Why the New Public Option is Better for Physicians

The thing to keep an eye on is the negotiation requirements—this may be how CMS drives payment reform. The legislation states that "the Secretary may utilize innovative payment mechanisms and policies to determine payments for items and services under the public health insurance option." It lists examples like the patient-centered medical home, accountable care organizations, value-based purchasing, bundling of services, differential payment rates, performance- or utilization-based payments, partial capitation, and direct contracting.

Private insurers are already including some of these mechanisms in contracts, and both sectors will probably start adding more quality and performance caveats to contracts in the future. I've talked to many physician groups that leverage quality data to improve their overall rates already, and many private payers are exploring pay for performance and other innovative methods for improving quality and reducing costs.

Sure, there's still a decent chance that the public option doesn't make it through at all. Or if it does, it may be tied to a trigger or opt-out clause that waters it down. But physicians concerned about the financial impact of such an option should take comfort in the fact that whatever makes it through won't likely be tied to Medicare rates.

That's no small victory.