Introduction
The integration of artificial intelligence (AI) in healthcare presents both opportunities and challenges. While AI can significantly enhance patient care and operational efficiency, it also introduces risks that necessitate stringent regulatory measures to protect patient information and ensure ethical use.
Description
The use and disclosure of patient information [1], particularly in the context of artificial intelligence (AI), must be rigorously protected. While AI has the potential to enhance patient care and streamline operations [1], significant risks accompany its adoption in healthcare [1]. Developers are urged to evaluate the training data and development processes of their AI systems [1], ensuring comprehensive documentation that includes assessments of interpretability, repeatability [2], robustness [2] [4], regular tuning [2], reproducibility [2], traceability [2], model drift [2], and auditability [2]. Healthcare entities must conduct due diligence to ensure compliance with California law [1], including the validation [2], testing [1] [2], and retesting of AI outputs upon implementation [2]. Noncompliant technologies should not be utilized until all issues are resolved [1].
Regular testing [1], validation [1] [2] [3], and auditing of AI systems are essential to ensure safety [1], ethics [1] [3], and legality [1] [3], while also minimizing human error and bias [1]. Staff training on the appropriate use of clinical algorithms and AI tools is crucial to mitigate adverse outcomes [1]. Transparency with patients regarding the use of their information in AI training and decision-making is necessary [1]. Assembly Bill 3030 mandates that healthcare facilities disclose when they use generative AI (genAI) to communicate clinical information to patients [3], requiring disclaimers that the information was generated by genAI and providing instructions for patients to contact a human healthcare provider for further assistance [3]. Communications generated by genAI that have been reviewed by a licensed healthcare provider are exempt from these requirements [3], as are administrative functions like appointment scheduling [3].
Concerns arise when generative AI is used to create patient documentation that may contain inaccuracies or biases [1], potentially leading to discrimination against certain patient groups [1]. The introduction of AB 489 in February 2025 aims to regulate AI-generated communications in healthcare to prevent misleading interactions with patients [1]. Additionally, the “Physicians Make Decisions Act,” effective January 1, 2025 [2] [4], prohibits health insurers from relying solely on AI to deny claims based on medical necessity [4], amending the Knox-Keene Health Care Service Plan Act to establish guidelines for AI use in claims processing [4]. This legislation emphasizes the necessity of human oversight in critical medical decisions, requiring licensed healthcare professionals to supervise AI-assisted medical necessity determinations [3]. AI tools may be utilized in claims analysis, but they must rely solely on the policyholder’s medical history and individual clinical circumstances [2], rather than group datasets.
Under California Senate Bill 1120 [4], medical professionals are mandated to determine the medical necessity of treatments [4], ensuring that AI cannot be used to deny [4], delay [2] [4], or alter services deemed necessary by doctors [4]. The legislation stipulates that standard coverage decisions must be made within five business days and urgent care cases within 72 hours [4], with penalties for organizations that fail to comply [4]. The California Medical Association co-sponsored this legislation [4], advocating for AI to support rather than replace physician judgment [4]. Furthermore, a proposed bill by Assemblymember Mia Bonte seeks to regulate the interaction of AI systems with health plan participants, specifically preventing developers and users from misleadingly suggesting that these systems are equivalent to licensed health professionals [5].
California’s Unfair Competition Law (UCL) prohibits deceptive practices [1], including the use of AI systems that violate other state laws [1]. For instance [1], submitting inaccurate claims using AI would breach Medi-Cal regulations and the UCL [1]. Professional licensing laws dictate that only human medical professionals can practice medicine [1], and AI cannot replace their decision-making authority [1].
Healthcare entities must be vigilant against disparate impact discrimination [1], as California’s anti-discrimination laws require addressing inequities related to protected classifications [1]. The use of generative AI in drafting patient-related documents must comply with these laws to avoid perpetuating stereotypes [1]. The California Attorney General is investigating potential discrimination linked to AI in healthcare [1], while federal guidance emphasizes the need for nondiscrimination in emerging technologies [1]. Several California privacy laws [1], including the Confidentiality of Medical Information Act and the California Consumer Privacy Act [1], impose strict requirements on the use and disclosure of patient information [1], necessitating patient consent for disclosures [1].
California has enacted numerous bills regulating AI technology [1], including requirements for AI detection tools and disclosures related to generative AI [1]. The California Privacy Protection Agency is also working on rules for automated decision-making technologies [1], with a comment period closing in February 2025 [1]. These legislative measures underscore the importance of compliance and transparency in AI use [3], ensuring that organizations employing AI undergo periodic audits to adhere to ethical and legal standards [3]. Proponents argue that these laws balance technological advancement with consumer protection [3], ensuring that human oversight remains central to medical decision-making and prioritizing patient safety [3].
Conclusion
The legislative framework in California highlights the critical balance between leveraging AI’s potential and safeguarding patient rights and safety. By enforcing stringent regulations and promoting transparency, these measures aim to ensure that AI serves as a tool to enhance healthcare without compromising ethical standards or patient trust. The emphasis on human oversight and compliance with legal standards underscores the importance of maintaining the integrity of medical decision-making in the age of AI.
References
[1] https://www.jdsupra.com/legalnews/california-ag-issues-legal-advisory-7271477/
[2] https://www.rmmagazine.com/articles/article/2025/02/19/trends-in-ai-insurance-coverage-and-claims-handling
[3] https://nquiringminds.com/ai-legal-news/california-enacts-ai-regulations-in-healthcare-effective-2025/
[4] https://www.wordandbrown.com/NewsPost/California-Law-Prohibits-Using-AI-Claims
[5] https://www.benefitspro.com/2025/02/25/california-may-stop-ai-bots-from-calling-themselves-doctors/
