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Does Interstate Licensing Hurt the Telemedicine Market?

By Vera Gruessner

- The telemedicine market is highly dependent on physicians having the necessary licenses to practice telehealth services in their individual states. As most states continue to revise current legislature on telehealth services and improve reimbursement practice to involve similar payment between video consults and in-person visits, the next step the telemedicine market will need to address is that of physician licensing.

Interstate Licensing Policy

Currently, various state legislatures are considering taking part in the Interstate Medical Licensure Compact (IMLC), which seven states are investing in at this point in time. This particular policy is meant to improve the use of technologies in the telemedicine market and reduce the problems associated with physician shortages.

However, economist Michael L. Marlow, Ph.D., does not support the ultimate associations of the Insterstate Medical Licensure Compact. Marlow’s opinion piece was published in the Journal of American Physicians and Surgeons. The new policy and the promotion of interstate licensure will essentially strengthen the Federation of State Medical Boards, according to a press release from the Association of American Physicians and Surgeons (AAPS).

Essentially, Marlow – a free-market economist – feels that licensure could be a potential obstacle or barrier to the entry of a particular career. Licensing among the telemedicine market is meant to improve quality of care and patient safety. However, Marlow argues that the proponents of licensure in the telemedicine market are usually clinicians who are looking to decrease competition and keep their fees at high levels.

“The Compact represents attempts by the FSMB to consolidate its own power and control over physicians, and that it has little relationship to improving quality of care. It thus represents a major misstep for medical care,” Marlow wrote. “It is broadly understood by economists that occupational licensing creates market power for members of occupations, with little to no attendant gains in safety or product quality.”

While this particular economist does not support the agreement of an interstate licensure system for the telemedicine market, Larry D. Dixon, Executive Director of the Alabama Board of Medical Examiners, has found significant advantages the Interstate Medical Licensure Compact offers.

“Now that seven states have enacted the Compact legislation, we can begin the real work of establishing the Compact to ensure patients have access to quality healthcare services, while maintaining the highest level of patient protections,” Dixon said in a news release from the Federation of State Medical Boards.

“The Interstate Medical Licensure Compact will ease the physician shortage in rural and other underserved areas. We thank Governor Bentley and the state lawmakers for moving swiftly and prudently to establish a new era of care, patient protections and physician licensing.”

Marlow argues for the other side and continues to push the fact that the new interstate licensing policy enables state boards to receive more funds from physicians who are paying the fees required for the interstate licensing program. Three years ago, only 78 percent of physicians around the US had active practicing licenses. More money could potentially be earned by increasing the number of active licenses.

Additionally, the new policy will not truly address physician shortages since it will mostly lead to some doctors spending more time on patients in one state instead of another. Essentially, Marlow concludes that pushing forth a free market and reducing the amount of policies and bureaucracy in the healthcare industry will attract more physicians to the field and thereby ‘improve quality and access to care.’

Regardless of differing opinions, at this particular time, Alabama, Idaho, Montana, South Dakota, Utah, West Virginia, and Wyoming have implemented the interstate licensing compact and almost 20 other states have introduced legislature about this program in their legislative chambers.


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