The Rules Surrounding Telehealth are Changing

July 19, 2017

Thanks to a new agreement, medical licensure issues won't hold back the growing telehealth industry nearly as much.

Over the past few years, I have worked with many physicians and entrepreneurs on the forefront of telemedicine and other new healthcare technologies. Often the most frustrating aspect of growing a healthcare enterprise is the requirement that physicians (and other healthcare providers) be licensed in every state the patient they're treating (even electronically) is located.

Recently, physicians became eligible to apply for out-of-state licensure under the Medical License Compact ("Compact").  This Compact currently applies to eighteen (18) states and twenty-three (23) medical boards that have voluntarily agreed to allow a physician, with a valid medical license in one of the Compact states, to also obtain an expedited license to practice medicine in another Compact state.  This does not mean, however, that having a license in one Compact state will automatically license the physician in all the other states.  However, the Compact does streamline the application process and will minimize the timeframe for physicians to become licensed in other states. 

In order to obtain a license through the Compact, a physician will need to complete an application and submit a fee to it.  The state where the physician is licensed at the time of the application to the Compact will review the application (subject to each such state completing their application processing and background check procedures). Currently under the physician Compact, the general requirements to participate are fairly benign.  A physician must: (i) hold an unrestricted license to practice medicine in their own Compact member state; (ii) have graduated from an accredited medical school, (ii) passed all components of the USMLE, COMPLEX-USA or equivalent in no more than three (3) attempts; (iv) have no disciplinary or controlled substance action against their medical license; (v) have no criminal history; and (v) not be under investigation at the time of application. 

Once an application is approved by the state of principal licensure, a physician can simply designate any number of other Compact states where the physician wishes to become licensed.  A separate fee is required for each state application and compliance with the licensure and continuing medical education requirements of that state will also be required, or the physician may lose the license in that state.  

One lingering issue with regard to the Compact is the Federal Bureau of Investigation ("FBI")'s recent alert to several state agencies that it has concerns about the state laws that authorizes those states to participate in the Compact. This is because their laws do not meet the requirements of the federal regulation empowering the agency to share information with the states for purposes of criminal background checks.  It is expected that these issues will be resolved swiftly.

Although the Compact will offer some relief to growing telehealth businesses, it's important to remember that each state maintains autonomous oversight of the practice of medicine by its licensees.  Every state's medical practice regulations differ on issues such as fee-splitting, the selling of products to patients, referrals and ownership of entities by physicians and non-physicians.  This means that healthcare/technology businesses that plan to do more than offer pure telehealth services will need to proceed with caution and obtain appropriate legal advice.