A contract issued or renewed by a nonprofit service organization after April 8, 1994 may not contain a provision that permits, upon retroactive review and confirmation of medical necessity, the imposition of a penalty of more than $500 for failure to provide notification under a utilization review program. This section does not limit the right of nonprofit service organizations to deny a claim when appropriate prospective or retroactive review concludes that services or treatment rendered were not medically necessary.

PL 1995, c. 332, §M2 (NEW).