This is a variation of "Cost+" regulation which is, ironically, a recipe for exploding costs.
If I charge you $100 and pay $80 to the hospital, I get to keep $20.
If I charge you $200 and pay $160 to the hospital, I get to keep $40.
Hmmm....my incentive to knock down what I pay to the hospital and pharm companies is....
So long as the market moves in more or less lock step, there is every incentive to keep increasing underlying healthcare costs.
This is how phone companies were regulated for years in many states. I used to work at one where the big question was "how do we get cost xyz into the rate base?" Essentially, "how do we convince the regulators that a certain cost was critical and therefore something we should be allowed to mark-up into the price?"
Well intentioned to be sure but unlikely to be effective at containing the cost of anything.