Regulon — VT-H-0776 · VT H 776 (AI in Health Care Coverage Decisions)

Summary

VT H.776 regulates the use of artificial intelligence, algorithms, and other software tools by health plans in utilization review and coverage determinations. Health plans must ensure AI tools base decisions on individualized clinical data rather than solely on group datasets, are applied consistently across all insureds, and are reviewed and revised at least quarterly for accuracy and reliability. The bill prohibits AI tools from making adverse coverage determinations — those must be made by a licensed human health care provider competent to evaluate the clinical issues involved. The Department of Financial Regulation retains audit and compliance review authority over covered AI tools. The bill takes effect July 1, 2026.

Enforcement & Penalties

Enforcement Authority

The Department of Financial Regulation has audit and compliance review authority over AI tools used in utilization review. The bill does not create a private right of action or specify additional enforcement mechanisms beyond existing DFR regulatory authority over health plans.

Penalties

The bill does not specify statutory damages, civil penalties, or private remedies. Enforcement remedies would be those available to the Department of Financial Regulation under existing Vermont insurance regulatory authority.

Who Is Covered

Compliance Obligations 7 obligations · click obligation ID to open requirement page

HC-01 Healthcare AI Decision Restrictions · HC-01.3 · Deployer · Healthcare

18 V.S.A. § 9423(a)(1)-(2)

Plain Language

Health plans must ensure that any AI, algorithm, or software tool used in utilization review bases its determinations on the individual insured's medical history, the specific clinical circumstances presented by the requesting provider, and other relevant clinical information from the insured's record. The tool may not rely solely on group-level datasets — it must incorporate individualized clinical data. This mirrors requirements in other states (e.g., CA, IL) that prohibit AI-driven coverage decisions based exclusively on aggregate data rather than patient-specific circumstances.

Statutory Text

(1) The artificial intelligence, algorithm, or other software tool bases its determination on the following information, as applicable: (A) an insured's medical or other clinical history; (B) the specific clinical circumstances as presented by the requesting health care provider; and (C) other relevant clinical information contained in the insured's medical or other clinical record. (2) The artificial intelligence, algorithm, or other software tool does not base its determination solely on a group dataset.

HC-01 Healthcare AI Decision Restrictions · HC-01.1 HC-01.2 · Deployer · Healthcare

18 V.S.A. § 9423(b)

Plain Language

AI tools may not independently deny, delay, or modify health care coverage determinations. Every adverse coverage decision must be made by a licensed human health care provider who is competent to evaluate the specific clinical issues at hand. That human reviewer must consider the treating provider's recommendation, the insured's medical and clinical history, and the specific clinical circumstances. This is stronger than many comparable state laws — it prohibits AI from serving as even a primary basis for adverse determinations, requiring a licensed human to make the decision entirely.

Statutory Text

The artificial intelligence, algorithm, or other software tool utilized by a health plan shall not deny, delay, or modify a determination of whether to authorize the coverage of health care services. An adverse coverage determination shall be made only by a licensed human health care provider who is competent to evaluate the specific clinical issues involved in the health care services requested by a treating health care provider by reviewing and considering the requesting provider's recommendation; the insured's medical or other clinical history, as appropriate; and the specific clinical circumstances.

HC-01 Healthcare AI Decision Restrictions · HC-01.4 · Deployer · Healthcare

18 V.S.A. § 9423(a)(7)

Plain Language

Health plans must review and revise the performance, use, and outcomes of AI utilization review tools at least quarterly to maximize accuracy and reliability. This is a more frequent cadence than many comparable state laws, which typically require only periodic (often annual) review. The obligation is ongoing and requires affirmative revision — not merely passive monitoring.

Statutory Text

(7) The artificial intelligence, algorithm, or other software tool's performance, use, and outcomes are reviewed and revised at least quarterly to maximize accuracy and reliability.

H-02 Non-Discrimination & Bias Assessment · Deployer · Healthcare

18 V.S.A. § 9423(a)(3)-(4)

Plain Language

Health plans must ensure their AI utilization review tools are fairly applied in compliance with applicable HHS regulations and guidance, and are configured and applied consistently across all health plans and insureds so that patients with similar clinical presentations receive the same decisions. This is a fairness and consistency requirement — it prohibits arbitrary variation in AI-driven outcomes across plans or patient populations but does not prescribe a specific bias testing methodology.

Statutory Text

(3) The artificial intelligence, algorithm, or other software tool is fairly applied, including in accordance with any applicable regulations and guidance issued by the U.S. Department of Health and Human Services. (4) The artificial intelligence, algorithm, or other software tool is configured and applied in a standard, consistent manner for all health plans and insureds so that the resulting decisions are the same for all patients with similar clinical presentation and considerations.

HC-01 Healthcare AI Decision Restrictions · HC-01.7 · Deployer · Healthcare

18 V.S.A. § 9423(a)(5)

Plain Language

Health plans must ensure that AI tools used in utilization review are accessible for inspection by the Department of Financial Regulation and other state agencies for audit or compliance review purposes. This is a regulatory transparency requirement — the AI tool itself, not just documentation about it, must be open to examination. This means health plans must contractually ensure access when they use third-party AI tools.

Statutory Text

(5) The artificial intelligence, algorithm, or other software tool is open to inspection for audit or compliance reviews by the Department of Financial Regulation and by other State agencies and departments pursuant to applicable State and federal law.

HC-01 Healthcare AI Decision Restrictions · HC-01.6 · Deployer · Healthcare

18 V.S.A. § 9423(a)(6)

Plain Language

Health plans must include in their written policies and procedures disclosures about the use of AI in utilization review and the nature and degree of human review and oversight, to the extent the Department of Financial Regulation requires. This is a conditional disclosure obligation — its specific scope will be determined by DFR rulemaking or guidance. At minimum, it signals that plans should be prepared to document and disclose their AI use and human oversight practices in their UR policies.

Statutory Text

(6) Disclosures pertaining to the use of the artificial intelligence, algorithm, or other software tool in the utilization review process and the nature and degree of human review and oversight are contained in the health plan's written policies and procedures to the extent required by the Department of Financial Regulation.

Other · Deployer · Healthcare

18 V.S.A. § 9423(a)(8)

Plain Language

Health plans must ensure that AI tools used in utilization review do not directly or indirectly cause harm to the insured. This is a broad outcome-based prohibition — it does not specify testing, documentation, or assessment methodology, but instead creates a substantive standard against which AI tool performance can be measured. The lack of a definition of 'harm' creates significant interpretive ambiguity that will likely need to be resolved by DFR guidance or enforcement action.

Statutory Text

(8) The artificial intelligence, algorithm, or other software tool does not directly or indirectly cause harm to the insured.