Interstate Licensure Compacts

welcome to Mental Health Evolution, a podcast about what's changing in mental health and why it matters. I'm your host, Rachel Harrison, inviting you into honest conversations with people from all perspectives in the field. Clinicians, tech founders, investors, insurance companies, and all the folks in between. Let's explore what's working, what's not, and what's next.

Welcome back to the Mental Health Evolution Podcast. I'm your host, Rachel Harrison, and today I want to talk about one of the most promising and honestly complicated shifts happening in mental health care right now, which involves licensing and the interstate licensure compacts. A lot of counselors, social workers, psychologists are very excited about this, and I'm going to kind of go through each one and talk about what's happening currently and how this might impact our industry as a whole. For professional counselors, an interstate compact is already live and operational in a few states, allowing clinicians to practice across state lines without holding multiple licenses. And if you're like me, you already have licenses in several states because that has been a necessity for sure up to this point. If you want to see the most up to date status, you can find it at counselingcompact.gov which tracks where the Counseling Counseling Compact is active and where states are still in the implementation phase. This matters because since the rise of telehealth, we've seen a clear mismatch between where clinicians are licensed and where clients actually need care. Some areas have providers who can't find enough clients, while others, often more rural communities, face serious shortages. Interstate compacts could help bridge that gap, but they also raise important questions about insurance coverage, risk reimbursement, and parity that we don't yet have answers to. So let's talk a little bit about what it is we are referring to. An interstate compact is essentially a legal agreement between multiple states to recognize one another's professional licenses so a clinician in one state can provide care in another state without having to secure a separate license. The idea isn't new. Nursing, for example, has had a compact for years, but more recently compacts have been developed for mental health professions. So let's go through each one and talk about where the compact is currently and where it's going. So first, the counseling Compact, as I've already talked about a little bit, this allows licensed professionals to practice across state lines in participating states. So that's the key. A lot of states have signed up to say that they're going to do this, that they're interested in doing this. But as of now, early 2026, Arizona, Minnesota and Ohio are the ones that have implemented the compact, and many more states have passed the legislation or are finishing their readiness requirements. So hopefully that number of states will increase soon. The Social Work Licensure Compact for Clinical Social Workers is in development. Once a certain number of states enact the model laws, social workers would be able to hold multi state license licenses and practice across state boundaries. Now lastly, psychologists, they already have the psypact, so they've had this for several years. The Psychology Interjurisdictional Compact is what it is fully called and it enables psychologists to provide telehealth and in state services across participating state lines without multiple state licenses. So they're a little ahead of the curve here. Interstate compacts like these are designed to reduce the administrative burdens on clinicians, improve workforce mobility, and most importantly, expand access to care for clients who may not have local providers. All of that seems great for clients and great for therapists. But I want to talk a little bit about some of the challenges Right now. Most clinicians still have to be licensed in the state where the client is physically located at the time of the session. So that means here in Maryland, if I am licensed in Maryland to someone who lives in Montana, I can only do that if I have a Montana license. And even though the compacts will help with licensure, here's the rub. Clinicians are often unsure how insurance companies will handle payment. So for out of state care delivered via telehealth, some state laws require private insurance to cover telehealth like in person care, but not at the same reimbursement rates. And federally regulated plans can be even more complicated. For example, private insurance laws are in place in over 40 states, but these vary widely in whether insurance must reimburse telehealth at the same level as in person care in Medicaid reimbursement policies. These also differ by state, and they control how telehealth is paid paid within these Medicaid programs. But it still doesn't fully answer whether out of state services will be covered. And federal Medicare policies also have strict rules about where providers are licensed and how telehealth services are reimbursed. So this reimbursement landscape means that even when clinicians can legally see clients across state lines under a compact, there can still be unanswered questions about payment, clinical client cost sharing, and network participation. So that is a barrier that all therapists need to start looking at as we are looking at these different compact pieces. And if you are a clinician that takes insurance and wants to take insurance, that could be a complicating factor. But let's talk a little bit about what it could mean for access to care and delivery. If compacts become fully operationalized and widespread. A clinician in California can see a client in Montana. As long as both states participate, rural areas with provider shortages could get access to specialists located in major metro areas. So think about this. If you are looking for a trauma specialist and there are none in your state or in your area, you can access another state where you might have even a lot of choices about what might be a best match for you. Clinicians potentially would spend less time and money maintaining dozens of state licenses and more time with clients. Like I said, most of us that I know have several licenses already. So reducing that and keeping track of the different CE requirements and all of that would certainly be a time saver. Compacts could become a real solution to the geographic provider imbalance. And as a reminder, these compacts don't guarantee insurance coverage. There's still a separate insurance policy question. Each compact also has its own eligibility and administrative processes. So some of that is yet to be seen. And making sure if you are a clinician, that you are really ready to look at that and understand what all of that means. And lastly, telehealth practice will always be subject to scope of practice laws such as client consent requirements and local privacy protections. So you do need to be aware of the different laws and the different governing ethics for the area that you're practicing in. I think that as we look at the industry, it's very interesting because a lot of the bigger national tech companies that offer therapy, for example, they are already operating as if they can operate in all 50 states. And it's going to be interesting once these compacts come into play, if a majority of states buy into them, it really does expand the market. It makes it so that instead of competing on a local level, if you will, for clinics and clinicians, we are instead looking at a national level. So if we are a have a specific expertise, say in our area of the world, we may no longer be the top provider for say, OCD expertise. Right. Because there's a whole national pool for people to work with. At the same time, therapists are still going to have limited caseloads and can only see a certain number of clients. So that is going to continue to be a thing that will impact delivery of services. It's going to be interesting to see how it plays out as telehealth continues to grow and become a permanent part of how mental health care is delivered. These compacts represent one of the most promising policy developments for clinicians and for clients alike, but we have to consider insurance reimbursement, network participation, and some real world implementation. I think it might be one of those things that there are going to be unforeseeable conditions and consequences to this that we haven't yet experienced. For clinicians who want to expand their reach across state lines, whether to serve underserved rural populations or to connect with specialty clients nationwide, understanding your specific licensure compact, telehealth, insurance policy trends and cross state legal requirements is now essential. So we are going to include some articles as we always do with this episode. I didn't highlight them today because they were mostly just listing some of the information that I already shared and talking about which states are engaged with these different compacts. So that is all for today on the Mental Health Evolution Podcast. We would love to hear from you as always, and hopefully this information about interstate licensure compacts has been helpful and gets you thinking and prepared for what's coming. Bye for now.