That sounds like a totally sane statutory requirement. Why don't more states have it? Collusion between hospital chains and insurers is the crux of the health care cost problem in the US.
Like Medicare.
Yes, I'm advocating for the replacement of doctors in the vast majority of cases. They're like college professors who spend most of their time doing research, while the TAs (Nurses in this case) do all the heavy lifting. Empower the nurses, replace the doctors.
For that one, the theory was that the payment/administration bureaucracy was the cause of the health care cost problem, and that by having insurance companies buy hospital service in bulk rather than doing individual-service billing the overhead could be reduced and accountability would be increased. This requires insurers to be able to assign customers to hospitals and doctors that work for them for it to work.