The Colorado AI Act: Implications for Health Care Providers
The Colorado AI Act represents a significant regulatory development aimed at governing the use of artificial intelligence (AI) within the health care sector. With the integration of AI into various health care operations, from administrative functions like scheduling and billing to clinical decision-making such as diagnosis and treatment recommendations, the Act seeks to address emerging concerns related to bias, transparency, and accountability.
Set to take effect on February 1, 2026, the Act imposes governance and disclosure requirements on entities deploying high-risk AI systems, particularly those involved in decisions that significantly affect health care services. Given its broad applicability, including potential extraterritorial reach for entities conducting business in Colorado, health care providers must proactively evaluate their AI utilization in preparation for compliance with these regulations.
1. What Is the Act Trying to Protect Against?
The primary goal of the Act is to mitigate algorithmic discrimination, defined as AI-driven decision-making that results in unlawful differential treatment or disparate impact based on characteristics such as race, disability, age, or language proficiency. By addressing these concerns, the Act aims to prevent AI from reinforcing existing biases or making decisions that disadvantage certain groups.
Examples of Algorithmic Discrimination in Health Care:
- Access to Care Issues: AI-powered scheduling systems may struggle to recognize accents or process non-English speakers, complicating appointment scheduling for non-native speakers.
- Biased Diagnostic Tools: AI diagnostic tools may provide different treatment recommendations for patients of various ethnicities, influenced by biases in their training data. For instance, a model trained primarily on white patients might overlook early disease signs in Black or Hispanic patients, leading to ineffective treatment.
2. What Types of AI Are Addressed by the Act?
The Colorado AI Act applies broadly to businesses using AI to interact with or make decisions about Colorado residents. While certain high-risk AI systems—those significantly influencing consequential decisions—face stricter requirements, most AI systems used in health care fall under the Act’s obligations.
Key Definitions in the Act:
- “Artificial Intelligence System”: Any system that generates outputs influencing real-world environments.
- “Consequential Decision”: A decision that materially affects a consumer’s access to or cost of health care, insurance, or other essential services.
- “High-Risk AI System”: Any AI tool that makes or significantly influences a consequential decision.
- “Developers”: Creators of AI systems.
- “Deployers”: Users of high-risk AI systems, typically health care providers.
3. How Can Health Care Providers Ensure Compliance?
While the Act outlines broad obligations, specific regulations are still pending. The Colorado Attorney General is responsible for developing rules to clarify compliance requirements, which may encompass:
- Risk management and compliance frameworks for AI systems.
- Disclosure requirements for AI usage in consumer-facing applications.
- Guidance on evaluating and mitigating algorithmic discrimination.
Health care providers must stay abreast of developments in the regulatory framework to ensure their AI practices align with state law.
4. How Could the Act Impact Health Care Operations?
The Act mandates that health care providers evaluate their AI usage across various operational areas, as it broadly applies to any AI system influencing decision-making. As AI becomes increasingly integral to patient care and administrative functions, compliance obligations will extend across multiple domains.
Key Operational Areas Affected:
- Billing and Collections: AI-driven billing systems should be scrutinized for biases that may disproportionately target specific patient demographics for debt collection.
- Scheduling and Patient Access: AI scheduling assistants must accommodate patients with disabilities and limited English proficiency to prevent discrimination.
- Clinical Decision-Making and Diagnosis: AI diagnostic tools must be validated to ensure equitable outcomes across demographic groups.
5. If You Use AI, With What Do You Need to Comply?
The Act delineates different obligations for Developers and Deployers. Health care providers, often serving as Deployers, should review their contractual relationships with Developers to ensure appropriate risk allocation and information sharing when implementing AI tools.
Obligations of Developers (AI Vendors):
- Disclosures: Developers must provide transparency regarding training data, known biases, and intended use cases.
- Risk Mitigation: Developers must document efforts to minimize algorithmic discrimination.
- Impact Assessments: Developers must evaluate discrimination risks before deploying AI systems.
Obligations of Deployers (Health Care Providers):
- Duty to Avoid Algorithmic Discrimination: Deployers must protect consumers from known or foreseeable risks of algorithmic discrimination.
- Risk Management Policy: Deployers must implement an iterative risk management policy that aligns with AI risk management frameworks.
- Impact Assessments: Deployers must conduct regular and event-triggered assessments to evaluate AI system impacts.
- Notifications and Transparency: Deployers must maintain public notice and transparency regarding their AI systems and how they manage discrimination risks.
6. How is the Act Enforced?
The enforcement authority lies solely with the Colorado Attorney General. A rebuttable presumption of compliance exists for Deployers following recognized AI risk management frameworks. Importantly, there is no private right of action, meaning consumers cannot sue directly under the Act.
Final Thoughts: What Health Care Providers Should Do Now
The Colorado AI Act signifies a transformative moment in AI regulation, particularly for health care providers relying on AI tools for various operational functions. While enhancing transparency and mitigating algorithmic discrimination, the Act imposes substantial compliance obligations. Health care organizations must:
- Assess their AI usage and implement risk management protocols.
- Maintain detailed documentation of AI practices.
- Audit existing AI systems and train staff on compliance requirements.
- Establish governance frameworks that align with best practices.
As the regulatory landscape evolves, staying informed about additional requirements will be crucial for compliance and risk mitigation. Providers should conduct thorough legal analyses of their AI systems and negotiate service agreements with Developers to ensure adequate information sharing and risk allocation. Compliance is not a one-size-fits-all process; it necessitates a careful evaluation of AI tools and their potential impacts on consequential decisions.
