Increasing patient demand following health care reform has led to concerns about provider shortages, particularly in primary care and for Medicaid patients. Nurse practitioners (NPs) represent a potential solution to meeting demand. However, varying state scope of practice regulations and Medicaid reimbursement rates may limit efficient distribution of NPs. Using a national sample of 252,657 ambulatory practices, we examined the effect of state policies on NP employment in primary care and practice Medicaid acceptance. NPs had 13% higher odds of working in primary care in states with full scope of practice; those odds increased to 20% if the state also reimbursed NPs at 100% of the physician Medicaid fee-for-service rate. Furthermore, in states with 100% Medicaid reimbursement, practices with NPs had 23% higher odds of accepting Medicaid than practices without NPs. Removing scope of practice restrictions and increasing Medicaid reimbursement may increase NP participation in primary care and practice Medicaid acceptance.