Hospital Facility Prices Declined as a Result of Oregon’s Hospital Payment Cap

Oregon’s state employee health insurance plan instituted a cap on hospital payments, resulting in over $100 million in savings during the first two years, according to a study in Health Affairs. The cap, which limited hospital facility prices to 200 percent of Medicare payments for in- network services and 185 percent of Medicare payments for out-of-network services, was implemented in October 2019 and January 2020 for members of Oregon’s state employee health insurance plan. The cap was associated with a 25.4 percent reduction in outpatient price levels. Inpatient facility prices per admission did not change significantly in the first year, but declined in the second year of the policy. Price variation also declined as hospitals’ relative prices moved closer to the cap.