Colorado § 10-16-112.7 - Use of artificial intelligence systems - utilization review - prohibition on payment for AI-delivered psychotherapy services - definitions.

§ 10-16-112.7. Use of artificial intelligence systems - utilization review - prohibition on payment for AI-delivered psychotherapy services - definitions.

[Editor's note: This section is effective January 1, 2027.]

(1) As used in this section:

(a) "Artificial intelligence system" has the meaning set forth in section 6-1-1701 (2).

(b) "Behavioral health administrative services organization" means an organization selected by the behavioral health administration pursuant to section 27-50-402 to establish and maintain a network of behavioral health providers.

(c) "Managed care entity" has the meaning set forth in section 25.5-5-403 (4).

(d) "Private utilization review organization" or "organization" means a private utilization review organization, as defined in section 10-16-112 (1)(a), that has a contract with or performs prior authorization on behalf of a carrier.

(2) Utilization review. Subsections (3), (4), and (5) of this section apply to:

(a) A carrier that:

(I) Uses an artificial intelligence system for the purpose of utilization review; or

(II) Contracts with or otherwise works through a person that uses an artificial intelligence system for the purpose of utilization review;

(b) A pharmacy benefit manager or private utilization review organization that contracts with a carrier to provide utilization review services on behalf of the carrier and uses an artificial intelligence system for the purpose of conducting the utilization review; and

(c) A behavioral health administrative services organization or managed care entity that uses an artificial intelligence system for the purpose of conducting utilization review of mental or behavioral health services.

(3) A person described in subsection (2) of this section that uses an artificial intelligence system to conduct utilization review shall ensure that:

(a) The artificial intelligence system bases its determination on the following information, as applicable:

(I) An individual's medical or other clinical history;

(II) Individual clinical circumstances as presented by the requesting provider; and

(III) Other relevant clinical information contained in the individual's medical or other clinical record;

(b) The artificial intelligence system does not base its determinations solely on group data, without reference to the individual's data;

(c) The artificial intelligence system is not used in any way that discriminates against individuals in violation of other state or federal laws;

(d) The artificial intelligence system is fairly and equitably applied, including in accordance with applicable regulations and guidance issued by the federal department of health and human services;

(e) The artificial intelligence system produces and retains documentation, audit logs, and model-governance records in order to demonstrate compliance with this section and section 10-3-1104.9;

(f) The artificial intelligence system's performance, use, and outcomes are periodically reviewed to maximize accuracy and reliability;

(g) An individual's health data is not used beyond its intended or stated purpose, consistent with applicable state and federal laws; and

(h) The artificial intelligence system's or algorithm's criteria and guidelines comply with other applicable state or federal laws concerning utilization review and coverage for health-care services.

(4) A person described in subsection (2) of this section shall provide written disclosures to the division, the department of human services, or the department of health care policy and financing, as applicable, that identify:

(a) The utilization review functions for which the artificial intelligence system will be used;

(b) The points in the utilization review process when the artificial intelligence system is used;

(c) The human oversight process, including the qualifications of the reviewer and whether a human must approve an adverse determination; and

(d) The process for maintaining audit information sufficient to demonstrate compliance with subsection (3) of this section.

(5) (a) Notwithstanding subsection (3) of this section, an artificial intelligence system may be used to assist with utilization review, including expedited approvals.

(b) A carrier's denial of coverage based in whole or in part on medical necessity shall not be issued solely on the output of an artificial intelligence system without human review and approval of the denial by a licensed clinician, licensed physician, or other regulated professional that is competent to evaluate the specific clinical issues involved in the health-care services requested by the provider and a review of the health benefit plan's terms of coverage for the health-care service.

(6) Prohibition on payment for AI-delivered psychotherapy services.

(a) A carrier offering a health benefit plan issued or renewed in the state on or after January 1, 2027, shall not provide coverage for services that constitute psychotherapy services, as defined in section 12-245-202 (14), that are provided directly to an individual and that are conducted by an artificial intelligence system.

(b) Subsection (6)(a) of this section does not prohibit the use of billing software, electronic health records, video platforms, or other nontherapeutic software tools incident to services provided by a human provider.

(c) The use of videoconferencing, messaging platforms, or other communications software to enable supervision or consultation by a licensed, registered, or certified individual does not constitute supervision or consultation that is conducted by an artificial intelligence system, as referenced in subsection (6)(a) of this section.

Source: L. 2026: Entire section added, (HB 26-1139), ch. 325, p. 1890, § 2, effective January 1, 2027.

Editor's note: Section 4(2) of chapter 325 (HB 26-1139), Session Laws of Colorado 2026, provides that the act adding this section applies to actions taken on or after January 1, 2027.

Cross references: For the legislative declaration in HB 26-1139, see section 1 of chapter 325, Session Laws of Colorado 2026.