SB 1120 Compliance Guide (2026)

SB 1120 directly targets automated utilization review — the process by which health plans evaluate whether to approve, deny, or modify a requested medical service. Before SB 1120, AI systems at some payers were issuing denial decisions with no physician in the loop. The law closes that gap by requiring that any decision to deny, delay, modify, or reduce a covered health service must be made by, or in consultation with, a licensed physician who has reviewed the case.

AI tools remain permitted as analytical aids — flagging high-cost requests for review, surfacing clinical guidelines, or pre-screening claims — but they cannot be the final decision-maker on any determination that adversely affects patient care. The law is enforced by the Department of Managed Health Care (DMHC) and the California Department of Insurance (CDI).

Health plans, insurer-operated utilization review organizations (UROs), and any delegated third-party administrator performing UR on behalf of a California plan must comply. Violations can result in regulatory action, plan license jeopardy, and civil liability to affected patients.