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

Summary

Regulates the use of artificial intelligence, algorithms, and other software tools by health plans in utilization review decisions. Requires that AI tools base determinations on individualized enrollee clinical data — not solely on group datasets — and be applied consistently across all insureds. Prohibits AI tools from making adverse coverage determinations; only a licensed human health care provider competent to evaluate the specific clinical issues may deny, delay, or modify coverage. Health plans must ensure AI tools are open to regulatory inspection, include AI-use disclosures in written policies, and review tool performance at least quarterly. Enforced by the Vermont Department of Financial Regulation through audit and compliance review authority.

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 the Department's existing regulatory authority over health plans.

Penalties

The bill does not specify monetary penalties, statutory damages, civil penalties, or any specific remedy provisions. Enforcement would operate through existing Department of Financial Regulation regulatory authority over health plans.

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 enrollee's medical history, the specific clinical circumstances presented by the treating provider, and other relevant clinical information from the enrollee's records. The tool may not rely solely on group-level or aggregate datasets. This requires health plans to configure and validate that their utilization review tools ingest and process individualized patient data for each determination.

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 used by health plans are flatly prohibited from making adverse coverage determinations — they may not deny, delay, or modify authorization of health care services. Every adverse determination must be made by a licensed human health care provider who is clinically competent to evaluate the specific issues at hand. That human reviewer must consider the treating provider's recommendation, the enrollee's individual medical history, and the specific clinical circumstances. This is stricter than many peer-state provisions: the AI tool cannot serve as even the primary basis for a denial — it is entirely barred from making the adverse determination.

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 their AI utilization review tools at least quarterly. This is a more frequent cadence than many peer-state requirements (which typically require annual review). The review must be substantive enough to drive revisions aimed at maximizing accuracy and reliability — a checkbox review would not satisfy the obligation.

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.

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

18 V.S.A. § 9423(a)(5)

Plain Language

Health plans must ensure their AI utilization review tools are available for inspection by the Vermont Department of Financial Regulation and other state agencies conducting audits or compliance reviews. This means the health plan cannot claim the tool is proprietary and refuse to allow regulatory examination. The obligation extends to any contracted entity's tools used on the health plan's behalf.

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 their use of AI in utilization review and the nature and degree of human review and oversight applied. The specific content and format of these disclosures are subject to Department of Financial Regulation requirements. This is a documentation and disclosure obligation — the health plan's policies must transparently describe how AI is used and what human oversight exists.

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.

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

18 V.S.A. § 9423(a)(3)-(4)

Plain Language

Health plans must ensure that their AI utilization review tools are fairly applied in compliance with HHS regulations and guidance, and are configured and applied consistently across all health plans and insureds. The practical effect is a non-discrimination and consistency obligation: patients with similar clinical presentations must receive the same determination regardless of which plan they are on or other non-clinical factors. Health plans should be prepared to demonstrate through testing or configuration documentation that the tool does not produce disparate results for similarly situated patients.

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.

Other · 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, open-ended duty of care that goes beyond the specific operational requirements in other subsections. The term 'harm' is not defined, which creates significant compliance ambiguity — it could encompass physical harm from delayed care, financial harm from improper denials, or other forms of injury. Health plans should document their interpretation and the safeguards they rely on to satisfy this obligation.

Statutory Text

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