Doctors and nurse practitioners (NPs) can apply for insurance credentialing and establish their independent practice. In most states, this is impossible for physician assistants (PAs). If you are a PA practicing in Connecticut, Massachusetts, Michigan, Minnesota, North Carolina, North Dakota, Rhode Island, and Vermont, this process is more accessible.
If you meet any of these criteria, then this article is for you.
In this concise guide, we’ll cover the different types of licenses and business registrations your practice may need. We’ll also list where you can find state-specific details for medical licensing.
What business licenses do medical practices need?
The healthcare industry deals exclusively with patient well-being, and so there are high standards to meet across all levels of business operations. Unlike in many other fields, medical practices need several different licenses and credentials to work legally and comply with various authorities.
You may need the following licenses from your city, municipality, or county, depending on your specialty:
- Business license
- Certificate of occupancy
- Fire license from the fire marshal
- Pharmacy license, if applicable
- State sales tax ID, if you plan to buy and sell medical equipment or products
These licenses tend to differ from county to county and state to state, so it’s important to review your local requirements. Often you may need to also register your practice with your state’s department of health.
Depending on your state and specialization, you may also need specific licenses, permits, or certificates. Some examples include:
- Accreditation medical test site license
- Behavioral health services licensing
- Childbirth center license
- DEA medical license
- Nursing pool registrations
- Controlled substance endorsement
However, there is additional paperwork to complete before starting your practice. In particular: state licensing, business structuring, and insurance credentialing.
Medical practitioners must meet medical licensing standards for every state in which they plan to practice.
This rule used to apply to telemedicine as well, but the pandemic enabled telehealth services to work across state lines. However, post-pandemic, states are determining whether to keep these waivers. If you practice telemedicine, it’s important to stay updated with licensing developments in your state.
This is often the first step to starting your own practice, as you need a state license to purchase medical malpractice insurance or begin the credentialing process if needed.
Your medical state license application may require documents like:
- Your personal information
- A curriculum vitae
- Primary verification of your education and medical training
- Hospital privileges
- Past licenses
- Disclosure of negative experiences, claims, or other similar information
- Past exam scores, if applicable
- Successful results in the United States Medical Licensing Examination (USMLE), if applicable
Each state has its own requirements beyond the application form, and it’s important to ask for a list upfront. Often the licensing board provides an exhaustive list on its website.
It takes around 2 months on average for the state medical board to process and approve an application. Remember that you’ll need to keep up with license renewals, and the timeline for renewal depends entirely on your state.
“It’s important to stay updated with licensing developments in your state. ”
The Federation of State Medical Boards (FSMB) offers guidance and services to assist in this process, including registering for the USMLE and accessing verified credentials.
Business structuring refers to business registration and defining your practice’s legal status. Almost every business is required to register with its state and the federal government.
Each business structure has its own pros and cons. The 3 main types of business entities are:
- Professional corporation (PC): This is a common business structure for physicians and healthcare professionals, although whether this is the best option for you depends on your state. A professional corporation is a business type often limited to specific skilled professionals, such as accountants, engineers, and healthcare professionals.
- Sole proprietorship: This is often the easiest type of registration, and it implies that there is a single owner of the practice. You don’t even technically need to create another business entity; you can register your business under your name. The downside is that, as the owner, you are responsible for all business debts and liabilities.
- Partnerships: A partnership business structure is often used when there are several professionals working together. This form of business registration is very similar to sole proprietorship, but it does come with additional tax filing requirements.
If you’re a sole proprietorship or a professional corporation, you may file your taxes as such. But there are additional tax structures, too:
- Limited liability company (LLC): An LLC offers the simplicity of sole proprietorship and partnership filing with the advantage of not being personally liable for business debts or bankruptcy. You can also forgo corporate taxes, as revenue is taxed as income. As a result, this is a popular option for small businesses.
- Corporation (C-corp): At this point, the business is completely separate from the owner and other shareholders. C-corps often have higher record-keeping and reporting requirements. While you can better protect personal assets with this business structure, you pay both a business tax and personal income tax.
- Subchapter corporation (S-corp): A key benefit of this structure is that you only pay personal income tax. You can avoid the double taxation that occurs with a C-corp business registration. However, you must register directly with the IRS to gain this status. At the same time, there may be additional state regulations regarding taxation and operational standards.
You can file everything yourself through the IRS and your state portals. Many choose to register their business through an online platform like LegalZoom or Incfile. However, you may choose to work with a lawyer to get advice on the best structure for your practice.
Outside of general business registration, you may need to apply for an employer identification number (EIN). You will also need to set up your state and local tax process. You may be able to do this online, depending on your business and tax structure.
Many healthcare professionals choose to bill insurance companies directly. To do so, you may need to go through a credentialing process for each insurance provider with which you plan to work. Each insurance provider has its own standards and requirements. In addition, these insurance requirements differ whether you decide to be in or out of network and whether you will sign discount agreements to be in network.
There are several documents you need for your credentialing application. Some examples include:
- Practitioner personal information
- Driver’s license
- Social security card
- National provider identifier (NPI) number
- State licensure from the medical board
- Proof of medical education
- Residency information
- Malpractice insurance or claims
- Letters of recommendation
- Drug Enforcement Administration (DEA) registration, if applicable
- Clinical Laboratory Improvement Amendment (CLIA) or waiver, if applicable
- State health department registration, if applicable
Insurance credentialing is often a cumbersome and time-consuming process. As a result, many medical practitioners choose to outsource this part of setting up their practice.
Are there additional licenses or registrations to consider?
Many healthcare specialties or facility types have additional mandatory certifications or registration requirements. Many of these are determined by your state, and you can often find this information on your state medical board’s website.
Some potential additional licenses, certifications, registrations, or additional paperwork may be required for:
- In office testing
- In-office X-rays/mammograms
- EMG testing
- Naturopathy and acupuncture
- Laser tattoo removal
- Unlicensed staff giving injects or signing for samples
- PAs ordering MRIs or controlled substances
- Handling medical records when closing a practice
- Owning a pharmacy
- Providing non-medical services
- Hiring independent contractors
Are there state-specific requirements, and how can I find them?
The FSMB website provides the definitive list of US State Medical Board contact information. These websites often include extensive information about professional licensing, certifications, and other practice standards.
You may also find additional resources from the American Medical Association website.
What are the hardest states in which to get a medical license?
Massachusetts is one of the hardest states in which to get a medical license. While it doesn’t have the longest wait for a medical license (that honor goes to New Jersey with up to 9 months), the requirements are time-consuming and challenging.
Some of the most time-consuming requirements are:
- Federation Credentials Verification Service (FCVS) profile
- Supervisory form
- Prior claim history from your insurance carrier
There are other states with challenging requirements as well, including New Jersey, Nevada, Texas, and California.
How much does it cost to get a medical license?
Costs differ widely from state to state, from $35 to $1,425 at the time of writing. However, the application and initial license fee isn’t the only expense.
Additional fees include:
- FSMB uniform application: $60-$80
- Federation credentials verification service: $375 base fee; $95 per state
- VeriDoc: $10-$60
- Transcripts: varies
- Background check: $40-$60
- Fingerprinting: $5-$10
- Notary fees: varies
- Postage: varies
- License renewal fee: around $200, depending on the state
- The National Practitioner Data Bank: $4 per query
You can always ask for help
Business licensing for medical practices isn’t exactly hard. But it is often time-consuming and, at times, confusing.
In addition, practice management does end with the immediate setup. You’ll also need to create a business plan that includes things like patient care, billing, marketing, and more.