Does direct primary care affect medicare opt-out rates? Evidence from state business of insurance legislation

Abstract

Past economic research has examined factors influencing the degree to which physicians accept assignment from Medicare and allow new Medicare patients into their practice. There is no known examination of physicians' decision to opt out of Medicare completely. I study this decision in the context of Direct Primary Care, a growing alternative to fee-for-service healthcare delivery in the United States that has been enabled by state-level policy shielding DPC practitioners from insurance regulations. Using the publicly available National Provider Identifier Registry and Opt- Out Affidavit datasets in a difference-in-difference framework, I study the effect of said policy on the propensity of physicians to opt out of Medicare. In my main analysis, I estimate that treatment increases the likelihood of family physicians opting out by 38 - 46% of the panel's baseline opt-out rate, but find no consistent effect on internal medicine providers. This relationship is valuable for policymakers and healthcare providers to keep in mind in evaluating DPC and possible Medicare reform.