Doctors Without State Borders: Practicing Across State Lines

This article was first published in the HealthAffairs Blog.

Note: In addition to Robert Kocher, this post is authored, by Topher Spiro, Vice President, Health Policy, Center for American Progress ; Emily Oshima Lee, Policy Analyst, Center for American Progress; Gabriel Scheffler, Yale Law School student and former Ford Foundation Law Fellow at the Center for American Progress with the Health Policy Team; Stephen Shortell, Blue Cross of California Distinguished Professor of Health Policy and Management and Professor of Organization Behavior at the School of Public Health and Haas School of Business at the University of California-Berkeley; David Cutler, Otto Eckstein Professor of Applied Economics in the Faculty of Arts and Sciences at Harvard University; and Ezekiel Emanuel, senior fellow at the Center for American Progress and Vice Provost for Global Initiatives and chair of the Department of Medical Ethics and Health Policy at the University of Pennsylvania.

In the United States, a tangled web of federal and state regulations controls physician licensing.  Although federal standards govern medical training and testing, each state has its own licensing board, and doctors must procure a license for every state in which they practice medicine (with some limited exceptions for physicians from bordering states, for consultations, and during emergencies).

This bifurcated system makes it difficult for physicians to care for patients in other states, and in particular impedes the practice of telemedicine. The status quo creates excessive administrative burdens and like contributes to worse health outcomes, higher costs, and reduced access to health care.

We believe that, short of the federal government implementing a single national licensing scheme, states should adopt mutual recognition agreements in which they honor each other’s physician licenses.  To encourage states to adopt such a system, we suggest that the federal Center for Medicare and Medicaid Innovation (CMMI) create an Innovation Model to pilot the use of telemedicine to provide access to underserved communities by offering funding to states that sign mutual recognition agreements.

The Current System And Its Drawbacks

State licensure of physicians has been widespread in the United States since the late nineteenth century.  Licensure laws were ostensibly enacted to protect the public from medical incompetence and to control the unrestrained entry into the practice of medicine that existed during the Civil War.  However, it no longer makes sense to require a separate medical license for each state.  Today, medical standards are evidence-based, and guidelines for medical training are set nationally through the Accreditation Council for Graduate Medical Education, the Centers for Medicare and Medicaid Services’ Graduate Medical Education standards, and the Liaison Committee on Medical Education.  All U.S. physicians must pass either the United States Medical Licensure Examinations or the Comprehensive Osteopathic Medical Licensing Examination.

Although the basic standards for initial physician licensure are uniform across states, states impose a patchwork of requirements for acquiring and maintaining licenses. These requirements are varied and burdensome and deter doctors from obtaining the licenses required to practice across state lines.  For example, in all states, applicants must show proof of graduation from an accredited medical school and completion at least one year of a residency program, provide information about malpractice suits, and pay a fee to the state for initial licensure (usually several hundred dollars) and for license renewal (which in some states must be done annually).

In addition, some states require that applicants undergo further testing, complete specific course work, submit to a criminal background check, participate in a face-to-face interview, or provide proof of participation in other training programs or a log of continuing medical education courses.  Once applicants have fulfilled the initial license requirements, state agencies can take several months to process their applications.

Not only does this system impose direct costs on physicians who must decipher and comply with multiple states’ licensure requirements, but also it creates substantial indirect costs for both physicians and patients by preventing some physicians from practicing in those locations where they would be most productive and where the need for providers is greatest.  For instance, specialist shortages in rural areas are endemic, and patients must often travel long distances and endure lengthy waits in order to be seen by a doctor.

During public health emergencies, such shortages, in conjunction with state licensure requirements, can have especially harmful consequences.  As of 2008, 18 states did not permit exemption from licensure or expedited licensure for volunteer physicians during disasters.  In these states, any out-of-state private practitioners who render voluntary aid must in effect practice medicine without a license, potentially placing themselves at risk for civil and/or criminal penalties.

The impact on telemedicine.  State licensure has had a marked effect on telemedicine in particular, effectively stifling its growth as an industry.  For decades, telemedicine has been touted as a potentially groundbreaking innovation which could benefit providers (lowering administrative costs, reducing barriers to relocating), patients (lowering the cost of care, increasing access, improving health outcomes), and payers (exerting downward price pressure on providers).  While the extent of these benefits is disputed, telemedicine has had success in several areas where it has been promoted.

A Better Path Forward

For years, various organizations have advanced proposals for relaxing the regulation of telemedicine and making it easier for physicians to practice across state borders.  For example, the Federation of State Medical Boards (FSMB) has endorsed and taken steps toward implementing a system of “expedited endorsement,” which offers qualifying doctors a simpler and more standardized licensure application process, but which still requires doctors to obtain a separate license for each state.

The Center for American Progress recommends that, short of the federal government implementing a single national licensing scheme, states should go further by adopting mutual recognition agreements in which they honor each other’s physician licenses (as they now do, for example, with driver’s licenses). Mutual recognition has already been adopted in Europe and Australia and has been successfully utilized by the Veterans Administration, the U.S. military, and the Public Health Service.  In addition, twenty-four states have signed on to a similar agreement for registered nurses and licensed practical/vocational nurses, called the Nurse Licensure Compact.

To spur action and help defray the costs associated with implementation, the federal government should encourage states to adopt mutual recognition agreements for physicians.  For instance, as noted above, the Center for Medicare and Medicaid Innovation (CMMI) could create an Innovation Model to pilot the use of telemedicine to provide access to underserved communities by offering funding to states that sign mutual recognition agreements. Because similarly complex and burdensome licensing systems also deter advanced practice registered nurses (APRNs) from providing needed health services across state lines, CMMI should consider including incentives in the innovation model for states that include APRNs in their mutual recognition agreements.

Proponents of the current system may object that adopting mutual recognition would compromise patient safety or reduce the revenues that states derive from licensure fees.  Yet because standards for physician treatment, training, and testing already apply nationwide, requiring physicians to obtain separate licenses for each state in which they practice confers little additional protection on patients.  Mutual recognition could actually be designed in such a way as to raise overall standards, for example by requiring that participating states conduct physician background checks.  Similarly, states could offset potential lost revenue by increasing fees for multi-state licenses.

The reality is that state medical licensure is a vestigial system that imposes significant costs on society without furnishing any kind of commensurate benefit.  We can and should do more to address this problem.

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