Senate committee substitute to the 3rd edition removes the content of the previous edition and replaces it with the following. Makes conforming changes to the act’s titles.

Part I.

Amends GS 58-50-61 by prohibiting using an artificial intelligence (AI)-based algorithm, as defined, as the sole basis to deny a utilization review determination. Applies to insurance contracts issued, amended, or renewed on or after October 1, 2026.

Requires the Department of Health and Human Services (DDHS), Division of Health Benefits (DHB), to amend DHB’s contacts with prepaid health plans, as soon as practicable, to include a prohibition on using AI-based algorithms as the sole basis for denying a utilization review or prior authorization determination.

Part II.

Enacts new GS 90-413 providing as follows. Prohibits developers from designing, training, or materially modifying an AI system for use in healthcare coding, billing, or documentation if it is designed to promote, incentivize, or systematically result in upcoding. Prohibits healthcare providers from using an AI system for healthcare coding, billing, or documentation if the system is designed to promote, incentivize, or systematically result in upcoding. Specifies that a developer or healthcare provider’s repeated failure to comply with the statute indicates a general practice that is deemed an unfair and deceptive trade practice.

Amends GS 90-410 by defining the terms artificial intelligence, developer, and upcode.

Enacts new GS 108C-15 to require healthcare providers, or their agents, to annually provide DHHS, starting July 1, 2027, an attestation of compliance with GS 90-413; sets out what must be included in the attestation. Requires sharing copies of the attestations with the Attorney General. Makes submission of the attestation a condition of participating in the Medicaid program. Allows DHHS to deny enrollment or terminate enrollment of a provider who is not in compliance with this statute or GS 90-413. Allows DHHS to adopt rules to implement this statute.