The phrase “extortion racket” does not usually bring forth the image of a person in a white coat with a stethoscope. But here in the Lone Star State, health-care extortion is legal and hurts Texans both economically and medically.
In commerce and in the movies, the extortion euphemism is “protection.” In health care, it is known by a different name – a Prescriptive Authority Agreement (PAA). The people being extorted are advanced-practice registered nurses, commonly called APRNs.
These nurses are trained to function independently diagnosing and treating a host of common ailments. While they could offer prescription drugs to sick patients, they are forbidden to do so in Texas except by delegation from a physician with whom they must sign and pay for a PAA.
The average cost to an APRN of such a contract is $20,000, with some running as high as $120,000 per year. When an APRN practices in a major urban medical center, the hospital generally picks up the tab as part of the employment agreement.
In rural Texas, doctors are in very short supply: 226 regions are federally classified as medically underserved while 25 counties have no doctor at all. APRNs could fill in the gaps but cannot afford to locate in these areas because of the cost of a PAA.
An APRN cannot pass on the cost of the PAA to consumers: Payments are fixed by federal regulations. She gets what the reimbursement schedule allows, regardless of her costs.
With an average gross income of $92,000, roughly 50 percent overhead, and a $20,000 payment to the doctor for a PAA, the APRN with all her training and despite her great value to the community, is only making $1,750 a year above the poverty line for a family of four. Knowing that in advance, why would an APRN choose to set up practice in the Panhandle or in South Texas?
The exorbitant expense of a PAA makes serving rural, low-density or impoverished communities cost-prohibitive for APRNs. This regulation creates a great barrier to care, and serves as a deterrent to APRNs who may want to serve their hometown.
The PAA also causes a large financial loss to Texas.
APRNs are less expensive to train and, thus, less expensive to patients.
A national study of Medicare Part A and Part B expenditures found that advanced-practice nurses cost 29 percent less than primary care physicians.
Texas taxpayers will spend more than $160,000 to train one doctor.
For the same price, we could train between three and 12 APRNs and have them available sooner.
The PAA also reduces revenue production and inhibits job creation. A study done here in Texas suggested that releasing APRNs to practice fully would generate $700 million in additional tax receipts to state and local governments, and would create more than 97,000 private-sector new jobs.
What value does the patient or the APRN receive for the cost of a PAA?
The Texas Medical Board, which mandates the PAA, claims an APRN can safely prescribe drugs only under a doctor’s supervision. Yet, APRNs are trained in pharmacology and understand the limits of their prescribing ability. They do not prescribe chemotherapy or cardiac drugs on their own. Furthermore, the oversight by the contracting physician is always after-the-fact: one to six months after the APRN has prescribed a medicine. If a mistake occurred, the “supervision” would not prevent patient harm.
As in all instances of regulatory capture, those benefiting most from the status quo are those who are most vocal in its perpetuation. Texas’ largest physician advocacy group has routinely resisted expanding APRN’s scope of practice to include independent prescriptive authority, a job function these nurses have been trained for and are well-qualified to perform. Understandably so, as any expansion in a nurse’s scope of practice could be considered in equal part marginalizing physicians’ usefulness and reducing doctors’ compensation.
Ironically, studies have shown that in states where APRNs are allowed full scope of practice, physicians earn higher wages than those in states with more restrictive regulation.
There is a role in civil society for sensible regulations, those that can be proven to benefit the consumer, the public at-large and the state. Regulations that constrain the free market for outdated or protectionist reasons must be repealed, especially if they are making health care more difficult to obtain and more expensive.
For this reason, the incoming Texas Legislature should eliminate legalized extortion called the PAA.
Cohen is deputy director of the Center for Effective Justice at the Texas Public Policy Foundation, a nonprofit research institute based in Austin. Waldman is director of TPPF’s Center for Health Care Policy and author of “The Cancer in the American Healthcare System.”