Veterans' Affairs: Potential Costs of Changes in Licensing Requirement
Outweigh Benefit (Letter Report, 05/21/99, GAO/HEHS-99-106).

Pursuant to a congressional request, GAO provided information on whether
changing Department of Veterans Affairs (VA) health care personnel
licensing requirements would effect VA's health care system, focusing
on: (1) comparing VA's physician employment requirements and processes
with those of other federal agencies; (2) comparing VA's requirements
with those of private sector health care organizations; (3) the
potential benefits and costs of requiring VA physicians and registered
nurses to be licensed in the state where they practice; and (4) the
implications of such a licensing change on VA's use of telemedicine.

GAO noted that: (1) generally, VA and other major federal agencies, such
as the armed services and Public Health Service, that employ physicians
to provide medical care use similar employment practices; (2) these
agencies require physicians to be U.S. citizens, possess a current
license to practice medicine from any state; have graduated from an
approved medical school program with a Doctor of Medicine or Doctor of
Osteopathy degree; have completed at least a 1-year internship,
residency or fellowship; and have undergone a suitability investigation
for federal employment; (3) beyond these basic requirements, VA requires
its physicians to demonstrate English proficiency and pass a physical
exam; in 1997, it also began requiring newly hired physicians to be
board certified in a medical specialty; (4) in contrast, in accordance
with state laws, private sector physicians must be licensed in the state
where they practice; (5) also, unlike VA, less than half of the health
maintenance organizations and preferred provider organizations GAO
contacted require U.S. citizenship, board certification, or demonstrated
English proficiency, and none require a physical exam; (6) the potential
costs to VA of requiring physicians and registered nurses to be licensed
where they practice would likely exceed any benefit; (7) if the
licensing requirements were changed, up to 14 percent of VA's physicians
and 13 percent of VA's registered nurses would have to obtain new state
licenses or transfer to VA facilities located in states where they are
licensed; (8) VA believes the costs and burden generated by such a
change would outweigh any benefits to its operation; (9) supporting this
view, literature shows no linkage between differences in state licensing
practices and quality of care; (10) likewise, individuals representing
physician and nursing boards told GAO that the quality of patient care
and differences in state licensing practices are not directly linked;
(11) the impact of a licensing change on telemedicine would likely be
modest; (12) VA expects that its telemedicine activities that cross
state lines would be significantly hampered by requiring physicians and
registered nurses to be licensed in every state where they provide care
through telemedicine; and (13) however, GAO found that many state laws
exempt VA providers from their licensing requirements when they practice
telemedicine.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  HEHS-99-106
     TITLE:  Veterans' Affairs: Potential Costs of Changes in Licensing
	     Requirement Outweigh Benefit
      DATE:  05/21/99
   SUBJECT:  Veterans benefits
	     Licenses
	     Health care personnel
	     Health care services
	     Physicians
	     Comparative analysis
	     Cost analysis
	     Proposed legislation
IDENTIFIER:  HHS National Practitioner Data Bank

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VETERANS' AFFAIRS: Potential Costs of Changes in Licensing
Requirement Outweigh Benefit GAO/HEHS-99-106 United States General
Accounting Office

GAO Report to the Chairman, Subcommittee on Health, Committee on
Veterans'

Affairs, House of Representatives

May 1999 VETERANS' AFFAIRS Potential Costs of Changes in Licensing
Requirement Outweigh Benefit

GAO/HEHS-99-106

  GAO/HEHS-99-106

GAO United States General Accounting Office

Washington, D. C. 20548 Health, Education, and Human Services
Division

B-279951 May 21, 1999 The Honorable Cliff Stearns Chairman,
Subcommittee on Health Committee on Veterans' Affairs House of
Representatives

Dear Mr. Chairman: Currently, the Department of Veterans Affairs'
(VA) physicians and registered nurses may provide medical care in
VA facilities if they have a license to practice in any state. In
recent years, concerns have been expressed about physicians
providing care in states where they are not licensed. Reflecting
these concerns, in July 1997, a bill 1 was introduced in the 105th
Congress that would have required the Secretary of Veterans
Affairs to assign a health care professional 2 only to facilities
in a state where the professional is licensed to practice in
effect requiring health care professionals to be licensed in the
state where they provide medical care. Though the bill has not
been reintroduced in the 106th Congress, you were concerned about
the effect that this approach to licensing, if implemented, would
have on VA's health care system. Regarding these concerns, you
asked us to (1) compare VA's current physician employment
requirements and processes with those of other federal agencies;
(2) compare VA's requirements with those of private sector health
care organizations; (3) assess the potential benefits and costs of
requiring VA physicians and registered nurses to be licensed in
the state where they practice; and (4) determine implications of
such a licensing change on VA's use of telemedicine. We conducted
our review from April 1998 through April 1999 in accordance with
generally accepted government auditing standards. Details on our
scope and methodology are in the appendix.

Results in Brief Generally, VA and other major federal agencies,
such as the armed services and Public Health Service (PHS), that
employ physicians to provide medical

1 H. R. 2338 proposed amending the law to require the Secretary to
assign VA' s health care professionals only to VA facilities in
states where they are licensed to practice. However, the bill did
not address whether this requirement applied to current VA
employees or only to employees hired after its enactment. H. R.
2338 was also silent about whether VA's physicians and registered
nurses who provide care via telemedicine would be subject to the
telemedicine licensing requirements of each state in which they
practice telemedicine. Requirements in the bill would have become
effective 6 months after enactment.

2 Health care professionals include physicians, dentists,
podiatrists, optometrists, nurses, physician assistants, and
expanded- function dental auxiliaries. However, as agreed with
your office, we limited our review of the impact of this
legislation to physicians and registered nurses.

GAO/HEHS-99-106 Medical Licensing Page 1

B-279951

care use similar employment practices. These agencies require
physicians to be U. S. citizens; possess a current license to
practice medicine from any state; have graduated from an approved
medical school program with a Doctor of Medicine (M. D.) or Doctor
of Osteopathy (D. O.) degree; have completed at least a 1- year
internship, residency, or fellowship; and have undergone a
suitability investigation for federal employment. Beyond these
basic requirements, VA requires its physicians to demonstrate
English proficiency and pass a physical exam; in 1997, it also
began requiring newly hired physicians to be board certified in a
medical specialty. In contrast, in accordance with state laws,
private sector physicians must be licensed in the state where they
practice. Also, unlike VA, less than half of the health
maintenance organizations (HMO) and preferred provider
organizations (PPO) we contacted require U. S. citizenship, board
certification, or demonstrated English proficiency, and none
require a physical exam.

The potential costs to VA of requiring physicians and registered
nurses to be licensed where they practice would likely exceed any
benefit. If the licensing requirements were changed, up to 14
percent of VA's physicians and 13 percent of VA's registered
nurses would have to obtain new state licenses or transfer to VA
facilities located in states where they are licensed. VA believes
the costs and burden generated by such a change would outweigh any
benefits to its operation. Supporting this view, literature shows
no linkage between differences in state licensing practices and
quality of care. Likewise, individuals representing physician and
nursing boards told us that the quality of patient care and
differences in state licensing practices are not directly linked.

The impact of a licensing change on telemedicine would likely be
modest. VA expects that its telemedicine activities that cross
state lines would be significantly hampered by requiring
physicians and registered nurses to be licensed in every state
where they provide care through telemedicine. However, we found
that many state laws exempt VA providers from their licensing
requirements when they practice telemedicine.

Background The federal government employs about 31,000 physicians
who provide medical care to veterans, uniformed services personnel
and their

dependents, federal prisoners, Native Americans, and Alaska
Natives. Of these physicians, about 17,000 are employed by VA and
provide medical services to veterans at 181 treatment facilities
nationwide (see table 1).

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B-279951

These medical centers are grouped into 22 Veterans Integrated
Service Networks that each serve a particular geographic area.

Table 1: Number of Physicians Providing Medical Care Employed in
Federal Agencies

Federal agency Number of civil

service physicians

Number of commissioned officer physicians Total

VA 16,974 0 16,974 Army 454 4,580 5,034 Navy 91 4,039 4,130 Air
Force 56 4,131 4,187 Bureau of Prisons 195 14 a 209 U. S. Coast
Guard 1 57 a 58 Indian Health Service 648 344 a 992

Total 18,419 13,165 31,584

Note: Army, Navy, and Air Force numbers are for fiscal year 1997;
VA and Indian Health Service numbers are from 1998; and Bureau of
Prisons and Coast Guard numbers are from 1999.

a These physicians are PHS Commissioned Corps officers.

When hiring physicians, most federal agencies use the Office of
Personnel Management's (OPM) physician qualification standards.
OPM is the central federal agency charged with establishing and
administering federal personnel laws, regulations, and rules. OPM
sets federal policy for hiring, managing, compensating, and
separating federal employees, and most federal agencies use OPM
standards to determine whether applicants meet the minimum
requirements for a position. Moreover, VA has specific statutory
employment eligibility requirements for physicians, and the
Department of Defense (DOD) has specific statutory employment
eligibility requirements for physicians who are commissioned
officers. These agencies may also add employment requirements
beyond the statutory requirements.

Under current law, VA's physicians and registered nurses are
eligible for assignment to positions in VA if they have the
necessary degrees and experience and are licensed to practice in
any state. Thus, VA may assign them without regard to where they
are licensed. In the private sector, however, physicians and
registered nurses must be licensed in the state where they
practice. Licensing requirements for physicians and registered
nurses have evolved over the years, with states sharing common
categories of requirements. For example, all states require
physicians to pass a national licensing exam with the same minimum
score. In addition,

GAO/HEHS-99-106 Medical Licensing Page 3

B-279951

all states have basic requirements relating to education,
references, personal identification, and so on, but within these
categories, the specific requirements may vary somewhat from state
to state. For instance, a few states require 3 years of
postgraduate training, while most states require only 1 year.

Some states have also begun requiring physicians practicing
telemedicine within their borders to be licensed in that state.
Telemedicine involves using imaging and diagnostic equipment to
gather data from a patient and sending the data electronically
from one location to another to have a specialist interpret the
data. Telemedicine services include nuclear medicine, radiology,
pathology, mental health, and pacemaker- monitoring programs.

Most Federal Agencies Have Similar Physician Employment
Requirements and Processes

VA; the Army, Navy, and Air Force; PHS Commissioned Corps; Coast
Guard; Bureau of Prisons (BOP); and Indian Health Service (IHS)
are the major federal agencies that employ physicians to provide
medical care. For the most part, VA and other major federal
agencies follow similar physician employment practices when hiring
both civilian and commissioned officer physicians. Federal
agencies have in common a basic set of requirements, as shown in
figure 1.

Figure 1: Common Federal Physician Employment Requirements

a This requirement can be waived for civil service physicians if
there are no qualified U. S. citizens.

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B-279951

In addition to these basic employment qualifications, physicians
who provide medical care in the federal sector must undergo a
credentialing and privileging process before they begin treating
patients. Credentialing involves verifying the validity or
authenticity of the physician's degree, license, graduate
training, experience, ability, judgment, and health status. It
also includes a query of the National Practitioners Data Bank
(NPDB) 3 to determine whether any adverse actions have been taken
against a physician's license and to obtain information on
malpractice claims paid on behalf of the physician. To grant a
physician privileges, a review committee at the facility where the
physician will treat patients uses the verified credentials to
determine what specific medical procedures the physician will be
permitted to independently perform in the treatment facility.

Beyond these common requirements, federal agencies have additional
requirements as discussed, by agency, in the following sections.

VA In addition to the requirements common to other agencies, VA
physicians must possess basic proficiency in written and spoken
English, 4 be board certified in their specialty, 5 pass a
physical exam, and undergo credentialing and privileging upon
employment and at least every 2 years thereafter. VA also conducts
primary source verification of physicians credentials by
contacting individuals or institutions having direct knowledge of
the physician's degree, license, graduate training, experience,
ability, judgment, and health status.

Army, Navy, and Air Force The Army, Navy, and Air Force each
recruit their own physicians and use the same common physician
employment requirements as VA and the other federal agencies when
employing commissioned officer and civilian physicians. However,
in addition to the common requirements, each service has different
age restrictions for commissioned officer physicians and requires
them to undergo a physical exam and medical readiness training
that prepares them for operational military requirements. Like VA

3 The Health Care Quality Improvement Act of 1986 (P. L. 99- 660),
as amended, established a data bank to help ensure that unethical
or incompetent practitioners do not compromise health care
quality. The data bank contains information on adverse actions
taken against a physician's license, clinical privileges,
professional society membership, and malpractice payments.

4 This requirement was added in Nov. 1977 by P. L. 95- 201. 5 This
requirement was added by VA in June 1997 and applied to physicians
hired on or after July 1, 1997. A medical specialty is a branch of
medicine in which the physician has undergone additional education
and training, such as general surgery, internal medicine, or
neurosurgery.

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B-279951

physicians, all commissioned and civilian physicians in the
military services must undergo a credentialing and privileging
process before they treat patients at military facilities. Also
like VA, when credentialing physicians, the services conduct
primary source verification of a physician's credentials and query
the NPDB. The Navy also requires commissioned officer physicians
who have graduated from a foreign medical school to be board
certified within 1 year of reporting for active duty.

In contrast to VA, which grants privileges every 2 years, the
Army, Navy, and Air Force grant newly employed physicians
provisional privileges for 1 year at the military treatment
facility where the physician will practice. During this period,
the physician's clinical performance is under review by a
supervisor to ensure clinical competence. Upon successful
completion of the initial year, physicians may be granted full
staff privileges, which are reviewed every 2 years thereafter.

PHS Commissioned Corps The PHS Commissioned Corps is a component
of the Department of Health and Human Services. The mission of the
PHS Commissioned Corps is to provide highly trained and mobile
health professionals who carry out programs to promote the health
of the nation and deliver services to federal beneficiaries at
agencies such as the U. S. Coast Guard, BOP, and IHS. In addition
to the common physician employment requirements, a commissioned
officer in the PHS must be under the age of 44 when applying to
the PHS, pass a physical exam, and be found medically qualified to
perform the work.

After meeting these qualifications, a physician may be offered a
commission in the PHS and then be assigned to a position at
selected federal agencies. Before being assigned to an agency, PHS
commissioned officer physicians must meet the employment
requirements of the employing agency, which is also responsible
for credentialing and privileging the physician.

Coast Guard The Coast Guard employs PHS commissioned officer
physicians and does not have additional employment requirements
beyond those established by the PHS. Like VA, the Coast Guard
conducts primary source verification of a physician's credentials
and queries the NPDB before the physician begins providing medical
care. Unlike VA, Coast Guard physicians are initially granted
provisional privileges for 1 year at the health care facility

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where they will practice. After successful completion of the first
year, physicians are eligible for full staff privileges, which are
reviewed every 2 years thereafter.

BOP In addition to the common federal physician employment
practices, BOP requires physicians to pass a physical exam and
successfully complete a standard institutional curriculum and a 3-
week training program that includes a physical abilities test.
Credentialing, however, is conducted by a credential verification
organization with which BOP contracts, and privileging is
conducted at the individual BOP medical facility where the
physician will practice. Like VA, BOP grants privileges every 2
years.

IHS IHS uses the common federal physician employment requirements.
In addition, IHS commissioned corps and civilian physicians
undergo a character investigation required by the Indian Child
Protection and Family Violence Prevention Act. 6 The facility
where the physician will practice conducts primary source
verification of the physician s credentials and queries the NPDB
before the physician may provide medical care. Similar to VA,
privileging is conducted at the IHS facility when the physician is
first employed and at least every 2 years thereafter.

The varying requirements of these agencies are summarized in
figure 2. 6 The minimum standards of character set by this act are
that none of the individuals appointed have been found guilty of,
or entered a plea of nolo contendere or guilty to, any offense
under federal, state, or tribal law involving crimes or violence;
sexual assault, molestation, exploitation, contact or
prostitution; or crimes against persons.

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B-279951

Figure 2: Federal Agencies' Additional Physician Employment
Requirements

Note: NA = Not applicable, because it is the responsibility of the
hiring agency to credential and privilege the physician.

a PHS Commissioned Corps. b Coast Guard. c PHS Commissioned Corps
requirements. d For physicians hired on or after July 1, 1997. e
The Navy requires commissioned officers who have graduated from
foreign medical schools to be board certified within 1 year of
commissioning.

GAO/HEHS-99-106 Medical Licensing Page 8

B-279951

VA and Large HMOs and PPOs Have Similar Physician Employment
Requirements

Overall, private sector HMOs and PPOs we surveyed 7 have physician
employment requirements comparable to VA's. The principal
difference is that physicians working in the private sector are
subject to state jurisdiction and therefore must be licensed in
each state where they practice medicine. Like VA, HMOs and PPOs
require physicians to have an M. D. or D. O. degree and most
require a 1- year internship, residency, or fellowship and have a
credentialing and privileging process that occurs at the time of
employment and every 2 years thereafter. In addition, like VA,
about half of the HMOs and PPOs we surveyed verify date of birth,
citizenship, and employment history and conduct a criminal
background investigation. However, less than half of the HMOs and
PPOs we contacted require U. S. citizenship, board certification,
or demonstrated English proficiency, and none require a physical
exam.

The HMOs and PPOs we surveyed also conduct credentialing and
privileging. About half of them conduct primary source
verification of physicians' credentials, as VA does. The remainder
obtain information from various sources, such as the American
Medical Association (AMA) database and the Federation of State
Medical Boards database. The AMA database, known as the AMA
Masterfile, contains information on physicians' medical education,
training, and licenses and disciplinary actions taken against
physicians by state boards. The Federation of State Medical Boards
database contains information on state medical board actions taken
against a physician's license such as suspension, revocation, and
probation. A few of these organizations contract with
organizations that specialize in verification of physician
credentials. We also found that the majority of the HMOs and PPOs
we surveyed query the NPDB for actions taken against a physician's
license and to obtain information on malpractice claims paid.

Changing the Licensing Requirement Adversely Affects VA's Staffing
Flexibility Without Apparent Benefit

Changing the licensing requirement for VA's physicians and
registered nurses to require that they be licensed in the state
where they practice would reduce VA's flexibility to hire, assign,
and transfer its health care professionals. In addition, it could
cause a temporary disruption in VA's operations as physicians and
registered nurses tried to obtain licenses or to transfer to VA
facilities in states where they are licensed. VA was unable to
provide data that would allow us to more fully quantify this
effect. However, because we also found no apparent benefit from
such licensure changes, these potential costs, even if VA could
minimize them, suggest that imposing an in- state licensing
requirement would not be worthwhile.

7 To compare VA's physician employment requirements with the
private sector's, we contacted HMOs and PPOs that operate in
several states and have at least a total of 1 million covered
lives.

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B-279951

Potential Effect on Professional Health Care Staffing

VA records show that if the licensing requirement was changed and
applied to current employees, about 14 percent of VA's physicians
and 13 percent of VA's registered nurses would be affected. The
provision of health care could temporarily be disrupted as these
physicians and nurses sought to obtain new licenses. However,
neither we nor VA were able to project from this the potential
effect such a change could have on patient care.

VA records show that in November 1998 about 2,300 of its
physicians were licensed in states other than where they worked.
Under the proposed change, all of these physicians could be
required to obtain new state licenses to practice or would have to
relocate to a VA facility in a state where they have a license.
Since these physicians are already licensed, they would have to
apply for a license by endorsement in the state where they plan to
practice. Under licensure by endorsement, the state where a
physician seeks a new license reviews the physician's credentials
and experience and determines whether to issue a license. Like the
initial license, licensure by endorsement requirements for
physicians differ from state to state some require another
licensing exam if it has been more than 10 years since the
physician's initial exam, some require a personal interview and a
list of professional society memberships, and a few require an
oral exam and information on delinquent educational loans. The
cost for licensure by endorsement varies from $80 to $1,375. In
addition, states require periodic reregistration to maintain the
license, with fees ranging from $50 to $600.

VA also employs about 4,600 registered nurses who practice in
states other than where they are licensed. Since these registered
nurses already have a state license, they would also have to apply
for a license by endorsement. Similar to physician licensing
requirements, licensure by endorsement requirements for registered
nurses differ from state to state. For example, some states have
age restrictions, most require English language proficiency, and
almost all review for felony convictions. Costs for licensure by
endorsement vary from $25 to $135. After obtaining a license,
registered nurses are required to reregister periodically, with
reregistration fees ranging from $15 to $135.

According to VA and representatives of state licensing boards, it
may be difficult and could take up to a year for some physicians
and registered nurses to obtain a new state license. In addition,
because of different state licensing requirements, some of these
health care professionals may not be able to get a license where
they currently practice. For example, if a state requires 2 years
of supervised postgraduate training and the

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B-279951

physician only has 1 year of such training, he or she could not
get a license in that state without obtaining a year of supervised
postgraduate work. However, VA was unable to provide data
substantiating the potential impact more specifically.

Several VA officials told us that a change in the licensing
requirement would also restrict the pool of applicants for
vacancies at some VA medical centers and that, as a result, VA's
ability to recruit and retain health care professionals would be
made even more difficult than it has historically been. In
November 1998, VA records showed that it employed about 17,000
physicians and 35,000 registered nurses, and VA officials
projected that they may hire another 4,200 physicians and 7,600
registered nurses over the next 3 years. 8 VA officials believe
that their pool of applicants for these positions would be limited
if the applicants were required to be licensed in the state where
VA wanted the health professionals to practice fewer people will
apply because they are not licensed in the state where the job is.

VA officials also told us that changing the licensing requirement
might hinder granting transfers to its health care professionals.
Over the past 3 years, VA noted that it has averaged 7 chiefs of
staff and about 8 chiefs of nursing transfers to different states
each year. VA officials noted that, in recent years, virtually all
transfers have been made at the request of the employee when
filling vacant positions. Apart from these examples, however, VA
was unable to give us detailed information on the total number of
physician and registered nurse transfers, the locations of the
transfers, and where the individuals were licensed. Without such
data, we could not assess the likely impact on VA's physicians and
registered nurses or the probable effect on VA's ability to
deliver health care.

No Apparent Benefit From Changing the Licensing Requirement

To provide a balanced assessment of whether the change in the
licensing requirement would have an effect on the quality of
patient care, we reviewed the literature for evidence of a
relationship between physician licensure and quality of care and
found no studies indicating that differences in state licensing
practices are related to the quality of medical care. Though state
licensing requirements vary, all states require physicians to pass
a national licensing exam with the same minimum

8 Several VA medical centers did not provide information on
projected hiring needs. They said that they were unable to predict
their hiring needs because of restructuring, facility
integrations, and downsizing.

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B-279951

score. 9 In addition, all states share common categories of
requirements, such as education, references, personal
identification, cost, and reregistration, that are generally
similar. We also spoke with VA and AMA officials and others
representing over 100 state medical licensing boards for
physicians and nurses. These individuals told us that while
licensing ensures that the provider has the basic education,
skills, and competency to meet the state's standards, they believe
quality of care is not directly linked to the licensing
requirements in the state where the physician is licensed.

Changing the Licensing Requirement May Have a Modest Effect on
Telemedicine

Contrary to VA's view, we find little evidence to indicate that
licensing changes would have a substantial effect on VA's
telemedicine activities. Although VA expects its use of
telemedicine to grow, it did not provide information on the extent
to which its current telemedicine activities would be affected or
the extent of the expected increase in telemedicine use. In
addition, state laws exempting VA would likely lessen the effect
of a licensing change.

VA reports that it has 23 telemedicine services that cross state
lines. According to VA, during fiscal year 1997, these services
resulted in 61,911 consultations. 10 VA officials believe VA's
initial clinical telemedicine demonstrations and projects show
that substantial benefits can be realized from telemedicine
applications, including improved access to care; improved
continuity and timeliness of care; enhanced availability of
subspecialty expertise; and increased support to health care
providers and veterans, particularly in remote, rural, and
isolated areas.

Because VA telemedicine services are provided by physicians and
nurses located in one state to patients in another, VA program
managers believe that changing the licensing requirement would
substantially compromise the availability of telemedicine and its
future development within VA. For example, VA officials pointed
out that four nuclear medicine specialists located and licensed in
St. Louis, Missouri, provide telenuclear medicine services in
seven other states. VA contends that if these physicians are
required to be licensed where they practice, each of the four
physicians would have to obtain additional licenses to provide
their services in the

9 The U. S. Medical Licensing Exam was phased in from 1992 to
1994, replacing two other exams states had used for medical
licensure. 10 This number includes about 4,800 nuclear medicine
consults for fiscal year 1997. The remaining 57,100 consults took
place between January and June 1997 and include 45,000 pacemaker
consults. Consults include diagnostic interpretations of
information sent electronically, direct video interviews between a
patient and a health care provider, and physician- to- physician
consultation about a patient.

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B-279951

states where they currently provide telenuclear medicine services
because none are licensed in any of those states.

Similarly, at VA's Iron Mountain, Michigan, medical center,
officials believe that the licensing change would have a negative
effect on Iron Mountain's telemedicine initiatives because it
would require licensure of between 25 and 30 practitioners who now
provide telemedicine services from the VA medical center in
Milwaukee, Wisconsin, 11 to veterans at the medical center at Iron
Mountain. These practitioners would have to obtain a Michigan
license.

Despite offering these two anecdotal examples, VA was unable to
provide systemwide information on the total number of physicians
and registered nurses who routinely provide patient care through
telemedicine activities, where these individuals are licensed, and
the locations to which they provide telemedicine services. In
addition, VA did not provide information on its future plans for
the use of telemedicine or on its collaborative telemedicine
projects with other federal agencies.

VA believes that requiring health care professionals to be
licensed in every state where they practice could impose
significant limitations on the provision of health care. VA
believes this requirement could significantly hold back its
expansion of the telemedicine program into states not authorizing
an exemption, limit the scope of its telemedicine activities to
providing consultative services in other states, and limit the
enhancement of its clinical delivery systems as telemedicine
undergoes future technological and clinical advances. We found,
however, that exemptions in various state laws would allow VA's
physicians and registered nurses to use telemedicine to provide
medical care. Over half of the state licensure laws we reviewed
provided an exemption for VA or other federal health care
professionals. 12 Consequently, VA health care professionals
licensed in any state would be permitted to practice telemedicine
in these states. In addition, most of the 20 states we examined
allow physicians who are licensed in other states to provide
consultative services to physicians who are licensed in their
state.

Agency Comments We provided copies of a draft of this report for
review and comment to VA; DOD; OPM; BOP; the Coast Guard; and the
Department of Health and Human

Services, which includes IHS and PHS Commissioned Corps. OPM, DOD,
BOP, 11 VA did not provide information on where these
practitioners are now licensed. 12 We reviewed 20 states' laws
that affect telemedicine within their borders.

GAO/HEHS-99-106 Medical Licensing Page 13

B-279951

and the Coast Guard concurred with the sections of the report in
which they are mentioned. We have incorporated the agencies'
technical comments into the report where appropriate. Other
comments are summarized in the following sections.

Department of Veterans Affairs

The Deputy Under Secretary for Health stated that VA generally
agrees with our report. He also stated that it is difficult to
project the effect a licensing change would have on telemedicine,
since more than half the states have not passed legislation
pertaining to telemedicine. We believe there could be a modest
effect on VA's use of telemedicine because exemptions in some
state laws we reviewed allow VA physicians to practice
telemedicine within their states. In addition, any future effect
on VA's use of telemedicine will depend on whether and the extent
to which states make accommodations for VA.

Department of Health and Human Services

The Department agreed with the report's overall assessment of the
licensing situation. The Department believes it would not be in
the best interest of the government to require physicians and
nurses to be licensed in the state in which they practice in
addition to the state in which they are now licensed because of
constant turnover, attrition, difficulty in recruitment, as well
as the disruption caused by the process. The Department stated
that patient care is of the utmost concern and should not suffer
because a physician or nurse has a license from another state.

As agreed with your office, copies of this report are being sent
to the Honorable Togo West, Secretary of Veterans Affairs;
interested congressional committees; and other interested parties.
Copies will be made available to others upon request.

GAO/HEHS-99-106 Medical Licensing Page 14

B-279951

Please contact me at (202) 512- 7101 or Ronald Guthrie, Assistant
Director, at (303) 572- 7332 if you have any questions about this
report. Other major contributors to this report were Rachna Iyer,
Lesia Mandzia, and Alan Wernz.

Sincerely yours, Stephen P. Backhus Director, Veterans Affairs

and Military Health Care Issues

GAO/HEHS-99-106 Medical Licensing Page 15

Contents Letter 1 Appendix Scope and Methodology

18 Table Table 1: Number of Physicians Providing Medical Care
Employed

in Federal Agencies 3

Figures Figure 1: Common Federal Physician Employment Requirements
4 Figure 2: Federal Agencies' Additional Physician Employment

Requirements 8

Abbreviations

AMA American Medical Association BOP Bureau of Prisons DOD
Department of Defense HMO health maintenance organization IHS
Indian Health Service NPDB National Practitioners Data Bank OPM
Office of Personnel Management PHS Public Health Service PPO
preferred provider organization VA Department of Veterans Affairs

GAO/HEHS-99-106 Medical Licensing Page 16

GAO/HEHS-99-106 Medical Licensing Page 17

Appendix Scope and Methodology

To accomplish our objectives, we (1) obtained and reviewed
physician employment requirements and processes at VA; DOD; the
Army, Navy, and Air Force; PHS Commissioned Corps; U. S. Coast
Guard; Bureau of Prisons; and Indian Health Service; (2)
identified and interviewed representatives of these and other
federal agencies that employ physicians and discussed their
physician employment requirements and processes; (3) surveyed
representatives of selected private sector health maintenance
organizations (HMO) and preferred provider organizations (PPO) on
their physician employment requirements and processes; and (4)
interviewed representatives of the American Medical Association;
the Federation of State Medical Boards of the United States, Inc.;
the National Council of State Boards of Nursing, Inc.; the
National Association of VA Physicians and Dentists; and the Office
of Personnel Management to obtain information on physician and
registered nurse licensing requirements and processes, and the
potential effect of requiring VA's physicians and registered
nurses to have licenses from the states where they practice; and
(5) conducted literature searches on physician licensing to
determine whether the state where a physician is licensed has an
effect on quality of care.

To compare VA's physician employment requirements and processes to
the private sector, we selected HMOs and PPOs that, similar to VA,
operate in several states (that is, are geographically dispersed)
and have at least a total of 1 million covered lives. We contacted
11 HMOs, which have a total of 34 million covered lives, and 4
PPOs, which have a total of 9 million covered lives, and obtained
information about their physician employment requirements and
processes and compared these with VA's practices.

To assess the potential effect of changing the licensing
requirement on VA's physicians and registered nurses and on the
use of telemedicine, we obtained opinions from VA representatives
and obtained information from VA on (1) the total number of
physicians and registered nurses employed by VA, (2) where
physicians and registered nurses are licensed and where they are
practicing, (3) VA's employment projections for physicians and
registered nurses, and (4) limited information on the use of
telemedicine. VA did not provide, after repeated requests,
detailed information on the number of physician and registered
nurse transfers for the last 3 years; on VA's historic inability
to recruit and retain physicians and registered nurses; or on how
VA's collaborative and future telemedicine projects occurring
across state lines would be affected by H. R. 2338 and how many
physicians and registered nurses are currently providing
telemedicine

GAO/HEHS-99-106 Medical Licensing Page 18

Appendix Scope and Methodology

services, where they are licensed, and where they are providing
care via telemedicine.

Also, we obtained physician licensing information and credentials
verification information from the American Medical Association
(AMA), the Federation of State Medical Boards of the United
States, Inc., and the National Council of State Boards of Nursing,
Inc. We used this information to make licensure cost estimates.
However, we did not verify the accuracy of the data provided by
VA; the AMA; the Federation of State Medical Boards of the United
States, Inc.; or the National Council of State Boards of Nursing,
Inc.

We conducted a literature search using EMBASE, Sociological
Abstracts, Social Science Index, Dissertation Abstracts, Legal
References Index, Healthstar, Medline, and Internet searches on
physician licensure relating to quality of care from 1990 to the
present. We also spoke with a broad range of individuals about
medical licensing and quality of care.

(406151) GAO/HEHS-99-106 Medical Licensing Page 19

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