Connecticut Comptroller Sean Scanlon announced new regulations Wednesday that will govern how health insurance carriers use artificial intelligence when administering benefits for the state employee health plan. The rules, which take effect January 1, 2027, cover more than 270,000 enrollees and come as insurers face mounting lawsuits over AI-driven claim denials.
The five policies include a ban on using AI exclusively for activities such as down-coding claims or reducing payments. They also guarantee that plan member data will not be used to train other AI models. Scanlon's office negotiated the terms with insurance companies over the past month, and all carriers serving the state plan have agreed to comply.
"Our world is changing rapidly and government needs to change with it at the same speed in order to protect people," Scanlon said at a press conference Wednesday morning. "That's what this policy is all about."
Which insurers and plans are affected
Connecticut's state employee health plan works with multiple providers. Anthem administers medical benefits for active employees, Cigna handles dental coverage, and Aetna runs the Medicare Advantage plan for retirees. Caremark serves as the plan's pharmacy benefits manager. The new rules also apply to the Connecticut Partnership Plan, which covers municipal and other public-sector employees outside state government.
Scanlon said he will recommend in January that lawmakers require all state-regulated health plans to follow the same policies. That push faces a structural limit: states can only regulate "fully insured" plans. "Self-funded" plans, the type most large employers use, fall under federal jurisdiction. In Connecticut, about 220,000 people - roughly 6% of residents - get coverage through state-regulated plans.
National pressure builds on AI-driven coverage decisions
The Connecticut rules arrive during a broader reckoning over how insurers deploy AI. Three major companies - Humana, UnitedHealth and Cigna - are currently facing lawsuits over algorithm-based denials of care. Despite the legal challenges, investment continues. UnitedHealth recently announced a $1.5 billion commitment to AI across more than 1,000 potential use cases, including claims processing and prior authorization.
Patient advocacy and physician groups have warned that unchecked AI use can restrict access to medically necessary care. Tom Swan, executive director of the Connecticut Citizen Action Group, called the state employee health plan regulations "a really great step" but said broader legislation is needed. "Without meaningful oversight, this is really dangerous," Swan said. "Patients and providers need protections."
Why this matters for healthcare professionals
For clinicians, practice managers, and health system administrators, these regulations signal a shift in how payers will be allowed to use AI in utilization management and claims adjudication. A ban on exclusive AI use for down-coding or payment reduction means automated decisions will require human review - a standard that could reshape workflows around prior authorization and appeals if adopted more broadly. Professionals working with AI for Healthcare should track whether other states follow Connecticut's lead, as similar rules would change the compliance landscape for AI for Insurance applications across multiple lines of business.
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