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DHHS amends contractor terms: insurance requirements loosened; new AI restrictions added
Summary
DHHS said it will ease several insurance requirements (remove additional insured endorsement, remove AM Best rating and occurrence-form mandate, require subcontractors to match prime coverage) and add an AI-use term requiring written DHHS permission to use state data with AI tools.
Spencer Hall, speaking on terms and conditions updates, told providers DHHS is making eight changes to contract terms. "The 1st 1 is we are removing the requirement for an additional insured endorsement," he said, adding the department will also drop the requirement that insurance be written on an occurrence form and will remove the AM Best-rating requirement. "And we are adding a requirement that subcontractors must hold the same levels of insurance that the prime contractor has," he said.
Hall also described new substantive terms. On artificial intelligence, he said the new term "requires contractors to obtain written permission from DHHS if you use state data, with artificial intelligence and also contains some indemnity clauses relating to artificial intelligence." He explained "state data" as confidential, nonpublic, personal data and protected health information and said the term references DTS privacy and security requirements. Hall said amended terms will be posted on the PCM website and contracts will be amended in the coming weeks.
Why this matters: the insurance changes reduce barriers for some contractors but also require primes to ensure subcontractor coverage matches prime requirements. The AI term creates a formal approval process for use of state data with AI tools and adds indemnity language, which affected contractors will need to review with legal counsel.
