States require AI disclosure in healthcare with new transparency laws

Artificial intelligence is rapidly reshaping healthcare. It now supports diagnostic imaging, clinical decision tools, patient messaging, and back-office workflows. According to the World Economic Forum, 4.5 billion people still lack access to basic care and the global health worker shortage could reach 11 million by 2030. Artificial intelligence can help close this gap.

But as AI becomes more integrated into care, regulators are focusing on one simple question. Should patients be told when AI will play a role in their care?

In the United States, no single federal law requires comprehensive disclosure of AI in healthcare. Instead, a growing body of state laws are filling the gap. Some states require explicit disclosure. Others indirectly mandate transparency through limits on how AI can be used.

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Why is AI disclosure important for trust?

Transparency is not a technical detail, it is a matter of trust. Cross-industry research shows that people expect to be informed when AI influences decisions that matter to them. This expectation is even stronger in health services. An analysis published by CX Today found that when AI use is hidden, trust quickly fades away, even if the results are accurate.

Health depends on trust. When patients believe their care decisions are ethical and accountable, they follow treatment plans, share sensitive information, and stay engaged.

How does AI disclosure relate to HIPAA and informed consent?

Although HIPAA does not directly regulate AI, its principles still apply. Covered entities must clearly disclose how protected health information is used and protected.

When AI systems analyze or generate clinical information using patient data, failure to disclose could undermine this goal. Patients may not fully understand how the information they provide shapes their care decisions.

Disclosure also supports informed consent. Patients have the right to understand the material factors that influence diagnosis, treatment or care communication. Just as clinicians explain new procedures or medical devices, meaningful use of AI should be explained so patients can ask questions and engage in their care.

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States are stepping in where federal rules fall short and creating new disclosure requirements where AI affects access to care, claims or treatment decisions. (Kurt “CyberGuy” Knutsson)

What does explaining artificial intelligence mean in healthcare?

Disclosure of AI means informing patients or members when AI systems are used in healthcare decisions. This may include clinical messaging, diagnostic support tools, utilization review, claims processing, or coverage determinations. The goal is transparency, accountability and patient trust.

Healthcare activities most likely to trigger disclosure

According to Morgan Lewis’ analysis, disclosure requirements mostly apply when AI is used to:

• Face-to-face clinical communication with the patient
• Usage review and usage management
• Claims processing and coverage decisions
• Mental health or therapeutic interactions

These areas are considered high impact because they directly impact access to care and understanding of health information.

Risks of not disclosing the use of artificial intelligence

Healthcare organizations that do not disclose their use of artificial intelligence face real consequences. These include increased risk of litigation, damage to reputation, and erosion of patient trust. Ethical concerns about autonomy and transparency may also trigger regulatory scrutiny.

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Clear AI disclosure helps patients stay informed and engaged, reinforcing that licensed healthcare professionals remain accountable for every medical decision. (Kurt “CyberGuy” Knutsson)

How are states shaping AI disclosure rules?

States are taking different paths to regulate AI in healthcare, but most start with a common goal: greater transparency when the technology impacts care.

California focuses on communications and coverage decisions

California has adopted one of the most comprehensive approaches.

AB 3030 requires clinics and physician practices that use generative AI for patient communication to include a clear disclaimer. Patients should also be told how to reach a human healthcare professional.

SB 1120 applies to health plans and disability insurers. When using AI for usage review, safeguards are required. It also requires disclosure and verifies that licensed professionals are making medical necessity decisions.

Colorado regulates high-risk AI systems

Colorado’s SB24 205 targets AI systems considered high risk. These are tools that materially influence decisions such as approving or denying healthcare services.

Organizations must take precautions against algorithmic discrimination and disclose the use of artificial intelligence. While the law is broader than clinical care alone, it directly affects patient access decisions.

Utah emphasizes mental health and regulated services

Utah has tiered disclosure rules that intersect with health care.

HB 452 requires mental health chatbots to clearly disclose their use of artificial intelligence. SB 149 and SB 226 expand disclosure requirements to regulated professions, including healthcare professionals.

This approach ensures transparency in therapeutic interactions and clinical services.

Other states expanding AI transparency

Some other states are moving in the same direction. Massachusetts, Rhode Island, Tennessee, and New York are considering or implementing rules requiring disclosure and human review if AI impacts usage review or claims results. Even if clinical diagnosis is not covered, these laws push for accountability where AI impacts access to care.

What does this mean for you?

If you are sick, expect more transparency. You can see descriptions in messages, coverage statements, or digital interactions. If you work in healthcare, AI governance is no longer optional. Disclosure practices must be compatible across clinical, administrative, and digital systems. Training staff and updating patient notifications will be as important as the technology itself. Trust will increasingly depend on how clearly AI is incorporated into care.

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Kurt’s important takeaways

AI can improve efficiency, expand access and support clinicians. But its value depends on trust. Disclosure does not slow down innovation. It strengthens trust in both technology and the professionals who use it. As governments continue to take action, transparency in healthcare AI will likely become the norm rather than the exception.

If AI helps guide your care, will knowing when and how it is used change your trust in your healthcare provider? Let us know by writing to us. cyberguy.com.

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