The effects of expanded nurse practitioner and physician assistant scope of practice on the cost of Medicaid patient care

Highlights

• Allowing physician assistants to prescribe controlled substances reduces outpatient care cost.

• This reduction is quite large, ranging from 11.8% to 16.0%.

• This change is not associated with any changes in care intensity.

Abstract

The provision of health care to low-income Americans remains an ongoing policy challenge. In this paper, I examine how important changes to occupational licensing laws for nurse practitioners and physician assistants have affected cost and intensity of health care for Medicaid patients. The results suggest that allowing physician assistants to prescribe controlled substances is associated with a substantial (more than 11%) reduction in the dollar amount of outpatient claims per Medicaid recipient. I find little evidence that expanded scope of practice has affected proxies for care intensity such as total claims and total care days. Relaxing occupational licensing requirements by broadening the scope of practice for healthcare providers may represent a low-cost alternative to providing quality care to America’s poor.

Introduction

Providing health care to low-income Americans remains an ongoing policy challenge. Occupational licensing laws typically dictate the tasks that healthcare professionals are allowed by law to complete. Occupational licensing laws have begun to come under increased scrutiny as a result of a recent White House report documenting the costs and benefits of the laws [1]. The American Medical Association has historically exerted great influence over the licensing of physicians and other healthcare professionals and was described by Milton Friedman as the “strongest trade union in the United States.” [2], p. 150.

Two types of healthcare professionals that are becoming a more important part of healthcare delivery in the United States are nurse practitioners (NPs) and physician assistants (PAs). Each state has different rules for the scope of practice of NPs and PAs. According to the Controlled Substances Act of 1970, controlled substances are drugs or chemicals that are illegal to sell without first obtaining a prescription from a health care provider as a result of their potential for abuse. Controlled substances are assigned into five different “schedules”—Schedule V substances have little potential for abuse and Schedule I substances have a very high potential for abuse. In some states, PAs are allowed to prescribe controlled substances with physician supervision; in others, they are not. The same is true for NPs. However, some states grant NPs the authority to prescribe controlled substances without physician supervision—effectively allowing them to practice autonomously.

Although this paper is primarily focused on the US, the PA occupation also exists in countries such as Canada, Ghana, the Netherlands, India, and the United Kingdom. NPs work in other countries such as Canada and nurses can obtain prescriptive authority in the United Kingdom as well. Whether the scope or practice of these professions in countries where they exist should be expanded (or whether the professions should be added in countries where they do not) is a relevant question to address across the world.

Matching data from 1999 to 2012 from the Centers for Medicare and Medicaid Services Medicaid Statistical Information System (CMS-MSIS) with regulatory data from The Nurse Practitioner and the American Academy of Physician Assistants, I estimate the effect of expanded scope of practice of NPs and PAs on access to health care for Medicaid patients. The 1990s and the years since 2000 were a period of substantial change in the scope of practice for PAs and NPs. This study exploits those changes to use a difference-in-differences framework.

After providing some background and summarizing the existing research specifically on the economic effects of scope of practice, this paper provides shares the empirical results of the analysis.