For years, the conversation around health insurer consolidation and vertical integration has simmered through antitrust inquiries, oversight hearings, and policy papers. The Patients Over Profit Act (the “POP Act”)[i], introduced in both chambers of Congress this fall, marks a decisive shift. Rather than regulating insurer-provider integration, the POP Act proposes to ban it outright.
If passed, the POP Act would fundamentally reshape how Medicare dollars move through the U.S. healthcare system, not by adjusting incentives or introducing new reporting rules, but by redrawing the structural map itself. The POP Act draws a bright, enforceable line that prohibits common ownership or control between health insurers and physician or certain outpatient provider entities that bill Medicare Part B or participate in Medicare Advantage (MA) plans. That is a direct challenge to the model that has defined the past decade of health system strategy: vertical integration.
Vertical integration has historically been viewed as a potential strategy to control healthcare costs, align clinical and financial incentives, and manage population health risk more effectively. Health insurers, ranging from national companies to regional organizations, have expanded their involvement in the provider space through various approaches, including acquiring or affiliating with physician groups, outpatient networks, and care delivery platforms. The underlying theory was that putting insurers “on top” of the delivery system would allow them to streamline operations, reduce inefficiencies, and improve care coordination. In pursuit of these goals, many payors engaged in platform development by acquiring practices directly, or, in states with corporate practice of medicine restrictions, structuring relationships through management services organizations (MSOs) and management services agreements (MSAs).
The sponsors of the POP Act are taking a very different stance, not only questioning whether vertical integration works, but suggesting it may actually be driving market dysfunction, especially in Medicare Part B and Medicare Advantage. Critics of the bill, however, warn that it could go too far, creating new inefficiencies or distorting the market in other ways. The legislation reaches beyond direct ownership to include indirect and functional control, aiming to unwind much of the structure that has supported insurer-led care models for years.
Some proponents of the POP Act argue that when insurers own or control physician practices, they may blur the line between utilization management and clinical decision-making, potentially creating a conflict of interest. According to these supporters, financial incentives associated with insurance profits could influence care decisions, such as encouraging referrals within owned networks, or shaping approaches to coding and risk adjustment practices. Advocates of this perspective express concerns that integration strategies designed to control costs may instead lead to greater market concentration, reduced patient choice, or increased public program spending.
What’s in the POP Act? A Quick Breakdown
At its core, the POP Act would:
- Prohibit direct or indirect ownership or control of both a health insurance issuer and any provider entity participating in Medicare or Medicare Advantage. Hospitals, critical access hospitals, rural emergency hospitals, pharmacies and suppliers of durable medical equipment, prosthetics, orthotics, and supplies are excluded from this prohibition.
- Cover “health insurance issuers” (as defined in 42 U.S. Code § 300gg-91), which includes insurance companies, insurance services, and insurance organizations (including health maintenance organizations (HMOs)) that are licensed to engage in the business of insurance within a state and which are subject to state laws regulating insurance. This definition does not include employer-sponsored health plans governed by ERISA, whether those plans are self-funded or fully insured, or other ERISA-covered benefit arrangements. Provider-sponsored health plans are covered by the POP Act if they are licensed and regulated by the state as insurers or HMOs. They are not included if they operate solely as ERISA-covered employer-sponsored health plans or benefit arrangements.
- Cover MSOs and MSAs by broadly restricting non-equity control mechanisms, including reserved powers or veto rights, not just ownership.
- Impose mandatory divestiture timelines: two years for existing arrangements that were in place on or prior to the enactment of the POP Act and one year for any arrangements effectuated after enactment.
- Enable federal enforcement through the Department of Justice, Federal Trade Commission (FTC), Office of the Inspector General of the Department of Health and Human Services, and state Attorneys General, with authority to require court-ordered divestiture (either of the provider or the MSO, if applicable, or of the health insurance issuer) and return of healthcare revenue generated during non-compliance.
- Create an FTC fund to distribute proceeds recovered from violations to affected communities.
- Bar non-compliant MA organizations from offering Medicare Advantage plans or Medicare Advantage-Prescription Drug (MA-PD) plans.
- Subject violators to False Claims Act (FCA) exposure.
- Include a comprehensive definition of MSOs and MSAs, ensuring the POP Act captures all relevant business relationships, regardless of corporate form.
In short, should the POP Act become law, health insurers would need to divest any operational or ownership connection to certain outpatient providers, notably physician practices, that bill Medicare, or they stand to face financial penalties and exclusion from key federal programs.
Where Things Stand Now
As of early November 2025, the POP Act remains in committee in both chambers. Introduced on September 17th, it was referred to the House Judiciary, Energy & Commerce, and Ways & Means Committees, as well as the Senate Judiciary Committee. No floor votes have occurred, and no markup or amendments have been reported. That said, the multi-committee referral hints at broad policy interest, with competition, Medicare finance, and delivery reform all in play. The first session of the 119th Congress still has time remaining, and the bill could be considered either in the current session or in the second session next year. If not passed before the second session ends, it would need to be reintroduced in the 120th Congress.
Why This Bill Matters - Even If It Doesn’t Pass (Yet)
Whether or not the POP Act ultimately passes, it reflects a noticeable change in how some lawmakers are thinking, favoring structural separation over more targeted regulatory oversight. That shift could prompt vertically integrated health systems, insurers, investors, and even regulators to rethink how they assess risk going forward.
The POP Act, in some ways, draws parallels to the Glass-Steagall Act of 1933, enacted during the Great Depression to separate commercial and investment banking and prevent conflicts between fiduciary duties and profit-driven investments. Though Glass-Steagall was eventually eroded through deregulation and ultimately repealed, both laws seek to draw clear boundaries between distinct market roles to protect public trust and ensure that decision-making is not swayed by competing incentives. Glass-Steagall was passed in response to a financial collapse. The POP Act, by contrast, would arguably be a preemptive measure in a healthcare system that is still testing the limits of vertical integration, perhaps before its benefits, risks, and safeguards are fully understood.
Below are key implications:
- Medicare Advantage and FCA Exposure: MA plans are uniquely vulnerable under this proposal. Noncompliance could trigger False Claims Act (FCA) liability, including statutory penalties, treble damages, and whistleblower suits. The FCA exposure would likely apply to claims submitted under MA contracts, meaning both plan sponsors (issuers) and provider entities could find themselves at risk, depending on how regulators ultimately define the boundaries. As drafted, the POP Act would open the door to both sides being targeted.
- Functional Control, Not Just Equity: One of the POP Act’s more aggressive features is its focus on indirect or functional control, not just equity ownership. That encompasses MSO pathways, MSAs, reserved rights, veto powers, and governance or contractual levers.
- Enforcement Designed to Bite: Unlike most antitrust or structural remedies, which often leave discretion in the hands of agencies or courts, the POP Act mandates divestiture, disgorgement, and injunctive relief if a violation is found. Enforcement would vary across agencies, resource constraints, and litigation outcomes.
Market Impact: What This Could Look Like in Practice
Here is how different stakeholders and markets could be impacted by the POP Act:
- National Payors: For large national insurers, the POP Act would unwind the very strategies that have shaped their healthcare cost-containment efforts. Over the past decade, these companies have poured resources into building integrated ecosystems that combine insurance, care delivery, and analytics. Forced separation would likely mean multibillion-dollar divestitures and significant disruption to actuarial models, Medicare Advantage performance, and value-based contracting structures. Without owned or closely aligned physician networks, plans would lose key levers for managing quality measures, Star Ratings, and utilization management, which would likely increase reliance on third-party networks and raise administrative costs.
- Regional Payors: Regional plans that have pursued partial or hybrid integration models, such as joint ventures, MSO partnerships, or minority equity stakes in physician groups, would also face a complicated unwind. Many of these structures are tightly linked to population health and ACO initiatives that rely on local delivery networks. The POP Act would require regional plans to either divest MSO interests or renegotiate provider alignment models under pure contracting frameworks. While some regional payors may benefit if national payors are forced to divest, they would also contend with stronger provider bargaining power and a reduced ability to control total cost of care.
- Integrated Delivery Networks (IDNs): For IDNs that combine insurance and delivery functions, the POP Act poses an existential structural challenge. These systems operate under integrated models where the health plan and provider entities are legally distinct but economically and operationally interdependent. Under the POP Act’s expansive reach, without the issuance of interpretive guidance, even non-equity coordination or exclusive contracting could be viewed as prohibited control. For nonprofit IDNs that rely on integration to drive preventive care, manage population health, and sustain MA performance, the POP Act could unwind decades of organizational design.
- Hospital-Based Health Systems and Private Equity Investors: Hospital-based health systems without insurance arms may find themselves positioned to absorb physician practices and outpatient assets that insurers are forced to divest. For large nonprofit and regional systems, this could accelerate a new phase of provider re-integration, where hospitals rebuild physician networks once captured by payor-backed platforms. They will, however, be competing for the same acquisitions with private equity firms and specialty management companies, who are typically better capitalized and have been waiting for physician services valuations to normalize from the initial post-COVID surge. On the other hand, the POP Act’s broad view of control could put PE-backed MSO structures under the microscope as well, especially in cases where investors exert significant operational influence.
- Medicare Markets: Some analysts expect major disruption to Medicare Advantage pricing, while others foresee a more gradual adjustment. In markets where MA enrollment already exceeds 50%, breaking apart integrated payor-provider models could upend plan bids and pricing. Without corresponding adjustments to CMS benchmark and quality incentive formulas, plans may face short-term swings in medical costs and Star Ratings, disrupting the predictability that supports premium setting. In markets where MA penetration is still below 50%, the near-term effect would likely be less dramatic. With fewer insurer-owned physician networks to unwind, pricing may remain steady for some time. Still, if divested practices shift into health system or private equity ownership, long-term cost pressures could build as provider leverage grows.
- Healthcare Costs: The impact on patient outcomes and healthcare costs is uncertain. Severing physician practices from payors is unlikely to improve care coordination. Health systems, likely among the main beneficiaries as acquirers of divested practices, may be able to coordinate care more effectively within their own networks but would still depend on payor collaboration to achieve broader integration goals. They also may not always be the most cost-efficient option for care. Private equity investors, meanwhile, continue to face public and regulatory skepticism for purportedly emphasizing financial returns over long-term care outcomes. In short, the POP Act could ultimately replace one set of perceived problems with another.
Will the POP Act Pass? Unlikely, But It Shouldn’t Be Ignored
The POP Act faces an uphill path in Congress, but the ideas behind it are gaining traction. Growing concern over vertical integration is driving a segment of policymakers, regulators, and industry advocates to push for more structural guardrails and reform. In recent years, several states have ramped up their oversight of healthcare transactions, including transactions involving payors and providers. This suggests that state-level scrutiny is likely to continue expanding, even if federal legislation does not move forward.
The California Health Care Quality and Affordability Act broadens notice requirements to cover MSOs, private equity firms, and hedge funds. Oregon has maintained a healthcare transactions review process for several years that closely scrutinizes insurer and provider consolidations. New York requires pre-closing notice and review of “material transactions,” including acquisitions by health insurers of provider entities. These state-level initiatives began well before the POP Act, but if federal legislation stalls, states may step up their efforts to regulate insurer-provider integration in healthcare.
Final Word
The POP Act may never reach a floor vote, or it could undergo material amendments before passage. Nonetheless, its introduction reflects a growing willingness among some lawmakers to consider structural separation as an alternative to traditional regulatory oversight or gradual reform. This shift marks a significant development for deeply integrated organizations.
FOOTNOTES
[i] Patients Over Profit Act (POP Act), H.R. 5433, 119th Cong., 1st Sess. (2025); Patients Over Profit Act (POP Act), S. 2836, 119th Cong., 1st Sess. (2025).