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OBJECTIVES:: Medicaid managed care has been touted as an important vehicle for increasing physician participation in Medicaid. Although there is anecdotal evidence that the opportunity to participate in Medicaid via managed care increases physician participation, no empirical study has validated the claim. This study explores the relationship between Medicaid managed care penetration at the county-level and the likelihood that a physician practicing in that county will participate in Medicaid.RESEARCH DESIGN:: We used 3 waves of a large, nationally representative sample of primary care physicians from the Community Tracking Study followed across time (1996–2001) to estimate the impact of changing Medicaid managed care penetration levels on physician participation in the program. County-level Medicaid managed care penetration rates were collected directly from state Medicaid agencies for the study.FINDINGS:: In cross-sectional bivariate and multivariate analyses, Medicaid managed care penetration is significantly associated with physician participation in Medicaid; however, the relationship is nonmonotonic, of small magnitude and generally not in the anticipated direction. Our analyses indicate that a 10 percentage point increase in managed care penetration would reduce the likelihood that physicians participate in Medicaid on average by 2.9 percentage points. Although commercial MCO penetration exhibited a small positive, linear relationship with physician participation, this was not sufficient to offset the effects of Medicaid-dominant MCO penetration. Panel data analysis supported these findings.CONCLUSIONS:: This study failed to find that increases in Medicaid managed care lead to increased primary care physician participation in Medicaid during the period 1996–2001. [ABSTRACT FROM AUTHOR]