Lawmakers remove barrier to medical tourism

At the conclusion of its 2014 legislative session, the General Assembly passed the Rhode Island Access to Medical Technology Innovation Act and Gov. Lincoln D. Chafee signed the bill into law effective July 1, 2014.
The act, ostensibly aimed at promoting “domestic medical tourism” in Rhode Island, also contains significant amendments to the state’s certificate-of-need laws through its one-year moratorium on certain approvals and exemption from the process all together for other entities.
The act also mandates that the R.I. Department of Health conduct a statewide health care utilization and capacity study in order to prepare a statewide health plan that proposes strategies to address deficiencies in the state’s health care system.
Rhode Island law requires health care providers to obtain a need certificate from the DOH prior to the acquisition or development of any new health care equipment or new institutional health services.
The statutorily stated purpose of the need-certificate process is “to provide for the development, establishment and enforcement of standards for the authorization and allocation of new institutional health services and new health care equipment.”
In order to obtain a need certificate, an applicant must demonstrate the public need and affordability of its proposal during one of only two annual application periods. Due to the limited filing opportunities, comprehensive regulatory requirements and potential need to engage experts, the process is typically a costly and time-consuming endeavor for health care providers. Consequently, it often serves as a significant barrier to entry for health care providers looking to enter the Rhode Island market or for existing providers to update services or physical plants.
The act contains a blanket exemption from the requirement to obtain a need certificate for providers that specialize in domestic medical tourism. In order to specialize in domestic medical tourism and meet the requirements of the need-certificate exemption, a provider must certify to DOH biennially that more than 50 percent of the provider’s patients reside outside of Rhode Island. The exemption does not contain an expiration date and therefore survives the one-year, need-certificate moratorium also set forth in the act. In other words, absent future amendments to the act, domestic medical-tourism providers will never need to obtain a need certificate to provide services in Rhode Island. This medical-tourism exemption stemmed from lobbying efforts that followed the failed attempt by the Florida-based Laser Spine Institute to obtain approval to open an ambulatory surgery center in Warwick earlier this year.
The act also attempts to temporarily exempt Rhode Island-licensed hospitals (and entities owned by Rhode Island-licensed hospitals) from having to obtain a need certificate. The temporary exemption for hospitals from the process expires on July 1, 2015, and could lead to a dramatic impact on the scope of health care services offered in Rhode Island and the development of health care facilities in the state.
The temporary exemption allows Rhode Island-licensed hospitals to implement projects that would otherwise require need-certificate approval, without obtaining a certificate (or incurring the typically attendant costs). At the same time, the act’s moratorium on applications prohibits any other entities from even applying to implement need-certificate projects until after July 1, 2015.
Clearly, this exemption would represent an exciting opportunity for hospitals in the state to offer new services and develop new state-of-the-art facilities without the burden of the regulatory oversight and time-consuming and expensive need-certificate process. However, in the chaotic energy permeating the late nights at the end of the legislative session, the legislature inserted the hospital need-certificate exemption in the same section of the act as the exemption for domestic medical tourism.
Consequently, one reading of the act limits the hospital need-certificate exemption to those hospitals that can biennially certify more than 50 percent of the hospital’s patients reside outside the state.
Of course, that reading does not make logical sense as the legislature could not have assumed that any hospital in Rhode Island would attract more than 50 percent of its patients from outside the state. Adding to the confusion, the act’s need-certificate moratorium provision explicitly sets forth an exception that allows hospitals to apply for a need certificate during the moratorium.
The DOH has not yet publicly stated its interpretation of the hospital-exemption provision.
The act also requires DOH to analyze the state’s health care needs and publish a statewide health plan every two years. The act also calls for the identification of underserved populations and an inventory of certain medical imaging and physician-owned ambulatory surgery centers (which often do not require a need certificate) in the state.
Many lauded this attempt at coordinated health planning for Rhode Island, but implementation may be years off due to the fact that the act does not provide funding or other resources needed to successfully realize the admirable goals of the statewide health plan. •


Christopher Browning is a health care attorney in the Providence office of Nixon Peabody LLP.

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