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Debating the Pros And Cons of Licensure Compacts for Telehealth

Experts explain why licensure compacts are good or bad and how they may affect telehealth.

Source: ThinkStock

By Eric Wicklund

- Interstate medical licensure compacts, which enable healthcare providers to more easily apply for and receive permission to practice medicine in other states, have been touted as a means of expanding telehealth and telemedicine. They’re now live for both physicians and nurses and will soon be live for physical therapists.

But not everyone thinks the licensure compact is a good idea. Some say the process creates unnecessary regulatory burdens, while others would prefer to see one nationwide license that allows a clinician to practice in any state. Complicating the issue even further are the FBI, which argues that compacts don’t have the right to supersede federal criminal background checks, and the Department of Veterans Affairs, which is now implementing a nationwide program that bypasses state medical boards and enables VA doctors to treat veterans no matter where each lives.

To better understand the pros and cons of interstate licensure, consulted with Marschall Smith, Executive Director of the Interstate Medical Licensure Compact, and Shirley Svorny, a Professor of Economics at California State University in Northridge and an Adjunct Scholar at the Cato Institute. Both were asked the same set of questions. Here are their responses.

  1. Is the compact good or bad for telehealth/telemedicine?

Smith: IMLC is a positive, voluntary option for physicians who wish to become licensed in multiple states.

Svorny: Supporters have oversold the contribution the compact can make to improving access to interstate telemedicine. The lack of license portability remains a barrier. According to the Report of the Special Committee on License Portability of the Federation of State Medical Boards, the original intent was “to propose a licensure model that would result in true license portability.” When stakeholders pushed back, the committee “developed recommendations based on the existing processes of licensure by endorsement.” What remains is what proponents claim will be an expedited process for licensing medical-specialty-board-certified physicians with spotless records.

READ MORE: Telemedicine Licensure Gives Doctors a Chance to Expand Their Reach

Under the compact, because licenses are not portable, these issues remain a barrier to interstate practice and discourage physician participation:

  • Physicians practicing in multiple states must adhere to a variety of state-specific medical practice regulations; and
  • Annual license renewal fees discourage physicians from seeking additional state licenses.

The compact continues the problematic arrangement in which multiple boards license the same physicians. It includes a physician database that is supposed to allow member states to share information about ongoing investigations. But that database has a long way to go and is unlikely to work.

In July, 2017, I learned that the IMLC Commission was “just starting to talk about” the database. This is incredible to me as the licensing part of the compact has started and the database was part of the law that the state legislatures approved.

At the same event, Katherine Thomas, of the Nurse Licensure Compact, said that “…establishing a database is a big challenge. It is an incredible amount of work and process and constantly needs to be subject to change as you figure out what you're not capturing that you need to capture. It's also very expensive.”

Katherine Thomas said the Nurse Compact database is used to make sure nurses do not hide under the radar by moving to another state after a sanction. But we already have the National Practitioner Data Bank to mitigate similar concerns about doctors. Also, the Federation of State Medical Boards compiles this information.  The database the compact envisions is supposed to be much more than that, as states would be required (how will this be enforced?) to promptly report ongoing investigations.

READ MORE: What Telemedicine, Telehealth Resource Centers Offer to Providers

State boards may be reluctant to post information until an investigation is complete. It is common for state medical boards to protect physicians who are under investigation so as not to sully the doctors’ reputations.

  1. What makes the compact effective or burdensome for the doctor or health system?

Smith: The IMLC has eased the licensing burden by providing an expedited path to multi-state licensure – a critical factor for physicians with a telehealth practice. Over 500 physicians have used the IMLC process to obtain an average of two additional licenses since the first application was processed in April 2017.

Svorny: Many private licensing companies offer services to help physicians apply for state licenses. If continued federal subsidies are necessary to make compact fees competitive, a concern should be that an expensive federally-subsidized IMLC would replace a cheaper private effort.

  1. How does the compact affect a state’s medical board or regulatory body?

Smith: The impact on a state’s medical board is expediting the normal and regular process of reviewing and confirming information when acting as the State of Principal License (SPL) and issuing a license when a Letter of Qualification (LOQ) is received. The processing burden is reduced under the IMLC process since the SPL already has in its possession the static primary source information. The issuing member states build on that efficiency by issuing a license knowing that the verification of critical information has already be performed in a mutually agreed to manner.  

Svorny: The compact was designed to stave off calls for federal licensing that would usurp state power and disturb the status quo. It was designed by the Federation of State Medical Boards to protect the interests of the state boards. Avoiding national licensure was the motivation for the compact in the first place.

READ MORE: Telepsychiatry Opens a New Window into Behavioral Healthcare

As far as the financial consequences, the state boards and the FSMB may be better off:

  • The compact promised states they would not bear an additional financial burden: “Under the terms of the proposed Compact, the Commission may assess processing fees [on physicians] for expedited licensure, ultimately off-setting any burden on the member states. Additionally, the Compact Commission is enabled to seek grants and secure outside funding, through private grants, or federal appropriations in support of license portability.”
  • Perpetuating the existing system that requires physicians to secure licenses in multiple states continues the flow of license revenues to the states.
  • The Federation of State Medical Boards, the IMLC, and some state boards have received federal funding for the compact from the federal Health Resources and Services Administration’s Licensure Portability Grant Program.
  • The Interstate Medical Licensure Compact makes use of the Federation’s Uniform Application and funnels applicants through the Federation Credential Verification System.


  1. Does the compact affect patient care in any way?

Smith: The IMLC impacts patient care by providing an expedited process for a physician to obtain multiple state licenses. Approximately one-half of the applicants have used the IMLC process to obtain three or fewer licenses.  The other half have received 15 or more licenses.  This information suggests that the expedited process have provided a mechanism for increasing physician availability in states with population centers located near state boundaries and to physicians who have a broad national patient base like telemedicine.

Svorny: This is my biggest concern. The compact, by failing to address license portability as initially intended, reduces patient access to interstate telemedicine. I worry that the compact makes it seem as if action has been taken, quieting critics. Many people miss the subtleties about the lack of license portability in the compact or the implications for patient care. 

The compact is a missed opportunity for this country as the benefits to patients of license portability (opening state markets to out-of-state providers) would be substantial. Care from out-of-state specialists would no longer be reserved for patients with the financial wherewithal (and physical stamina) to travel. Lifting licensing barriers to interstate medicine would facilitate continuity of care.

Direct-to-consumer telemedicine offers patients care from their home, office, or mobile device. If we were to reduce regulatory barriers to interstate practice, it is reasonable to expect the same reduction in costs and improved access that followed the national expansion of retail chain stores and the end of regulatory barriers to trucking and interstate banking.

  1. Should states be able to set their own licensing rules or would it be better to have one national license for all doctors?

Smith: This is the long-standing US Constitutional question. The latest information indicates that between 5 percent and 10 percent of the physician population hold licenses in multiple states. The state medical licensing process has a long and solid history of protecting patients and ensuring standards of care. The IMLC process provides a successful state-based answer to the national licensure question, which is especially important for two reasons. First, the practice of medicine occurs where the patient is located, not the physician. It is unclear how this primary foundation would be changed with a national license or potential impacts on the patient rights or expectations of care. Additionally, state-based licensure provides local accountability if there are issues in patient care. Local accountability is naturally more responsive to the necessary balance of patient and physician protections.

Svorny: A national license would require a costly new federal agency. This agency, like the state medical boards, would be subject to pressures from physician groups to erect barriers to entry and competition. For those reasons, I do not favor a national license for all doctors.

I’d like states to be able to set their own licensing rules. But here is where I stand:

Option 1:  Individual states pass legislation to allow out-of-state telemedicine providers to offer services in the state under their home-state license (as proposed, but dropped, in Florida).

Option 2:  Given the lack of progress at the state level, a second-best option to eliminate barriers to interstate telemedicine would be for Congress to redefine the location of the interaction between patients and physicians from that of the patient to that of the physician. This approach has been advocated by the U.S. Health Care Financing Administration (1998): “...the use of telecommunications to furnish a medical service effectively transports the patient to the consultant…Therefore, we believe that the site of service for a teleconsultation is the location of the practitioner providing the consultation.”

There is some support for this in Congress.

Digital patients would be treated like patients who travel across state lines or national borders for care.

A physician would need only one license, and would be responsible for only one set of licensing laws governing the practice of medicine - that of his or her home state.

When it comes to state board oversight, all complaints would go to the licensing board of the physician’s home state. This would allow a coordinated oversight effort rather than the proposed IMLC database.

Under the just-passed VETS Act, Department of Veterans Affairs’ licensed clinicians providing telemedicine services from anywhere in the country do not have to be licensed in the patient’s state. Why confine this benefit to veterans?

  1. Do the same arguments for or against a compact apply to nurses and other specialists?

Smith: Each healthcare profession has approached the licensure process in a different way, as they should. The unique requirements of a physician and importance of patient protection lend themselves well to the IMLC process, where a physician uses the expedited process to obtain a license from each state where they intend to practice. The Nursing Compact uses a different model that successfully meets the unique and important requirements of that profession where there is a growing need to provide nursing care in multiple states and across state boarders. Discussions are underway in the dental and optometry professions about creating a multi-state licensing process and they will find the best answer to the needs of their profession.

Svorny: The nurse and physical therapy compacts differ from the IMLC as they include license portability, allowing clinicians to practice on the basis of their home-state license in other compact states. However, clinicians must still follow the state-specific medical practice rules and regulations. The barrier to interstate practice and access to care is lower but has not been eliminated.

  1. Are there other steps that could or should be taken to make licensure easier for healthcare providers wishing to use telehealth?

Smith: Continuing to hold discussions and seeking better ways to provide care and ensure patient safety. Having critical and productive discussions. Supporting efforts and innovative ideas that enhance, then expand current processes.

Svorny: See my proposals in my response to Question 5 above.

  1. Where do you see the compact going in the future?

Smith: The IMLC process continues to grow and become stronger. The “proof of concept” test was successfully completed, and the organization is moving into the next phase of expansion and automation. Legislation regarding joining the compact is being actively considered in seven different states and the District of Columbia – the passage of a couple of these actions means that over one half of the medical boards in the US are members.

Svorny: Like the nurse compact and the FSMB’s Uniform Application, I don’t see the majority of the states signing up. Many of the states that have joined the IMLC are small, remote (Hawaii), or not densely populated. They would be better off allowing licensed out-of-state physicians to treat patients in their state based on the physicians’ home-state licenses.

The database may be so expensive that it will be substantially weakened.

The IMLC benefits from lack of attention by policy-makers. I doubt that state politicians have noticed that the promised database, which was promoted as important to patient protection by those pushing the states to join, is not up and running, but the expediting of multiple state licenses is moving forward.


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