Statement of Principles on Consumer Driven Health Reform

Task Forces: Health and Human Services

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Summary

Across the country, consumers are demanding more affordable, transparent, and flexible ways to access health care. Yet state laws have been built with rigid requirements and anti-competitive provisions that limit consumer choice, raise costs, and slow the adoption of modern, patient centered care. Rather than propping up a system where care is more expensive and less accessible, it’s time to open the health care market and give patients the freedom to choose the care that best serves their needs. Models outside of the traditional system are emerging rapidly and providing more ways for patients to get the care they need at affordable prices. The following Statement of Principles outlines the types of reforms needed to have a regulatory system that supports a flexible, consumer driven health care marketplace.

Policy Statement

  1. Exempt non-insurance models from insurance regulations. States should ensure that health care models which rely upon cash payments are exempt from health insurance regulations. Cash pay models of health care delivery and coverage, such as Direct Patient Care (DPC) and Health Care Sharing Ministries, have grown in popularity in recent years. These models are not insurance and are not compatible with insurance rules and regulations which often prevent them from operating at all. Exempting them from insurance regulations protects these models for consumers to choose from.
  2. Ensure tax parity for individuals and employers who choose non-insurance coverage and delivery models. States should allow the same tax benefits to non-insurance coverage and delivery models which are applied for health insurance premiums and reimbursements, health savings accounts, health reimbursement accounts, or flexible spending accounts. State and federal tax codes do not address non-insurance arrangements, so they are not eligible for these same tax benefits, disincentivizing individuals or business from choosing them even if it would be a better fit. Individuals and employers should not be penalized for choosing more affordable, consumer driven options just because they fall outside traditional insurance structures.
  3. Allow patients to benefit from choosing more affordable, cash-price options. Patients should receive credit toward their insurance deductible and out-of-pocket maximum if they choose a cash price that is less than their plans’ lowest negotiated rate for the same service. This should also apply for medically necessary covered services from out-of-network providers. In most states, patients must make a claim and pay their plans negotiated rate for it to count toward their deductible and out-of-pocket maximum. Patients should not have to choose between paying higher costs or forfeiting progress toward their insurance benefits. They should be able to make choices that save money for themselves, their plan, and the overall system.
  4. Incentivize state employees to choose lower cost care through shared savings benefits. State and local governments are among the largest purchasers of health coverage in the U.S. and spend a significant portion of their budgets on health care. To lower costs, states should implement shared savings or “right-to-shop” programs. These programs provide a price comparison tool for employees to search for their health care needs. If they choose an option that costs less than the plan’s benchmark price, they will be rewarded with part of the resulting savings. States that have implemented this type of program have saved millions of dollars each year while encouraging competitive pricing that lowers health care costs overall.
  5. Modernize regulatory rules to streamline the growth of innovative health insurance models. Current insurance regulations were built for traditional HMO and PPO models that rely on features such as networks, negotiated rates, and standard claims processes. But new ACA compliant major medical models are emerging that don’t use these at all. Sidecar Health, for example, operates on a “cash pay + fixed benefit” structure with no networks, upfront cash payments, and incentives for choosing lower cost providers. These models are fully compliant with ACA requirements, yet their differences create regulatory uncertainty that can slow expansion. Beginning in 2028, CMS is formally recognizing non network plans as eligible Qualified Health Plans when they demonstrate a sufficient choice of providers consistent with 1311(c)(1)(B) and (C) of the ACA. CMS’s finalized standards at §156.236 make clear that non network plans are a legitimate, regulated category of major medical coverage. States should update their insurance codes so that non traditional, ACA compliant major medical models can have clear regulatory pathways. This may include but is not limited to modernizing actuarial value and rate filing standards, revising network adequacy rules and claims process requirements, and clarifying consumer protection laws in ways that fit non-network and cash-price models.
  6. Remove restrictive barriers to expanding direct-to-consumer businesses and facilities. There are a growing number of health care providers and businesses such as direct-to-consumer diagnostics and cash-only medical clinics and facilities. These may face many different regulatory barriers that limit their ability to open and provide services. States should:
    • (a) Repeal Certificate of Need (CON) Laws: These outdated laws require state approval to open or expand facilities or buy equipment like MRI machines. These have been shown to reduce supply and increase costs of health care and are a major obstacle to having the facilities and equipment necessary to offer cash-only or direct-to-consumer services. States should fully repeal their CON laws or make incremental reforms in that direction, such as expanding exemptions or reducing burdensome requirements.
    • (b) Reform Physician Order Mandates: States often require a doctor to order labs and imaging for a patient to receive them. These rules were originally created to ensure clinician oversight and manage liability of high risk diagnostics. But today, diagnostics are safe, widely available, and increasingly used for prevention and peace of mind. States should update these outdated mandates to allow patient directed access to non radiation diagnostics, permit self ordering with appropriate clinical safeguards, and ensure that facilities can provide cash pay services without unnecessary referral barriers.
    • (c) Modernize Corporate Practice of Medicine (CPOM) Laws: CPOM laws prohibit non physicians from owning, controlling, or influencing medical practices or anything resembling one. While intended to protect clinical independence, these rules make it difficult for businesses to offer simple, direct-to-consumer diagnostics without building costly legal workarounds. States should modernize CPOM rules to preserve clinical autonomy while allowing non physician ownership structures and management flexibility for direct-to-consumer diagnostic business models.
    • (d) Fully Expand Telehealth Laws: Many direct-to-consumer diagnostic companies rely on telehealth to have providers interpret the results, share those results with the patient and make recommendations. Cash-only providers also utilize telehealth to offer their patients virtual visits and more accessible communication. States should ensure there are no barriers to telehealth across state lines, allow all independent practice providers to use telehealth, and allow use of all modes of telehealth.