Background: This study assessed whether Rural Health Clinics (RHCs) were associated with higher rates of recommended primary care services for adult beneficiaries diagnosed with diabetes in Oregon's Medicaid program, the Oregon Health Plan (OHP). Methods: OHP claims data from 2002 to 2003 were used to assess quality of diabetic care for beneficiaries residing in urban areas or rural areas with or without at least 1 RHC. Study subjects included Temporary Assistance to Needy Families (TANF) or disabled beneficiaries, aged 18-64, who were enrolled in the OHP for 12 months per study year and had at least 1 claim with a diabetes diagnosis (n = 6,267). Diabetes-related primary care was measured by the proportion of patients receiving each of 3 recommended tests at least once during the calendar year: hemoglobin A1c (HbA1c), lipid profile, and eye exam. Logistic regression models were used to identify differences in testing rates across the geographic areas, after controlling for individual differences including age, race, sex, and health status. Results: Rural areas with no RHC had significantly lower rates of HbA1c testing, lipid profiles, and eye exams than urban areas (P less than 0.01). Rural areas with at least 1 RHC had significantly higher rates for lipid profiles and eye exams than other rural areas (P less than 0.05). No significant differences were detected in testing rates between rural areas with an RHC present and urban areas. Conclusions: RHCs in rural Oregon were associated with higher rates of recommended primary care for diabetes, consistent with the intent of the policy intervention.