26 to administer this division of the bill. 27 This division of the bill applies to requests for prior 28 authorization made before January 1, 2027, if the request 29 has not been finally determined on or before that date, and 30 requests for prior authorization made on or after January 1, 31 2027. 32 DIVISION II —— PRIOR AUTHORIZATION —— CANCER-RELATED 33 EXEMPTIONS. A health carrier (carrier) shall not require 34 prior authorization for, or impose additional utilization 35 -9- LSB 6750XC (5) 91 nls/ko 9/ 11

S.F. _____ review requirements on, a covered person for a cancer-related 1 screening or cancer-related preventative service if the 2 screening or service is recommended by the covered person’s 3 health care professional based on the most recently updated 4 national comprehensive cancer network clinical practice 5 guidelines in oncology. The commissioner may adopt rules to 6 administer this division of the bill. 7 This division of the bill applies to health benefit plans 8 delivered, issued for delivery, continued, or renewed on or 9 after January 1, 2027; and requests for prior authorization 10 for a cancer-related screening or cancer-related preventative 11 health care service if the screening or service is recommended 12 by the covered person’s health care professional, the request 13 is made before January 1, 2027, and the request has not been 14 finally determined on or before that date. 15 DIVISION III —— UTILIZATION REVIEW ORGANIZATIONS —— 16 PREPAYMENT AUDITS. A URO that conducts a prepayment audit 17 shall notify the provider that submitted the claim of the 18 initiation of the prepayment audit no later than 15 days 19 after the carrier selects the claim for prepayment audit. 20 “Prepayment audit” is defined by the bill. A URO shall 21 complete a prepayment audit and issue a determination on the 22 claim to the provider no later than 45 days after the URO 23 receives all requested documentation regarding the claim from 24 the provider. 25 A provider that submitted a claim that is the subject of a 26 prepayment audit and that receives an adverse determination 27 regarding the claim may appeal the determination no later than 28 30 days after the provider receives the determination. A URO 29 shall consider an appeal and issue a final determination on the 30 claim no later than 14 calendar days after receiving notice 31 of an appeal. If a URO violates the bill, the claim shall be 32 automatically approved by the URO and promptly paid, including 33 interest. 34 The commissioner shall adopt rules to administer and enforce 35 -10- LSB 6750XC (5) 91 nls/ko 10/ 11