California SB 1120: Physicians Make Decisions Act

California enacted SB 1120 as Chapter 879 of the Statutes of 2024, effective January 1, 2025. Often called the Physicians Make Decisions Act, it amended Health and Safety Code §1367.01 and Insurance Code §10123.135. The law applies to health care service plans, health insurers and relevant contracted entities that use artificial intelligence, algorithms or other software tools in utilization review or utilization management based in whole or in part on medical necessity. Utilization review can be prospective, concurrent or retrospective. Covered entities must ensure these tools comply with applicable standards and are not used to supplant the role of a licensed physician or other qualified health professional. The tool may not deny, delay or modify health care services based on medical necessity. A qualified, appropriately licensed professional with competence in the relevant field must make that decision after reviewing the requesting provider’s recommendation, the patient’s medical history and individual clinical circumstances. The law also requires consideration of relevant patient-specific clinical information, nondiscrimination, fair and equitable application, auditability, written policies describing use and oversight, periodic performance review, and limits on use of patient data beyond the stated purpose. SB 1120 is not a categorical ban on algorithms, automation or decision support. It governs a payer-side review process and preserves human clinical decision-making for medical-necessity determinations. A health plan should distinguish administrative automation from a covered medical-necessity decision and account for contracted entities. Certain Medi-Cal managed-care application is conditioned on federal approvals and financing, so the scope should not be simplified into a single universal rule for every program.