An Opportune Time to Update Medical Licensing (2024)

During the coronavirus disease 2019 (COVID-19) pandemic, many states waived requirements that physicians and other health care professionals with out-of-state licenses be licensed in the state in which they are providing services. Some states also extended this reciprocity for the provision of telehealth services. These crisis responses highlight the barriers that physician licensure procedures have created for the delivery of health care. Although state licensing requirements are largely similar across the country, most states require that physicians be separately licensed in each state in which they practice.

The history of the unwieldy regulation of medicine dates from the ratification of the US Constitution in 1790. The Constitution stipulates that the federal government has jurisdiction over interstate commerce and states have jurisdiction over intrastate activities. Given that medicine has been practiced locally from the 18th century onward, it made sense that physicians should be regulated through state medical boards comprised of their peers, analogous to local guilds in other industries.¹

With the national standardization of medical practice, as well as telehealth and other changes that allow remote delivery of certain medical services, it is increasingly difficult to defend these legacy regulatory practices. Physicians throughout the country prescribe medications approved by the US Food and Drug Administration and use the same US version of UpToDate.

However, vested interests provide incentives for the continuation of state-based medical licensure. First, states derive significant revenue from licensure fees and are not keen to lose this income stream. For instance, in fiscal year 2019, California received $62 million in physician application and renewal fees.² Second, maintaining state control over licensing is in the economic interest of physicians who already practice in the state. Physicians who wish to provide telehealth services in another state incur additional costs in terms of both time and money to secure a medical license. State-specific licensing provides market power to in-state physicians, who sit on state medical boards and are a powerful lobby in state governments.³ Third, although the 2014 US Supreme Court case of North Carolina State Board of Dental Examiners v Federal Trade Commission⁴ placed some limits, states continue to have substantial immunity from federal antitrust laws. Specifically, the Federal Trade Commission sued the North Carolina state dental board for violating federal antitrust law by prohibiting nondentists from offering teeth-whitening services. In a 6 to 3 ruling, the Court held that a regulatory board made up of active market participants can only claim immunity from federal antitrust laws if the board were subject to active supervision by the state. Thus, the ruling’s effects are limited. State medical licensing boards, while generally composed of active market participants, have the authority to oversee and enforce state licensing regulations that are anticompetitive in effect, so long as the board is implementing a policy adopted by the state legislature or otherwise actively supervised by the state.

A national license to practice medicine is an obvious solution to the inefficiencies caused by state-based licensure. However, the system of state-based licensure would be politically and legally difficult to overturn, and a logical federal governance structure to administer medical licensure is lacking. The following 3 approaches represent a middle ground that would modernize medical licensing while preserving state authority and revenue.

Congress could regulate telemedicine across state lines as interstate commerce and establish the “place of service” of a telehealth visit as the location of the clinician, not the location of the patient.⁵ This definition would allow physicians to provide telehealth services if licensed by the state from which they would conduct telehealth visits. Such legislative action would not override state licensure or insurance regulations but would increase access to telehealth services by removing state licensing as a barrier.

State-based medical licensing is inherently linked to state-based consumer protection, including oversight by state licensing boards and the recourse of malpractice litigation in state courts. Therefore, if telemedicine were regulated as interstate commerce, Congress would need to provide a framework for consumer protections, in particular to guard against states protecting the interests of in-state physicians against claims from out-of-state telehealth patients. For example, Congress could decide that a physician’s home state medical board would be responsible for disciplinary investigations, while the state in which the patient lives would be the jurisdiction for malpractice litigation.

The public may also be concerned about clinicians who have been sanctioned in one state but may relocate to another state to provide interstate telehealth services. The Federation of State Medical Boards facilitates the sharing of data between state medical boards to prevent physicians in poor standing from being licensed in new states. Furthermore, state-based consumer protections are only one of many consumer protections in medicine. Practice organizations, hospitals, health systems, health insurers, and malpractice liability insurance carriers also protect patients, by means such as periodic, substantive reviews of physician skills and qualifications.

Another alternative would involve expansion of the Interstate Medical Licensure Compact (IMLC). The IMLC, established in 2014, is a legally binding agreement in which 26 states agreed to adopt uniform standards for licensure. These states also agreed to recognize each other’s vetting processes for medical licenses but not each other’s licenses.⁶ Congress should encourage more states to join the compact through incentives such as increased funding for public health or graduate medical education.

Moreover, the IMLC should provide for full license reciprocity across member states instead of merely standardizing and simplifying the application process for multiple licenses. The Nurse Licensure Compact (NLC) of 2000 served as the model for the IMLC. Yet, unlike the IMLC, the NLC allows for full license reciprocity across member states without requiring additional applications or fees. At present, the NLC encompasses 34 participating states; it has greatly enhanced nursing mobility across state boundaries, a feature that has been particularly important during the COVID-19 pandemic.⁷

A telehealth-specific medical license is a special-purpose license that allows an out-of-state physician to render services via telehealth in a state where they are not physically located. In some cases, the license involves certain conditions (such as the physician agreeing to not open an office in the issuing state). At present, 12 state boards allow physicians to obtain telehealth-specific licenses. Of the 12 states, some will issue these licenses only if the physician’s home state offers reciprocity. An additional 6 state boards require physicians to register if they wish to practice across state lines through a mechanism similar to the procurement of telehealth-specific licenses. In these 6 states, the onus of consumer protection is placed on the physician’s home medical board.⁸ Other states have laws that allow for practicing in contiguous states but do not specifically address telehealth licensing. The expansion of telehealth-specific licenses is a solution that would require adoption by individual states, although Congress could provide incentives similar to those for the expansion of the IMLC.

In 2015, the Obama Administration released a report on occupational licensing, making the case that the proliferation of state-based licensing restrictions had led to a slowdown in economic growth.⁹ A telling illustration is found within the US Department of Veterans Affairs (VA) telehealth program, which enables VA clinicians to treat veterans regardless of patient location, effectively bypassing state licensure laws. In the rulemaking decree, the VA delineated the need to exercise federal preemption of conflicting state laws, as attempting to work within the existing system “would be costly and time-consuming for VA and would not guarantee a successful result.”¹⁰ The VA’s decision to bypass the state medical licensure system offers evidence of the regulatory burden that delays access to telemedicine for patients who would benefit from its innovations.

The COVID-19 pandemic has led to many temporary changes in medicine, including changes in regulatory policies, payment policies, and practice patterns. Now that we have seen how patients have benefited from expanded access to interstate medical practice, the time is right to update medical licensing and to make some of these changes permanent.

Corresponding Author: Samyukta Mullangi, MD, MBA, Department of Medicine, Memorial Sloan Kettering Cancer Center, 1275 York Ave, New York, NY 10065 (smullangi13@gmail.com).

Published Online: January 13, 2021. doi:10.1001/jamainternmed.2020.8710

Conflict of Interest Disclosures: Dr Agrawal reported receiving payment for serving as policy advisor to Governor Ned Lamont of Connecticut. Dr Schulman reported board member and shareholder relationships with Grid Therapeutics, Faculty Connection, LLC, and Reserve Therapeutics. He is also a member of the board of advisors and a shareholder with Prealize. Dr Schulman reported that he is an investor in Altitude Ventures, Inc and Excelerate Health Ventures. He reported receiving consulting fees from Novartis, Inc, Cytokinetics, Inc, Business Roundtable, Motley Rice, LLC, and Frazier Healthcare Partners and speaking fees from Health Quest, LLC and ISMIE, Inc. Dr Schulman also reported nonfinancial relationships with the Business School Alliance for Health Management (president), Civica RX (member of Advisory Board), and Health Services Research (senior associate editor).