(a) The purposes of this section are to:

1. (1) promote the delivery of quality mental health services in a cost-effective manner;
2. (2) foster the practice of mental health services review as a professional collaborative process, the primary objective of which is to enhance the effectiveness of clinical treatment;
3. (3) protect clients and patients, employers, and mental health providers by ensuring that review agents are qualified to perform service review activities and to make informed decisions on the appropriateness of mental health care; and
4. (4) ensure the confidentiality of clients’ and patients’ mental health records in the performance of service review activities in accordance with applicable State and federal laws.

(b) Definitions. As used in this section:

1. (1) “License” means a review agent’s license granted by the Commissioner.
2. (2) “Mental health provider” means any individual, corporation, facility, or institution certified or licensed by this State to provide mental health services, including a physician, nurse with recognized psychiatric specialties, hospital or other health care facility, psychologist, clinical social worker, mental health counselor, alcohol or drug abuse counselor, or an employee or agent of such mental health provider acting in the course and scope of employment or an agency related to mental health services.
3. (3) “Mental health services” mean acts of diagnosis, treatment, evaluation, or advice or any other acts permissible under the health care laws of Vermont, whether performed in an outpatient or institutional setting, and include treatment for substance use disorder.
4. (4) “Review agent” means a person or entity performing service review activities within one year following the date of submission of a fully compliant application for licensure who is affiliated with, under contract with, or acting on behalf of a business entity in this State and who provides or administers mental health benefits to members of health insurance plans subject to the Department’s jurisdiction, including a health insurer.
5. (5) “Service review” means any system for reviewing the appropriate and efficient allocation of mental health services given or proposed to be given to a client or patient, or to a group of clients or patients, for the purpose of recommending or determining whether the services should be covered and includes activities of utilization review and managed care, but does not include professional peer review that does not affect reimbursement for or provision of services.

(c) Any person who approves or denies payment, or who recommends approval or denial of payment, for mental health services, or whose review results in approval or denial of payment for mental health services on a case-by-case basis, shall not review these services in this State unless the Commissioner has granted the person a review agent’s license. The Commissioner shall adopt rules to implement the provisions of this section, including the procedures and standards for licensure. The rules shall differentiate between health maintenance organizations licensed to do business within this State and other forms of utilization review. The rules shall establish:

1. (1) A requirement that within 10 business days after receiving a request for them, the review agent shall make available at no cost to the clients, patients, and providers affected by its service review activities the specific review criteria and standards, credentials of the reviewing professionals, and procedures and methods to be used in evaluating proposed or delivered mental health services.
2. (2) A time period within which any determination regarding the provision or reimbursement of mental health services shall be made.
3. (3) A requirement that any determination regarding mental health services rendered or to be rendered to a client or patient that may result in a denial of third-party reimbursement or a denial of precertification for that service shall include the evaluation, findings, and concurrence of a mental health professional whose training and expertise is at least comparable to that of the treating mental health provider.
4. (4) The type, qualifications, and number of personnel required to perform service review activities.
5. (5) A requirement that a determination by a review agent that care rendered or to be rendered is inappropriate shall not be made until the review agent has communicated with the patient’s attending mental health provider concerning that care. The review shall be prospective or concurrent with the treatment.
6. (6) A requirement that any determination that care rendered or to be rendered is inappropriate shall include the written evaluation and findings of the review agent.
7. (7) A procedure for clients, patients, mental health providers, and hospitals to seek prompt reconsideration before an independent review organization pursuant to section 4063 of this title of an adverse decision by a review agent. The external reviewer engaged by the independent review organization shall have training and expertise at least comparable to that of the treating health care provider.
8. (8) Policies and procedures to ensure that all applicable State and federal laws to protect the confidentiality of individual mental health records are followed.
9. (9) Policies and procedures that ensure appropriate notification and concurrence of providers and their clients or patients before client or patient interviews are conducted by the review agent.

10. (10) (A) Prohibition of an agreement between the review agent and a business entity or third-party payor in which payment to the review agent includes an incentive or contingent fee arrangement based on the reduction of mental health services, reduction of length of stay, reduction of treatment, or treatment setting selected.

    1. (B) Nothing in this subdivision (10) shall prohibit capitation arrangements for reimbursement for mental health services.
    2. (C) A clinical decision made by the attending mental health provider regarding continued treatment shall not be construed as a denial of services subject to the provisions of this section.