Oregon's Hospital Payment Cap and Enrollee Out-of-Pocket Spending and Service Use

Importance Enrollee cost-sharing and health insurance premiums have grown alongside rising hospital prices. To control prices and price growth, the Oregon State Employee plan instituted a cap on hospital facility payments in October 2019 that was found to reduce hospital prices. Yet the program's association with out-of-pocket spending and use among enrollees is unknown. Objective To assess the association of the Oregon State Employee Plan's hospital payment cap with out-of-pocket spending and changes in service use among state employees enrolled in higher cost-sharing plans. Design, Setting, and Participants Using data from the Oregon All Payer All Claims database (January 2014 to December 2021), a difference-in-differences analysis was conducted to examine the association of Oregon's hospital payment cap with enrollee out-of-pocket spending and service use. The main analysis focused on the outpatient setting, where there were significant declines in hospital prices. Changes in a subpopulation of employees enrolled in higher cost-sharing plans were also examined. Main Outcomes and Measures The primary outcome was outpatient out-of-pocket spending per procedure, which included the copayment, coinsurance, and/or deductible paid at the point of service. Changes in service use were also examined by counting the number of outpatient procedures received per enrollee per year. Results The outpatient sample included 1 094 083 procedures from 92 523 Oregon educators and 4 510 342 procedures from 473 621 control enrollees. During the period before implementation, Oregon educators had higher out-of-pocket spending per outpatient procedure than the control group ($69.26 vs $41.87). The hospital payment cap was associated with a $6.60, or 9.5%, reduction in out-of-pocket spending per procedure (95% CI, -12.7 to -0.5) and a 0.24, or 4.8%, increase in the number of outpatient procedures received per enrollee per year (95% CI, 0.09-0.39) among those in higher cost-sharing plans. Enrollees receiving outpatient services from October 2019 through December 2021 saved an estimated $1.8 million. However, savings for the state were $10.3 million less than they would have been absent increases in service use. Conclusions and Relevance The study findings suggest that enrollees may benefit from reduced out-of-pocket spending due to hospital price regulations, but states should be mindful that price regulations may inadvertently increase health care service use.