Oregon primary care takeaway sparks alarm for doctors, clinics

This article has been updated with comment from the Oregon Medical Association.

Oregon doctors and primary care clinic managers have long complained that poorly designed state regulations are eroding care for patients with low incomes. Now, however, state officials are sparking new complaints — with a proposal to take away a significant chunk of the money those same clinics and doctors depend on.

To plug a hole created by overoptimistic budget projections, top leaders at the Oregon Health Authority are contemplating moving money out of a program used to fund primary care, pediatrics and OB-GYN services for the 1.4 million people — one in three Oregonians — served by the state’s version of Medicaid.

The plan is fueling alarm among doctors as well as leaders of clinics and community health centers that provide primary care under the Medicaid-funded Oregon Health Plan. 

They say the state’s system of family medicine is already in crisis due to stagnant government funding — and that’s before the additional reductions spearheaded by the Trump administration take effect.

Betsy Boyd-Flynn of the Oregon Academy of Family Physicians is among those raising concerns.

“We absolutely must stay focused on access to care,” she told The Lund Report. “And anything we do that erodes the solvency of primary care teams threatens that access.”

Grants Pass Clinic CEO Christi Siedlecki said the move comes at a time when their providers serving 20,000 people are already grappling with unexpected costs.

“We're already operating on an extremely thin margin ... We just don't have any place we can cut that amount of expenses,” she said. “It would put our clinic in jeopardy.”

The Oregon Medical Association is “concerned" about the OHA move, according to Courtni Dresser, an executive with the doctors' group. “These payments are specifically important to primary care including OBGYN and pediatrics. The concern is the loss of this funding stream will further reduce capacity for primary care in our state.”

State officials have not made a final decision. But a spokesperson for the Oregon Health Authority wrote in an email to The Lund Report that the agency doesn’t have much choice unless the Legislature steps in.

And the Kotek administration is already bracing for major budget cuts acrosss state government.

“This is a tough situation,” the spokesperson wrote. “Our highest priority is to keep OHP members covered, while balancing the need to be a good steward of taxpayer dollars.”
 

Primary care takeaway driven by budget projection

The proposed money shift has its roots in projections supplied by state health officials earlier this year to Oregon lawmakers working on the budget. Specifically, it was the line item used to pay the managed care entities that oversee spending for the vast majority of Oregon Health Plan members — known as coordinated care organizations.

 Oregon Health Authority leadership told the Legislature to expect those costs to climb by only about $147 million, or 3.4%.

But then it came time to negotiate contracts with the insurer-like care organizations. Their executives noted that cost trends across health care have been climbing by 10% or much more, causing some of them to book hefty losses. If the state wouldn't match that figure, some of them threatened to pull out of the Oregon Health Plan entirely — threatening the provider networks the program relies on to deliver care.

When the dust cleared, the projected costs for 2026 had grown by nearly $300 million — forcing the agency to look for enough funding to cover about half that.

Though no final decision has been made, state officials have warned that they intend to fill their budget hole using what’s known as the “bonus pool” or “quality pool.”  That’s the bonus money that is paid to the care organizations to meet “metrics” or benchmarks intended to ensure quality of care.

The bonus money is a major part of why the state’s privatized Oregon Health Plan reforms have drawn national acclaim. 

The bonuses are used to ensure the managed care organizations provide services rather than just boost profits by pocketing what the state pays them.
 

Targeted fund reduction will directly hurt providers

The catch in the state’s plan? For many of the organizations, that bonus money goes directly to their primary care providers — including not just family medicine, but pediatricians and OB-GYNs.

The money is also relied on by Oregon’s network of community health centers that provides a lot of the care that takes place under the Oregon Health Plan.

If the funds go away, "we're effectively defunding community health centers in particular, because of our unique funding model," said Danielle Sobel of the Oregon Primary Care Association. "In a recent survey of our membership, health center budgets, on average, would experience a 4% loss if [the] funds were to go away."

Siedlecki, of the Grants Pass Clinic, said that typically the bonus funds arrive in the middle of the year, and providers rely on it arriving every year, though the specific amounts may vary.

“Literally, some of my physicians take out loans to function in the first half of the year; but then we get our bonus money, usually around July, and then they can pay off their loans and then make it through the rest of the year,” she said. “Without that money, there's not enough income and it makes it hard to attract new physicians.”