Noting that technology and telemedicine are assuming an increasingly critical role in healthcare delivery, the FCC has initiated a proceeding to consider changes to its Rural Health Care Program (RHCP), which provides $400 million in annual subsidies for telecommunications and broadband services to eligible rural healthcare providers (HCP). These changes would potentially affect existing as well as future Program participants.
RHCP Components
The telecommunications component of the RHCP, established in 1997, allows eligible providers to obtain rates on telecommunications services in rural areas that are reasonably comparable to rates charged for similar services in corresponding urban areas. The broadband component, established in 2012 and known as the Healthcare Connect Fund (HCF), provides a flat 65% discount on services such as Internet access, dark fiber, business data and private carriage services. Both components include a competitive bidding process.
Eligible HCPs include, for example, rural health clinics, not-for-profit hospitals, community mental health centers, local health departments and dedicated emergency departments of rural for-profit hospitals. The HCP must be a public or non-profit entity and generally must be located in a FCC-designated rural area. In certain cases, consortia may include non-rural entities.
FCC Initiatives
The Notice of Proposed Rulemaking (NPRM) and Order released on December 18 addresses the following major areas:

  • Increased Program Funding Levels – During the last two funding years, the Program has been oversubscribed at the $400 million level, requiring proration of support available. To address that development, the FCC authorized carry forward of unused funds from prior funding years to ameliorate these cutbacks for funding year 2017. In addition, the NPRM seeks comment on increasing the current $400 million cap, noting that if it had been adjusted annually for inflation the cap would now be approximately $571 million per year. Comment is also sought on potentially modifying what is considered a “rural area” for Program purposes and targeting more funding to rural and Tribal HCPs.
  • Promoting Efficient Operation Of The Program – Focus is on the telecommunications component of the Program to provide greater incentives for HCPs to make more cost-efficient service purchases by, for example, setting objective benchmarks to identify “outlier” funding requests and capping requests that exceed the benchmark. The NPRM also intends to reexamine the services supported by the Program and ways to minimize certain types of perceived waste of Program funding.
  • Improved Program Oversight – The FCC will explore ways to simplify and streamline various RHCP requirements to improve the stakeholder experience and ease administrative burdens. These include establishing rules on use of consultants and restrictions on gifts. In addition, the Commission seeks comment on streamlining the data collection requirements reflected in existing application forms. The NPRM also wants to bolster competitive bidding in the telecommunications component of the Program by applying lessons learned in this regard in administration of the broadband component. Finally, the FCC seeks to fine-tune the initial application process.

In unanimously adopting this initiative, the Commission cited trends suggesting that rural communities across the country are “falling behind when it comes to the availability of high-quality health care.” The unanimous approval demonstrates an across-the-board commitment to improve rural healthcare provider access to modern communications services to help in overcoming some of the obstacles to healthcare delivery faced in rural communities.
Existing participants in the RHCP as well as those who might be interested in seeking support should consider participating in the 90-day rulemaking comment process, which will kick off when the decision is published in the Federal Register. We can provide additional details about the NPRM and comment process to any interested parties.