PacificSource’s Withdrawal from Oregon Medicaid System
PacificSource is pulling back in a noticeable way. This is evident through the layoffs, including a significant recent round, and the company’s partial exit from Oregon’s Medicaid system, particularly affecting the Portland area.
Majority owned by Legacy Health, PacificSource revealed that it would cease servicing the Oregon Health Plan in certain regions.
For instance, in the Portland area, the Health Share of Oregon covers over 400,000 members, making it the largest integrated care organization in the region. Many of these members are insured under the Oregon Health Plan through other companies, such as CareOregon.
Nonetheless, around 20,000 members are still part of legacy PacificSource plans. With this withdrawal, they will probably have to find new insurance providers.
In a statement, both Legacy Health and PacificSource insisted that this transition would not disrupt the relationships members have with their healthcare providers.
“Legacy continues to support Oregon Medicaid members and aims to find a new management partner for 2026,” stated a spokesperson for the health system. Meanwhile, a PacificSource representative asserted that “this change should not affect our members’ continuity of care or relationships with their providers.”
Lane County, however, might see even more significant changes. There, PacificSource plans to end its contract with the state that insures about 90,000 Oregon Health Plan members. The state intends to transfer these individuals to Trillium, an insurance company affiliated with Centene.
PacificSource claims that the rates proposed by the Oregon Health Authority for 2026 would not be sufficient to cover its costs. However, the insurer will continue to provide coverage under the Oregon Health Authority in other areas, such as Marion and Polk counties, and plans to maintain its offerings in the commercial insurance market.
And then there are the layoffs. Recently, PacificSource confirmed it will lay off 381 employees over the coming months, which is about 20% of its 1,800 workforce that was reported this summer. This figure includes 56 layoffs already announced and the recent news of an additional 325 job cuts. The Lund Report first reported these latest layoffs.
“Like many health plans, Oregon is experiencing significant pressures, including rising healthcare costs and challenges with Medicaid funding,” noted spokeswoman Lauren Thompson in an email. In a statement filed on Wednesday, the company attributed the layoffs to a “substantial decline in Medicaid membership” in Lane County. While the company operates in other states, 265 impacted employees are based in Oregon, as per the notice.
Legacy Health, which is among Oregon’s largest health systems, has a majority stake in PacificSource’s board. In documents approving a merger, Legacy acquired half of PacificSource for $247 million in 2016, as part of a strategy to create an integrated health system.
It seems that Legacy is also cutting back. Executives recently informed staff that multiple clinics would be closing soon due to “significant financial pressures.”
