The Patients Over Profit Act (“POP Act”), which was introduced in both the U.S. House of Representatives and the U.S. Senate, would ban certain forms of insurer-provider vertical integration in healthcare. (Patients Over Profit Act, H.R. 5433, 119th Cong., 1st Session 2025 and S. 2836, 119th Cong., 1st Session 2025). This bill presents a significant focus on structural separation of commonly owned entities, as opposed to regulating oversight of existing entities with common ownership.
Vertical Integration in Healthcare
What is Vertical Integration in Healthcare?
Vertical integration in healthcare occurs when health insurers establish or acquire ownership interests in healthcare provider delivery systems, resulting in common ownership of insurers and medical service providers. This ownership may occur directly or indirectly, including through Management Services Organizations (“MSOs”) and Management Services Agreements (“MSAs”), particularly in states where corporate practice of medicine laws restrict direct ownership.
Under the POP Act, this type of vertical integration of healthcare would be prohibited, and health insurers would not be allowed to own certain healthcare providers participating in Medicare programs. Hospitals (including critical access hospitals and rural emergency hospitals), pharmacies, suppliers of durable medical equipment, prosthetics, orthotics or supplies (“DMEPOS”), and certain other providers would be excluded from the ban on direct or indirect ownership.
If enacted, the proposed law would dramatically reshape the ownership of medical care entities and flow of Medicare payments.
Health Insurers Will be Impacted
Under the POP Act, health insurers who would be impacted include insurance organizations and health maintenance organizations (“HMOs”) licensed under state insurance laws. However, ERISA employer-sponsored health plans (fully insured or self-funded) are excluded from the proposed law.
Cost Savings or Cost Increases Under the POP Act??
Although vertical integration has often been presented as mechanism for potential cost-saving opportunities, supporters of the POP Act disagree with that assumption. They argue that vertical integration and common ownership between health insurers and healthcare providers increase healthcare costs, particularly in the Medicare program.
According to the bill’s supporters, the common healthcare ownership structure targeted by the POP Act create conflicts of interest between with the medical care providers’ clinical decisions and the financial profits of insurance companies, while also contributing to higher costs and limiting patient choice.
What Does the POP Act Provide and What Does It Mean for MSOs and MSAs
What could this mean for MSOs, MSAs and health insurers? Under the proposed law, it will be unlawful for anyone to both:
1) Directly or indirectly own, operate or control certain medical providers or a management services organization that has a management services agreement with an applicable provider regarding health care services; and
2) Directly or indirectly own, operate or control the whole or any part of a health insurance issuer.
Anyone who is in violation of the law shall be required to divest either the medical services provider or the management services organization (if applicable), or the health insurance issuer. Applicable commonly owned entities that existed on or before the date of the law’s enactment would be required to divest within two years. If applicable, commonly owned entities are acquired after the law’s enactment would be required to divest within one year of the acquisition.
The POP Act also authorizes civil actions for injunction and equitable relief to be brought in the applicable court against violators by the Inspector General of the U.S. Department of Health and Human Services, the Assistant Attorney General of the Antitrust Division of the Department of Justice, the Federal Trade Commission, or a state attorney general. The relief provided would include not only ending common ownership in violation of the law but also disgorgement of revenues received during the period of the violation. The revenue from the disgorgement of income from the violators would be deposited in a fund for the healthcare needs of the affected community.
In addition, the POP Act would amend the Social Security Act would also be amended to prohibit common ownership of Medicare Advantage organizations and applicable providers. Specifically, the federal government would be prohibited from contracting with or making payments to a Medicare Advantage organization with regard to a Medicare Advantage plan or a Medicare Advantage Prescription plan, if the organization:
1) directly or indirectly owns, operates or controls the whole or any part of an applicable provider or a management services organization that has a management services agreement with an applicable provider; or
2) is directly or indirectly owned, operated or controlled in whole or in part by a person who also directly or indirectly owns, operates or controls the whole or any part of an applicable provider or a management services organization that has a management services agreement with an applicable provider.
Any claims for payment by entities in violation of the common ownership prohibitions would constitute a false or fraudulent claim in violation of the False Claims Act.
For purposes of the POP Act, an “applicable provider” is defined as an entity that receives payment for services under Medicare Part B or under Medicare Advantage plan under Medicare Part C.
The Future of the POP Act Remains Uncertain
It is clear the POP Act contemplates a significant restructuring of the current healthcare delivery system. While its ultimate future is unknown, the scope of its provisions and the continuing concerns over healthcare costs would warrant it and other related healthcare legal developments to be monitored.
For any questions or more information regarding the POP Act, its status in Congress, or related healthcare regulatory or ERISA plan issues, please do not hesitate to contact Frier Levitt’s healthcare and ERISA attorneys.
