California’s New 30-Day Payer Payment Rule: What Health Plans, MSOs, and IPAs Must Prepare For

Summary:  In October 2023, the White House issued a sweeping executive order on the safe, secure, and trustworthy use of artificial intelligence. Since then, federal agencies have begun translating that directive into operational guidance, standards development, and enforcement priorities that directly affect healthcare payers. While the order is not healthcare-specific, it establishes expectations that materially change how health plans deploy, govern, and audit AI systems used in billing, utilization management, payment integrity, and compliance. For health plans, the order marks a shift from optional governance frameworks to measurable accountability for how AI is designed, validated, and monitored.

Why the Executive Order Matters to Health Plans

The executive order adopts a “whole-of-government” approach to AI oversight, requiring federal agencies to integrate safety, bias mitigation, transparency, and data protection into AI usage. In healthcare, where AI increasingly influences claims adjudication, prior authorization, risk adjustment, and fraud detection, these expectations directly affect plan operations.



CMS, HHS, ONC, and other agencies have since emphasized that AI-driven decision support must be explainable, auditable, and defensible—particularly when it affects payment decisions, access to care, or beneficiary financial responsibility. Health plans using AI to automate or accelerate claims and billing decisions should expect increased scrutiny around model behavior, outputs, and governance controls.

Key Provisions Affecting Healthcare and Health Plans

AI Safety and Bias Mitigation

Federal agencies are now required to assess and mitigate algorithmic bias, particularly when AI systems may disproportionately affect protected populations. For health plans, this applies to AI used in medical necessity determinations, claims review, utilization controls, and payment edits. Models that cannot demonstrate fairness, consistency, and clinical alignment may expose plans to regulatory risk.

Standards for Advanced AI Models

The executive order directs the development of safety and performance standards for advanced AI models. In healthcare, this reinforces expectations that AI systems influencing billing or coverage decisions must be validated against real-world data and updated as coding rules, coverage policies, and clinical guidelines evolve. Health plans relying on static rule sets or opaque models face increasing risk as regulators move toward requirements for explainability and reproducibility.

AI-Generated Content and Decision Support

Government-led efforts are underway to define standards for AI-generated outputs. In a payer context, this includes automated denial rationales, audit findings, and utilization flags. Plans must demonstrate how AI-generated recommendations are derived and how final decisions remain under human control.

Data Privacy and Security Expectations

The executive order reinforces data minimization, the secure handling of sensitive information, and its lawful use. While HIPAA remains the governing law for protected health information, the order heightens expectations that AI systems limit unnecessary data exposure and avoid secondary uses that could compromise privacy or trust. For health plans, this places added importance on AI architectures that do not store or repurpose PHI beyond their intended operational function.

Increased Oversight of AI in Healthcare Operations

Since the order’s release, federal agencies have made clear that healthcare is a priority sector for AI oversight. Health plans should expect closer review of how AI affects claim outcomes, denial rates, and beneficiary experiences. Systems that materially influence payment or access to care without adequate documentation, audit trails, or governance controls may trigger compliance reviews or corrective actions.

Importantly, the executive order does not prohibit AI in healthcare—it formalizes expectations for responsible use. Plans that already operate with strong audit discipline, explainable logic, and documented workflows are better positioned to adapt.

Preparing Health Plans for Regulatory Alignment

Adapting to this regulatory environment requires more than policy updates. Health plans must ensure that AI tools used in billing and payment integrity align with existing CMS rules, NCCI edits, coverage policies, and documentation standards.

This includes:

• Demonstrating how AI flags claims and why
• Maintaining human oversight for final determinations
• Ensuring consistent application of coding and payment rules
• Retaining audit-ready documentation for regulatory review

As enforcement becomes more data-driven, inconsistent or poorly governed AI usage increases financial and compliance exposure.

Summary of White House AI Bill

The White House AI executive order represents a turning point in how artificial intelligence is governed across healthcare. For health plans, it reinforces that AI-driven billing and adjudication must be transparent, compliant, and defensible—not merely efficient. As federal agencies continue issuing guidance and oversight expands, plans that invest in explainable, audit-ready AI systems will be better equipped to manage risk, control costs, and maintain regulatory trust while continuing to benefit from automation and advanced analytics.