The California legislature recently rejected SB 323, a bill which, if enacted, would have allowed nurse practitioners to operate independently of physicians in certain practice settings.

In California, nurse practitioners can provide nursing services that are within the permissible scope of a Registered Nurse and may also provide services that overlap into medical functions, such as physical and mental assessments, disease prevention and restorative measures, performance of skin tests and immunization techniques, and blood draws. However, a nurse practitioner is required to enter into a collaboration arrangement and standardized procedures with a physician when the nurse practitioner’s services overlap into medical functions.

SB 323 would have allowed nurse practitioners to perform these medical services without collaboration agreements or standardized procedures if they practiced in a clinic, an accountable care organization, a group practice, a medical group, independent practice association, or certain facilities, including hospitals and nursing facilities.

A similar bill failed to pass in 2013. The rejection of the bill came in spite of a nationwide movement to expand the scope of practice for NPs, with 20 states passing such laws and six states other than California considering similar bills. Proponents of the bill argued that the increased scope of practice would have allowed for more innovation and cost-cutting measures in the health care industry and increased access to healthcare in rural areas.

If the bill had become law, it would have presented interesting corporate practice of medicine issues. In California, nurse practitioners may form professional corporations, but there are no restrictions on what type of entities can employ nurse practitioners. Nevertheless, the employment of nurse practitioners is generally restricted due to the physician supervision requirement. Had the bill passed, nurse practitioners would have been able to perform many of the same functions as physicians without physician supervision, while physicians would have remained subject to employment restrictions via California’s prohibition on the corporate practice of medicine rules. Some anticipated the bill would help to further erode California prohibition on the corporate practice of medicine.