Federal Communications Commission.
Final rule.
In this document, the Federal Communications Commission reforms its universal service support program for health care, transitioning its existing Internet Access and Rural Health Care Pilot programs into a new, efficient Healthcare Connect Fund. This Fund will expand health care provider access to broadband, especially in rural areas, and encourage the creation of state and regional broadband health care networks. Access to broadband for medical providers saves lives while lowering health care costs and improving patient experiences.
Effective April 1, 2013, except for added §§ 54.601(b), 54.631(a) and (c), 54.632, 54.633(c), 54.634(b), 54.636, 54.639(d), 54.640(b), 54.642, 54.643, 54.645, 54.646, 54.647, 54.648(b), 54.675(d), and 54.679, and the amendments to §§ 54.603(a) and (b), 54.609(d)(2), 54.615(c), 54.619(a)(1) and (d), and 54.623(a), which contain new or modified information collection requirements that will not be effective until approved by the Office of Management and Budget. The Federal Communications Commission will publish a document in the
Linda Oliver, Wireline Competition Bureau at (202) 418–1732 or TTY (202) 418–0484.
This is a synopsis of the Commission's Report and Order (
1. In this
2. This
3. Drawing on these lessons, the Healthcare Connect Fund will direct Universal Service Fund (USF) support to high-capacity broadband services while encouraging the formation of efficient state and regional health care networks. The new Fund will give HCPs substantial flexibility in network design, but will require a rigorous, auditable demonstration that they have chosen the most cost-effective option through a competitive bidding process.
4. In particular, like the Pilot Program, the Healthcare Connect Fund will permit HCPs to purchase services and construct their own broadband infrastructure where it is the most cost-effective option. The Healthcare Connect Fund is thus a hybrid of the separate infrastructure and services programs proposed in the Commission's July 2010
5. Regardless of which approach providers choose, the Healthcare Connect Program will match two-for-one the cost of broadband services or facilities that they use for health care purposes, requiring a 35 percent HCP contribution. A two-for-one match will significantly lower the barriers to connectivity for HCPs nationwide, while also requiring all program participants to pay a sufficient share of their own costs to incent considered and prudent decisions and the choice of cost-effective broadband connectivity solutions. Indeed, with the level of support the Healthcare Connect Fund provides, and with the other reforms we adopt, we expect that HCPs will be able to obtain higher speed and better quality broadband connectivity at lower prices, and that the value for the USF will be greater, than in the existing RHC
6. Both rural and non-rural HCPs will be allowed to participate in the new program, but non-rural providers may join only as part of consortia. Moreover, to ensure that all consortia keep rural service central to their mission, we will require that a majority of the HCPs in each consortium meet our longstanding definition of rural HCPs, although we grandfather those Pilot projects with a lower rural percentage. And to ensure that the program maintains its focus on smaller HCPs that serve predominantly rural populations, we also adopt a rule limiting support to no more than $30,000 per year for recurring charges and no more than $70,000 for non-recurring charges over a five-year period for larger HCPs—defined as hospitals with 400 beds or more.
7. We also adopt a number of reforms for the Healthcare Connect Fund that will increase the efficiency of the program, both by reducing administrative costs for applicants and for Universal Service Administrative Company (USAC), and by adopting measures to maximize the value obtained by HCPs from every USF dollar. In particular, we take a number of steps in this
8. As a central component of this
9. Finally, we create a new Pilot Program to test whether it is technically feasible and economically reasonable to include broadband connectivity for skilled nursing facilities within the Healthcare Connect Program. The Pilot will make available up to $50 million to be committed over a three-year period for pilot applicants that propose to use broadband to improve the quality and efficiency of health care delivery for skilled nursing facility patients, who stand to benefit greatly from telemedicine and other telehealth applications. We expect to use the data gathered through the Pilot to determine how to proceed on a permanent basis with respect to such facilities, which provide hospital-like services.
10. We note that, with this comprehensive reform of the RHC program, the Commission has now reformed all four USF distribution programs within the past three years. In September 2010, the Commission modernized the Schools and Libraries support mechanism (E-rate) for the 21st century, improving broadband access, streamlining administrative requirements, and taking measures to combat waste, fraud and abuse. In October 2011, the Commission adopted transformational reforms of the high-cost program, creating the Connect America and Mobility Funds to advance the deployment of fixed and mobile broadband networks in rural and underserved areas, while putting the high-cost program on an overall budget for the first time ever. In January 2012, the Commission transformed the low-income program, taking major steps to modernize the program and reduce waste, fraud, and abuse. In each prior instance, and again in this
11. Clear performance goals and measures will enable the Commission to determine whether the health care universal service support mechanism is being used for its intended purpose and whether that funding is accomplishing the intended results. In the
12. Drawing on the Commission's experience with the existing RHC programs and the Pilot Program, and based on the record developed in this proceeding, we adopt the following performance goals for the health care universal service support mechanism (both for the RHC Telecommunications Program and the Healthcare Connect Fund), which reflect our ongoing commitment to preserve and advance universal service for eligible HCPs: (1) Increase access to broadband for HCPs, particularly those serving rural areas; (2) foster development and deployment of broadband health care networks; and (3) reduce the burden on the USF by maximizing the cost-effectiveness of the health care support mechanism. We also adopt associated performance measurements. Throughout this
13. Using the adopted goals and measures, the Commission will, as required by GPRA, monitor the performance of the universal service health care support mechanism. If the program is not meeting the performance goals, we will consider corrective actions. Likewise, to the extent that the adopted measures do not help us assess program performance, we will revisit them as well.
14. Goal. We adopt as our first goal increasing access to broadband for HCPs, particularly those serving rural areas. This goal implements Congress's directive in section 254(h) of the Communications Act that the Commission “enhance access to advanced telecommunications services and information services” for eligible HCPs and to provide telecommunications services necessary for the provision of health care in rural areas at rates reasonably comparable to similar services in urban areas. Access to the broadband necessary to support telehealth and Health IT applications is critical to improving the quality and reducing the cost of health care in America, particularly in rural areas. Broadband enables the efficient exchange of patient and treatment information, reduces geography and time as barriers to care, and provides the foundation for the next generation of health innovation.
15. Measurement. We will evaluate progress towards our first goal by measuring the extent to which program participants are subscribing to increasing levels of broadband service over time. We also plan to collect data about participation in the Healthcare
16. HCP needs for higher bandwidth connections vary based on the types of telehealth applications used by HCPs and by the size and nature of their medical practices. Because of this variation, and because of potential constraints on the ability of HCPs to obtain broadband (due to cost or lack of broadband availability), we are not establishing a minimum target bandwidth as a means to measure progress toward this goal. We expect, nevertheless, to compare the bandwidth obtained by HCPs with the kinds of bandwidth commonly required to conduct telemedicine and other telehealth activities.
17. We direct the Bureau to consult with the major stakeholders and other governmental entities in order to minimize the administrative burden placed on applicants and on the Fund Administrator (currently, USAC). We also direct the Bureau to consult with the U.S. Department of Health and Human Services (HHS), including the Indian Health Service (IHS), and other relevant federal agencies to ensure the meaningful and non-burdensome collection of broadband data from HCPs. We expect to follow health care trends (such as use of EHRs and telemedicine) and to coordinate, to the extent possible, our monitoring efforts with other federal agencies. We also direct the Bureau to engage in dialogue with United States Department of Health and Human Services (HHS) regarding whether and how to incorporate broader health care outcomes, including providers' “meaningful use” of EHRs, into our performance goals and measures in the future, consistent with our statutory authority.
18. Finally, in order to further our progress toward meeting this goal, we also direct the USAC, working with the Bureau and with other agencies, to conduct outreach regarding the Healthcare Connect Fund with those HCPs that are most in need of broadband in order to reach “meaningful use” of EHRs and for other health care purposes.
19. Goal. We adopt as our second goal fostering development and deployment of broadband health care networks, particularly networks that include HCPs that serve rural areas. This goal is consistent with the statutory objective of section 254(h), which is to enhance access to telecommunications and advanced services, especially for health care providers serving rural areas. Broadband health care networks also improve the quality and lower the cost of health care and foster innovation in telehealth applications, particularly in rural areas.
20. Measurement. We will evaluate progress towards this second goal by measuring the extent to which eligible HCPs participating in the Healthcare Connect Fund are connected to other HCPs through broadband health care networks. We plan to collect data about the reach of broadband health care networks supported by our programs, including connections to those networks by eligible and non-eligible HCP sites. We also will measure how program participants are using their broadband connections to health care networks, including whether and to what extent HCPs are engaging in telemedicine, exchange of EHRs, participation in a health information exchange, remote training, and other telehealth applications. Access to high speed broadband health care networks should help facilitate adoption of such applications by HCPs, including those HCPs serving patients in rural areas. We direct the Bureau to work with USAC to implement the reporting requirements regarding such telehealth applications in a manner that imposes the least possible burden on participants, while enabling us to measure progress toward this goal. We also direct the Bureau to coordinate with other federal agencies to ensure that data collection minimizes the burden on HCPs, which may already be required to track similar data for other health care regulatory purposes. To the extent feasible, we also will endeavor to compare the extent to which participants in the new program are using telehealth applications to that of non-participants, relying on public sources of information regarding trends in the health care industry.
21. Goal. We adopt as our third goal maximizing the cost-effectiveness of the RHC universal service health care support mechanism, thereby minimizing the Fund contribution burden on consumers and businesses. This goal includes increasing the administrative efficiency of the program (thereby conserving Fund dollars) while accelerating the delivery of support for broadband. This goal also includes ensuring that the maximum value is received for each dollar of universal service support provided, by promoting lower prices and higher speed in the broadband connections purchased with Fund support. In addition, we seek to ensure that funding is being used consistent with the statute and the objectives of the RHC support mechanism, and we adopt throughout this
22. Measurement. We will evaluate progress towards this goal both by measuring the administrative efficiency of the program and by measuring the value delivered with each dollar of USF support. First, we will measure the cost of administering the program compared to the program funds disbursed to recipients. USAC's cost to administer the Telecommunications, Internet Access, and Pilot RHC programs was nine percent of total funds disbursed in calendar year 2011, the highest of all four universal service programs. We may measure this also in terms of the percentage of administrative expenses relative to funds committed, to account for the fact that administrative expenses may be higher in years in which USAC processes a large number of applications for multi-year funding.
23. Second, we will measure the value delivered to HCPs with support from the Healthcare Connect Fund by tracking the prices and speed of the broadband connections supported by the program. As we found in the Pilot Program, consortium applications, in combination with competitive bidding
24. In this
25. Although we will allow the filing of both individual and consortium applications, a primary focus of the Healthcare Connect Fund will be encouraging the growth or formation of statewide, regional, or Tribal broadband health care networks that will expand the benefits we observed in the Pilot Program. Benefits of such networks include access to specialists; cost savings from bulk buying capability and aggregation of administrative functions; efficient network design; and the transfer of medical, technical, and financial resources to smaller HCPs. We will allow non-rural as well as rural health care providers to participate and receive support for critical network connections if they apply as part of a consortium, with limitations to ensure that program funds are used efficiently and that all consortia include rural participation.
26. In the
27. We expect that most HCPs will choose to obtain services from commercial providers rather than construct and own network facilities themselves, just as they did in the Pilot Program. HCP-owned infrastructure will be supported under the Healthcare Connect Fund only when the HCP or HCP consortium demonstrates, following a competitive bidding process that solicits bids for both services and construction, either that the needed broadband is unavailable or that the self-construction approach is the most cost-effective option. We also impose an annual cap of $150 million that will apply, in part, to the funds available for HCP self-construction, to ensure that ample funding will remain available for HCPs choosing to obtain services.
28. To promote fiscal responsibility and cost-effective purchasing decisions, we adopt a single, uniform 35 percent HCP contribution requirement for all services and infrastructure supported through the program. Use of a single, flat rate will facilitate network applications, encourage efficient network design, and reduce administrative expenses for applicants and the Fund. In requiring a 35 percent contribution, we balance the need to provide appropriate incentives to encourage resource-constrained HCPs to participate in health care broadband networks, while requiring HCPs to have a sufficient financial stake to ensure that they obtain the most cost-effective services possible. We also find that a 35 percent contribution requirement is economically reasonable and fiscally responsible, given the $400 million cap for the health care support mechanism and the anticipated demand for program support.
29. We adopt the Healthcare Connect Fund pursuant to section 254(h)(2)(A) of the Communications Act, which requires the Commission to “establish competitively neutral rules to * * * enhance, to the extent technically feasible and economically reasonable, access to advanced telecommunications and information services for all public and nonprofit * * * health care providers.” The Commission relied on this statutory authority when it created the Pilot Program in 2006 to support HCP-owned infrastructure and services, including Internet access services, and the Commission has broad discretion regarding how to fulfill this statutory mandate. In
30. The flexible, consortium-based approach of the Pilot Program fostered a wide variety of health care broadband networks that enabled better care and lowered costs. Drawing on our Pilot Program experience, we implement a Healthcare Connect Fund that will encourage HCPs to work together to preserve and advance the development of health care networks across the country. The measures we adopt will simplify the application process for consortia of HCPs and afford them flexibility to innovate in the design and use of their networks, recognizing the importance of enabling smaller HCPs to draw on the medical and technical expertise and administrative resources of larger HCPs.
31. We conclude that non-rural HCPs may apply and receive support as part of consortia in the Healthcare Connect Fund. To ensure that program support continues to benefit rural as well as non-rural HCPs, however, we require that in each consortium, a majority of HCP sites (over 50 percent) be rural HCPs. We also adopt measures to limit the amount of funding that flows to the
32. Separately, we describe the services and equipment eligible for support (including services and equipment necessary for networks), and we describe the funding process, including the requirements applicable to consortia.
33. Discussion. The
•
•
•
•
•
•
•
34. Commenters generally support a consortium approach and agree that it can provide a number of benefits, including better pricing and administrative efficiency.
35. In light of these benefits, we adopt a number of rules to encourage HCPs to work together in consortia to meet their broadband connectivity needs. We conclude that non-rural HCPs may participate and receive support as part of consortia, with some limitations. We also adopt a “hybrid” approach that allows consortia to receive support through a single program for services and, where necessary, self-construction of infrastructure. We adopt a uniform HCP contribution percentage applicable to all HCPs and to all funded costs to simplify administration. We adopt additional measures. We make support for certain costs available only to consortia—
36. Discussion. We will allow participation in the Healthcare Connect Fund consortia by both rural and non-rural eligible HCPs, but with limitations to ensure that the health care support mechanism continues to serve rural as well as non-rural needs in the future. The Pilot Program provided support to both rural and non-rural HCPs under section 254(h)(2)(A), which directs the Commission to “enhance * * * access to advanced telecommunications and information services for
37. We expect that including non-rural HCPs in consortia will provide significant health care benefits to both rural and non-rural patients, for at least three reasons.
• First, even primarily rural networks benefit from the inclusion of larger, non-rural HCPs. Pilot projects state that rural HCPs value their connections to non-rural HCPs for a number of reasons, including access to medical specialists; help in instituting telemedicine programs; leadership; administrative resources; and technical expertise. Many non-rural HCPs in the Pilot Program devoted resources to organizing consortia, preparing applications, designing networks, and preparing requests for proposal (RFPs). Had these non-rural HCPs not been eligible for support, they might not have been willing to take on a leadership role, which in turn directly enabled smaller and more rural HCPs to participate in Pilot networks. The participation of non-rural sites has also led to better prices and more broadband for participating rural HCPs, due to the greater bargaining power of consortia that include larger, non-rural sites.
• Second, the Commission's longstanding definition of “non-rural” HCPs encompasses a wide range of locales, ranging from large cities to small towns surrounded by rural countryside. Even within areas that are primarily rural, HCPs are likely to be located in the most populated areas. Many HCPs that are technically classified as non-rural within our rules in fact are located in relatively sparsely populated areas. For example, Orangeburg County Clinic in Holly Hill, South Carolina (population 1,277), a HCP participating in Palmetto State Providers Network's Pilot project, is characterized as non-rural. The largest cities closest to Holly Hill are Charleston, SC, and Columbia, SC, which are respectively 50 and 69 miles away from Holly Hill. Moreover, even those hospitals and clinics that are located in more densely populated
• Third, even hospitals and clinics that are located in truly urban areas are able to provide significantly improved care by joining broadband networks. The California Telehealth Network, for example, states that it “frequently encounters urban health care providers with patient populations that are as isolated from clinical specialty care as [the] most rural health care providers,” including urban Indian HCPs who could better serve Native populations through broadband-centered technologies such as EHRs and telemedicine. In some areas of the country, even “urban” communities may be hundreds of miles away from critical health care services such as Level 1 Trauma Centers, academic health centers, and children's hospitals. Like HCPs in rural areas, these “urban” community hospitals may serve as “spoke” health care facilities that access services that are available at larger hospital “hubs.” Eligible public and not-for-profit HCPs located in communities that are not classified as “rural” thus have a need for access to broadband to be able to effectively deliver health care, just as their “rural” counterparts do.
38. Some commenters express concern that unlimited non-rural HCP participation might jeopardize funding for rural HCPs if the $400 million annual program cap is reached. We therefore adopt three simple limitations that should help ensure a fiscally responsible reformed health care program without unduly restricting non-rural participation, consistent with our statutory mandate to enhance access to advanced services in an “economically reasonable” manner. First, non-rural HCPs may only apply for support as part of consortia that include rural HCPs; that is, they may not submit individual applications. Second, non-rural HCPs may receive support only if they participate in consortia that include a majority (more than 50 percent) of sites that are rural HCPs. The majority rural requirement must be reached by a consortium within three years of the filing date of its first request for funding (Form 462) in the Healthcare Connect Fund. Third, we establish a cap on the annual funding available to each of the largest hospitals participating in the program (those with 400 or more beds). These requirements will encourage the formation of health care
39. For purposes of the majority rural requirement, we “grandfather” non-rural HCP sites that have received a funding commitment through a Pilot project that has 50 percent or more non-rural HCP sites with funding commitments as of the adoption date of this
40. We recognize that large, metropolitan non-profit hospitals are more likely to provide specialized services and expertise that HCPs and patients in less populous areas (both rural and non-rural) may otherwise be unable to access, and that may serve a leadership role under which they provide significant, often unreimbursed assistance to other HCPs within the network. Thus, we see significant value in having such hospitals participate in health care broadband networks. At the same time, however, large metropolitan hospitals are located in urban areas where broadband is typically less expensive than in rural areas. Given that universal service funds are limited, we expect larger hospitals to structure their participation in Healthcare Connect Fund consortia in a way that appropriately serves the goals of the health care program to
41. To protect against larger HCPs in non-rural areas joining the program merely to obtain support for pre-existing connections, we require consortium applicants to describe in their applications the goals and objectives of the proposed network and their strategy for aggregating HCP needs, and to use program support for the described purposes. We also impose a limitation on the amount of funding available to large metropolitan hospitals, while recognizing that it is unlikely in the near term that large urban hospitals will consume a disproportionate amount of funds in the Healthcare Connect Fund. We require that under the Healthcare Connect Fund, a non-rural hospital site with 400 or more licensed patient beds may receive no more than $30,000 per year in support for recurring charges and no more than $70,000 in support for nonrecurring charges every 5 years under the Fund, exclusive in both cases of costs shared by the network. For purposes of this limit, we “grandfather” non-rural hospitals that have received a funding commitment through a Pilot project as of the adoption date of this
42. We expect that, on average, the actual number of rural members in the consortia will be substantially higher than 51 percent, as was the case in the Pilot Program, and we will evaluate this over time. We will not begin receiving applications from new consortia until 2014, and based on our experience with the Pilot Program, we know that it may take some time for consortia to organize themselves and apply for funding. We therefore direct the Bureau to report to the Commission on rural participation by September 15, 2015. If we observe that the trend of rural participation in the new program does not appear to be on a comparable path as we observed in the Pilot Program (where average rural participation reached 66 percent), we will open, by the end of 2015, a
43. We emphasize that the limitations do
44. In light of the limitations, we do not anticipate that our decision to allow both rural and non-rural HCPs to receive support through the Healthcare Connect Fund will cause program demand to exceed the $400 million cap in the foreseeable future, especially in light of our decision to require a 35 percent participant contribution and our adoption of a $150 million annual cap on support for upfront payments and multi-year commitments. Furthermore, the pricing and other efficiencies made possible through group purchasing should drive down the cost of connections as some Telecommunications Program participants migrate to the Healthcare Connect Fund. We will closely monitor program demand, and stand prepared to consider whether additional program changes are necessary, including, establishing rules that would give funding priority to certain HCPs.
45. In June 2011, the Commission adopted an interim rule permitting participating HCPs that were located in a “rural” area under the definition used by the Commission before July 1, 2005, to continue being treated as if they were located in a “rural” area for the purposes of determining eligibility for support under the RHC program. We conclude that HCPs that were located in “rural areas” under the pre-July 1, 2005 definition used by the Commission, and that were participating in the Commission's RHC program before July 2005, also will be treated as “rural” for purposes of the new Healthcare Connect Fund. Many such facilities play a key role in providing health care services to rural and remote areas, and discontinuing discounted services to these grandfathered providers could jeopardize their ability to continue offering essential health care services to rural areas. Extending eligibility for these grandfathered HCPs in the Healthcare Connect Fund helps ensure that these valuable services are not lost in areas that need them, and thus ensures continuity of health care for many rural patients. For similar reasons, we also have grandfathered those Pilot projects that do not have the majority rural HCP membership required of consortium applicants in the Healthcare Connect Fund.
46. Discussion. We conclude that a hybrid approach that supports both broadband services and, where necessary, HCP-constructed and owned facilities as part of networks, will best fulfill our goal of developing broadband networks that enable the delivery of 21st century health care. In addition to funding HCP-owned network facilities, we also include as an essential component of this hybrid approach the provision of funding for equipment needed to support networks of HCPs and the provision of support for upgrades that enable HCPs to obtain higher bandwidth connections.
47. We expect that HCP-owned infrastructure will be most useful in providing last-mile broadband connectivity where it is currently unavailable and where existing service providers lack sufficient incentives to construct it. As the American Hospital Association observed: “Although many rural providers lease broadband services, some construction is still needed. For many of the AHA's rural members, the ability to ensure access to `last mile' broadband connections to rural health care facility locations is a fundamental problem restricting broadband access.” We have learned that when providers are unable to build a business case to construct fiber in rural areas, last-mile fiber self-construction may be the only option for a HCP to get the required connectivity. We note that other federal programs—such as the Broadband Telecommunications Opportunities Program (BTOP)—have provided support for construction of “middle mile” facilities, and if HCPs can obtain support for last-mile connections from the Healthcare Connect Fund, they can take advantage of such middle mile backbone networks.
48. Providing a self-construction option will also promote our goal of ensuring fiscal responsibility and cost-effectiveness by placing downward pressure on the bids for services. As the Health Information Exchange of Montana observes, the option to construct the network may constrain pricing offered by existing providers, particularly in areas that have little or no competition. When an RFP includes both a services and a self-construction option, bidders will know that if the services prices bid are too high, the HCPs can choose to build their own facilities.
49. We adopt safeguards to ensure that the self-construction option will be exercised only where it is absolutely necessary to enable the HCPs to obtain the needed broadband connectivity. First, the HCP-owned infrastructure option may be employed only where self-construction is demonstrated to be the most cost-effective option after competitive bidding. We require USAC carefully to evaluate this showing; USAC already has experience in evaluating cost-effectiveness for large-scale projects from the Pilot Program. Consortia interested in pursuing self-construction as an option must solicit bids both for services and for construction, in the same posted Request for Proposals (submitted with Form 461), so that they will be able to show either that no vendor has bid to provides the requested services, or that the bids for self-construction were the most cost-effective option. RFPs must provide sufficient detail so that cost-effectiveness can be evaluated over the useful life of the facility, if the consortium pursues a self-construction option. We also permit HCPs that have received no bids on a services-only posting to then pursue a self-construction option through a second posting. We discuss the mechanics of the competitive bidding process and delegate to the Bureau the authority to provide administrative guidance for conducting the competitive bidding process, for the treatment of hybrid (services and construction) RFPs, excess capacity and shared costs, and other necessary guidelines for effective operation of this aspect of the Healthcare Connect Fund.
50. Second, by setting the discount at the same level regardless of whether HCPs choose to purchase broadband services from a provider or construct their own facilities, we ensure that there is no cost advantage to choosing self-construction. We require that all HCPs provide a 35 percent contribution to the cost of supported networks and services, which will help ensure prudent investment decisions. Pilot projects have stated that ownership of newly constructed facilities only makes economic sense for them where there are gaps in availability. And as many HCPs have stated in this proceeding, HCPs are generally not interested in owning or operating broadband facilities, but rather are focused on the delivery of health care.
51. Finally, we impose a $150 million cap on the annual funds that can be allocated to up-front, non-recurring
52. In addition to these safeguards, we expect that several other mechanisms in this
53. With the limitations and based on our experience with the Pilot Program, we do not expect HCPs to choose to self-construct facilities very often, and when they do, it will be because they have shown that they have no other cost-effective option for obtaining needed broadband. The self-construction option was rarely exercised in the Pilot Program. Only two of 50 projects entirely self-constructed their networks, even though the Pilot Program was originally conceived of as a program supporting HCP construction of broadband networks. The six projects that did self-construct some facilities used those funds primarily for last-mile facilities. We believe the hybrid approach adopted for the Healthcare Connect Fund will preserve the benefits of HCP-owned infrastructure while minimizing the potential for inefficient, duplicative construction of facilities.
54. In light of the safeguards we adopt, we reject arguments that when HCPs construct their own networks, rather than purchasing connectivity from existing commercial service providers, they remove key anchor institutions from the public network, thereby increasing the costs of providing service in rural areas and creating disincentives for network investment in rural areas. Rather, allowing the self-construction option should create incentives for service providers to charge competitive prices for the services offered to anchor institutions such as HCPs, which reduces burden on the rural health care mechanism. Moreover, experience under the Pilot program suggests that a self-construction option for HCPs can provide incentives for commercial service providers to work cooperatively together with HCPs to construct new broadband networks in rural areas, with each party building a portion of the network, and providing excess capacity to the other party under favorable terms, to the benefit of both the HCPs and the greater community.
55. We are also unpersuaded by commenters that argue the Commission lacks authority to provide universal service support for construction of HCP-owned broadband facilities. As the Commission concluded in authorizing the Pilot Program, section 254(h)(2) provides ample authority for the Commission to provide universal service support for HCP “access to advanced telecommunications and information services,” including by providing support to HCP-owned network facilities. Nothing in the statute requires that such support be provided only for carrier-provided services. Indeed, prohibiting support for HCP-owned infrastructure when self-construction is the most cost-effective option, would be contrary to the command in section 254(h)(2)(A) that support be “economically reasonable.”
56. The Montana Telecommunications Association (MTA), which represents telecommunications providers in Montana, also argues that funding HCP-owned infrastructure violates section 254(h)(3) of the Communications Act, which provides that “[t]elecommunications service and network capacity provided to a public institutional telecommunications user under this subsection may not be sold, resold, or otherwise transferred by such user in consideration for money or any other thing of value.” MTA's argument is unconvincing. As the Commission determined in connection with the Pilot Program, “the prohibition on resale does not prohibit for-profit entities, paying their fair share of network costs, from participating in a selected participant's network.” It concluded that the resale provision is “not implicated when for-profit entities pay their own costs and do not receive discounts provided to eligible health care providers” because only subsidized services and network capacity can be said to have been “provided * * * under this subsection.” The protections we adopt in this
57. Discussion. We adopt a requirement that all HCPs receiving support under the Healthcare Connect Fund contribute 35 percent towards the cost of all items for which they seek support, including services, equipment, and all expenses related to infrastructure and construction. A flat, uniform percentage contribution is administratively simple, predictable, and equitable, and has broad support in the record. Requiring a significant contribution will provide incentives for HCPs to choose the most cost-effective form of connectivity, design their networks efficiently, and refrain from purchasing unneeded capacity. Vendors
58. We adopt a flat-percentage approach to calculating an HCP's contribution under the Healthcare Connect Fund. This flat rate will apply uniformly to all eligible expenses and all eligible HCP sites.
59. The use of a uniform participant contribution will facilitate consortium applications and reduce administrative expenses, both for participating HCPs and for the Fund Administrator. In the Telecommunications Program, varying support levels have historically discouraged potential applicants due to “the complexity of * * * identify[ing] the amount of program reimbursement associated with the difference between rural and urban rates.” A uniform participant contribution will eliminate this complexity. Many commenters support a flat-rate approach for this reason. Indeed, based on this record, we anticipate that the relative administrative simplicity of the uniform flat discount approach will help attract HCPs to the Healthcare Connect Fund that may have declined to participate in the Telecommunications Program. We expect that the use of a uniform flat discount will therefore further all three of our program goals—increasing HCP access to broadband, fostering health care networks, and maximizing cost-effectiveness of the program.
60. A uniform HCP contribution requirement will also facilitate efficient network design because support will not vary based on network configuration. As the Bureau observed in the
61. Adopting a uniform contribution requirement will also help eligible HCPs to conduct better long-range planning for their broadband needs and obtain better rates. A clear, uniform rate will allow HCPs to better project anticipated support over a multi-year period, plan accordingly for their broadband services, and as appropriate, enter into multi-year contracts to take advantage of more favorable rates.
62. A flat-rate approach also provides HCPs with a strong incentive to control the total cost of the broadband connectivity, as a participating HCP will share in each dollar of increased costs and each dollar of cost savings. In contrast, in the Telecommunications Program, an HCP using the rural-urban differential pays only the urban rate, so it has little incentive to control the overall cost of the service (
63. Finally, a flat rate is consistent with the Act. In 2003, the Commission concluded that a flat discount for the Internet Access Program would be consistent with section 254(b)(5), which requires support to be “specific, sufficient, and predictable.” We now conclude that a flat discount for the Healthcare Connect Fund is also consistent with section 254(b)(5).
64. A number of commenters suggest that the Commission adopt different HCP contribution percentages depending on the identity of the health care provider or based on other factors, and such an approach was also recommended in the
65. Discussion. We find that requiring a 35 percent HCP contribution appropriately balances the objectives of enhancing access to advanced telecommunications and information services with ensuring fiscal responsibility and maximizing the efficiency of the program. A 35 percent HCP contribution results in a 65 percent discount rate, which represents a significant increase over the 25 percent discount provided today for Internet access, and the 50 percent proposed for the Broadband Services Program in the
66. We base our conclusion on a number of factors. First, many state offices of rural health, which work most directly with rural HCPs, believe that a 65 percent discount is required to provide a “realistic incentive” for many eligible rural HCPs to participate. A 65 percent discount rate is also similar to the average effective discount rate in the Telecommunications Program, which is approximately 69 percent, excluding Alaska. The effective discount rate in the Telecommunications Program provides a reasonable proxy for the discount rate that will be sufficient to allow health care providers in rural areas, which tend to have high broadband costs, to participate in the program. The discount level we set also falls between the proposed discount levels in the
67. We also expect that the 65 percent discount will be sufficient to induce many HCPs to participate in the Healthcare Connect Fund—both those currently in the Telecommunications Program and those that have not participated in that program before. We expect that at a 65 percent discount, eligible HCPs participating in consortia in the Healthcare Connect Fund will generally pay less “out-of-pocket” when
68. Other attractive features of the Healthcare Connect Fund include the lower administrative costs and the broader eligibility of services and equipment, relative to the Telecommunications Program. These factors may offset to some degree concerns regarding the size of the contribution requirement from those who advocated a lower HCP contribution. We also note that from a program efficiency perspective, the better prices negotiated by consortia in the Pilot Program, relative to the prices paid by Telecommunications Program participants, will mean that USF dollars will go further in the new program, particularly as HCPs demand the higher bandwidth and better service quality needed for telehealth applications.
69. We recognize that a 35 percent contribution will be a significant commitment for many health care providers, and that many commenters argued for a lower contribution amount from HCPs. One of our core objectives, however, is to ensure that HCPs have a financial stake in the services and infrastructure they are purchasing, thereby providing a strong incentive for cost-effective decision-making and promoting the efficient use of universal service funding.
70. We acknowledge that some current Pilot participants have argued that a discount rate lower than 85 percent will preclude new sites from being added to existing networks and may even result in existing sites dropping off the network. We nonetheless believe a cautious approach is justified given that the new Healthcare Connect Fund will expand eligibility and streamline the application process compared to the existing Telecommunications Program, which we hope will increase the number of participating HCPs. Even within the existing program, the number of participating HCPs has steadily increased in recent years, averaging just under 10 percent annual growth for the past five years. Meanwhile the Pilot Program has attracted over 3,800 HCPs, the majority of which were not previously participating in the RHC Program.
71. A 65 percent discount rate will help keep demand for the overall health care universal service, including the Healthcare Connect Fund, below the $400 million cap for the foreseeable future, even as program participation expands. We estimate that there are approximately 10,000 eligible rural HCPs nationwide, of which approximately 54 percent (5,400) are participating in the RHC Telecommunications, Internet Access, or Pilot Programs. If we assume that in five years (1) the rural HCP participation rate increases from 54 percent to 75 percent, (2) the number of rural HCPs participating in the Telecommunications Program does not significantly decrease, and (3) the average annual support per HCP is $14,895 in the Healthcare Connect Fund (including support for both recurring and non-recurring costs), the projected size of the annual demand for funding (including non-rural and rural HCPs) would be approximately $235 million. We will continue to monitor the effect of the 35 percent contribution requirement on participation in the program and on the USF, and stand ready to adjust the contribution HCP requirement or establish additional prioritization rules, should it prove necessary.
72. Consistent with the Pilot Program, we limit the sources for HCPs' contribution (
73. Eligible sources include the applicant or eligible HCP participants; state grants, funding, or appropriations; federal funding, grants, loans, or appropriations except for other federal universal service funding; Tribal government funding; and other grant funding, including private grants. Any other source is not an eligible source of funding towards the participant's required contribution. Examples of ineligible sources include (but are not limited to) in-kind or implied contributions; a local exchange carrier (LEC) or other telecom carrier, utility, contractor, consultant, vendor or other service provider; and for-profit entities. We stress that participants that do not demonstrate that their contribution comes from an eligible source or whose contribution is derived from an ineligible source will be denied funding by USAC. Moreover, participants may not obtain any portion of their contribution from other universal service support program, such as the RHC Telecommunications Program.
74. We conclude that these limitations on eligible sources are necessary to help safeguard against program manipulation and to help prevent conflicts of interest or influence from vendors and for-profit entities that may lead to waste, fraud, and abuse. Accordingly, we are unconvinced by commenters that argue the eligible sources should include in-kind contributions; contributions from carriers, network service providers, or other vendors; and contributions from for-profit entities. First, allowing in-kind or implied contributions would substantially increase the complexity and burden associated with administering the program. It would be difficult to accurately measure the value of in-kind or implied contributions to ensure participants are paying their share, and the costs and challenges associated with policing in-kind and implied contributions would likely be substantial. Second, allowing carrier, service provider, or other vendor contributions would distort the competitive bidding process and reduce HCPs' incentives to choose the most cost-effective bid, leading to potential waste, fraud, and abuse.
75. Some commenters urge the Commission to allow for-profit entities to pay an eligible HCPs contribution because “[t]he benefits of improved telehealth capabilities cannot be fully achieved if for-profit health care services providers are not part of the health care delivery network.” This argument is based on a faulty premise. To be clear, the prohibition against a for-profit HCP paying the contribution of an eligible HCP does not prevent the for-profit HCP from participating in one or more networks that receive Healthcare Connect Fund support, as long as the for-profit pays its “fair share.” Rather, the prohibition helps avoid creating an incentive for participating eligible HCPs to use support to benefit ineligible entities (
76.
• The consortium's RFP must solicit bids for both services provided by third parties and for construction of HCP-owned facilities, and must show that “self-construction” is the most cost-effective option. Applicants are prohibited from including the ability to obtain excess capacity as a criterion for selecting the most cost-effective bid (
• The participant must pay the full amount of the additional costs for excess capacity facilities that will not be part of the supported health care network. The additional cost for excess capacity facilities cannot be part of the participant's 35 percent contribution, and cannot be funded by any health care universal service support funds. The inclusion of excess capacity facilities cannot increase the funded cost of the dedicated network in any way.
• An eligible HCP (typically the consortium, although it may be an individual HCP participating in the consortium) must retain ownership of the excess capacity facilities. It may make the facilities available to third parties only under an IRU or lease arrangement. The lease or IRU between the participant and the third party must be an arm's length transaction. To ensure that this is an arm's length transaction, neither the vendor that installed the excess capacity facilities, nor its affiliate, would be eligible to enter into an IRU or lease with the participant.
• The prepaid amount paid by other entities for use of the excess capacity facilities (IRU or lease) must be placed in an escrow account. The participant can then use the escrow account as an asset that qualifies for the 35 percent contribution to the project.
• All revenues from use of the excess capacity facilities by the third party must be used for the project's 35 percent contribution or for sustainability of the health care network supported by the Healthcare Connect Fund. Such network costs may include administration, equipment, software, legal fees, or other costs not covered by the Healthcare Connect Fund, as long as they are relevant to sustaining the network.
77. We delegate authority to the Bureau to specify additional administrative requirements applicable to excess capacity, including requirements to ensure that HCPs have appropriate incentives for efficient spending (including, if appropriate, a minimum contribution from funds other than revenues from excess capacity), and to protect against potential waste, fraud, and abuse, as part of the infrastructure component of the program.
78. Overview. We discuss the services and equipment for which the Healthcare Connect Fund will provide support. We also provide examples of services and equipment that will not be supported. Section 254(h)(2)(A) of the Act directs the Commission to establish competitively neutral rules to “enhance * * * access to advanced telecommunications and information services * * * for health care providers.” Pursuant to that authority, we will provide support for services whether provided on a common carrier or private carriage basis, reasonable and customary one-time installation charges for such services, and network equipment necessary to make the broadband service functional. For HCPs that apply as consortia, we will also provide support for upfront charges associated with service provider deployment of new or upgraded facilities to provide requested services, dark or lit fiber leases or IRUs, and self-construction where demonstrated to be the most cost-effective option. Requests for funding that involve upfront support of more than $50,000, on average, per HCP will be subject to certain limitations. In general, we find that this approach will ensure the most efficient use of universal service funding.
79. Immediately below is a chart summarizing what services and equipment are eligible for support under the Healthcare Connect Fund.
80. We describe the services that will be eligible for support under the Healthcare Connect Fund. We are guided, among other considerations, by our statutory directive to enhance access to “advanced telecommunications and information services” in a competitively neutral fashion. We conclude that providing flexibility for HCPs to select a range of services, within certain defined limits, and in conjunction with the competitive bidding requirements we adopt, will maximize the impact of Fund dollars (and scarce HCP resources).
81. Specifically, we will provide support for advanced services without limitation as to the type of technology or provider. We allow HCPs to utilize both public and private networks, and different network configurations (including dedicated connections between data centers and administrative offices), and lease or purchase dark fiber, depending on what is most cost-effective. We also provide support for reasonable and customary installation charges (up to an undiscounted cost of $5,000). For consortium applicants, we will also provide support for upfront payments to facilitate build-out of facilities to HCPs. We limit such funding to consortia because we anticipate that group buying for such services and equipment will lead to lower prices and better bids, resulting in more efficient use of Fund dollars.
82. We decline to adopt a minimum bandwidth requirement for the supported services because many rural HCPs still lack access to higher broadband speeds. We will, however, limit certain types of support to connections that provide actual speeds of 1.5 Mbps (symmetrical) or higher, in order to ensure that we do not invest in networks based on outdated technology.
83. Discussion. We adopt a rule to provide support for any service that meets the following definition:
The definition we adopt differs from the
84.
85.
86. In the
87.
88. Discussion. We will not impose minimum bandwidth and service quality requirements for the Healthcare Connect Fund, based on the record in this proceeding. Commenters agree that HCPs need certain minimum levels of reliability, redundancy, and quality of service, but they note that the exact requirement may vary depending on the application, and that not all HCPs will have access to services that provide a specified level of reliability and quality. While our goal is to encourage HCPs to obtain broadband connections at the speeds recommended in the
89. We will continue to provide support in the Healthcare Connect Fund for services that have been historically supported through the Internet Access Program, including DSL, cable modem, and other similar forms of Internet access. We expect recipients to migrate to services over time that deliver higher capabilities. We do, however, adopt one limitation designed to ensure that the focus of the program remains on advancing access to the bandwidths that increasingly will be needed for health care purposes. No upfront payments will be eligible for funding for services that deliver less than 1.5 Mbps symmetrical (
90. We note that the Pilot Program allowed most participants to obtain speeds of 4 Mbps or above, and we expect that the reforms adopted in this
91. Discussion. Service providers today provide numerous broadband services over fiber that the service provider manages and has “lit” (
92.
93. Consistent with Commission precedent, we find that dark fiber is a “service” that enhances access to advanced telecommunications and information services consistent with section 254(h)(2)(A) of the Act. As in the E-rate program, we conclude that supporting dark fiber provides an additional competitive option to help HCPs obtain broadband in the most cost-effective manner available in the marketplace. HCPs generally support making dark fiber eligible. For example, IRHN states that the varying broadband environments in rural areas throughout the country need to be “mined” to find the most cost-effective solution, including existing fiber infrastructure that can be brought into use by HCPs seeking dark fiber. Commenters also agree that making dark fiber eligible will allow the cost-effective leveraging of existing resources and investments, including state, regional, and local networks.
94. As the Commission concluded in the E-rate context, we are not persuaded by arguments that entities who are not telecommunications providers, such as HCPs, “have a poor track record making dark fiber facilities viable for their services.” While dark fiber will not be an appropriate solution for all HCPs, Pilot projects have demonstrated that they can successfully incorporate dark fiber solutions into a regional or statewide health care network. We are also not persuaded by the argument that dark fiber solutions may not be cost-effective. HCPs will be required to undergo competitive bidding, and our actions merely ensure that HCPs have an additional option to consider during that process. If service providers can provide comparable, less expensive lit fiber alternatives, we anticipate that such providers will bid to provide services to HCPs, who are required to select the most cost-effective option. As the Commission found in the
95. In order to further ensure that dark fiber is the most cost-effective solution, however, we will limit support for dark fiber in two ways. First, requests for proposals (RFPs) that allow for dark fiber solutions must also solicit proposals to provide the needed services over lit fiber over a time period comparable to the duration of the dark fiber lease or IRU. Second, if an applicant intends to request support for equipment and maintenance costs associated with lighting and operating dark fiber, it must include such elements in the same RFP as the dark fiber so that USAC can review all costs associated with the fiber when determining whether the applicant chose the most cost-effective bid.
96. We are not persuaded that allowing a HCP to purchase dark fiber from state, regional, or local government entities will negate the HCP's ability to “maintain a fair and open competitive bidding environment” if the HCP is “linked” to the governmental entity in question. We adopt requirements that prohibit potential service providers, including government entities, from also acting as either a Consortium Leader or consultant or providing other types of specified assistance to HCPs in the competitive bidding process. Allowing HCPs to lease dark fiber should increase competition among fiber providers and
97.
98. Eligible HCPs applying as consortia may also receive support for upfront charges associated with fiber leases or IRUs, subject to the limitations applicable to all upfront charges. An IRU or lease for dark fiber typically requires a large upfront payment, even if no new construction is required. In some cases, however, service providers may deploy new fiber facilities to serve HCPs under the lease or IRU, and may seek to recover all of part of those costs through non-recurring charges (sometimes called “special construction charges”). Such “build-out” costs are eligible for support. Consistent with the general rule we adopt, we will provide support for build-out costs from an off-premises fiber network to the service provider demarcation point. We decline to provide support for such charges after the service provider demarcation point, consistent with the Commission's current policy of not supporting internal connections for HCPs.
99. In the E-rate program, fiber must be lit within the funding year for non-recurring charges to be eligible. We adopt this requirement in the Healthcare Connect Fund. HCPs, however, unlike schools, do not have a summer vacation period during which construction can take place without disrupting normal operations. Furthermore, in some rural areas, weather conditions can cause unavoidable delays in construction. Therefore, we will allow applicants to receive up to a one-year extension to light fiber if they provide documentation to USAC that construction was unavoidably delayed due to weather or other reasons.
100.
101.
102.
103. Discussion. “Broadband Services” in this context includes backbone services. We find that the membership fees charged by Internet2 and NLR are part of the cost of obtaining access to the backbone services provided by these organizations, and thus are eligible for support as recurring costs for broadband services. We delegate authority to the Wireline Competition Bureau to designate as an eligible expense, upon request, membership fees for other non-profit research and education networks similar to Internet2 and NLR. We further find that broadband services required to connect
104. We conclude, however, that it is appropriate to require participants to seek competitive bids from NLR and Internet2, or any other research and education network, through our standard competitive bidding process. We recognize and anticipate that in some cases, Internet2 or NLR services may be the most cost-effective solution to meet a HCP's needs. As noted by commenters, these networks can provide many benefits, and the most cost-effective solution for HCP needs may come from Internet2 or NLR. There may be instances, however, under which a more cost-effective solution is available from a commercial provider, or a non-profit provider other than Internet2 or NLR. Many commenters opposed the Commission's proposal to exempt National LambdaRail and Internet2 from competitive bidding, arguing, among other things, that such an exemption would be anti-competitive by disadvantaging other telecommunications providers. A competitive bidding requirement that applies equally to all participants will ensure that HCPs can consider possible options from all interested service providers. Because applicants must already engage in competitive bidding for all other services, we do not believe it would be overly burdensome to require applicants to also include Internet2 or NLR in their competitive bidding process. While we encourage all applicants to fully consider the benefits of connecting to non-profit research and education networks such as Internet2 and NLR, we emphasize that it is not a requirement to connect to Internet2 or NLR.
105. Discussion. Based on our experience with the RHC Telecommunications and Pilot Programs, we adopt a rule that provides support under the Healthcare Connect Fund for the connections and network equipment associated with off-site data centers and off-site administrative offices used by eligible HCPs for their health care purposes, subject to the conditions and restrictions. There has been significant change in how HCPs use information technology in the delivery of health care since the Commission originally adopted the rules for the Telecommunications Program that do not provide support for off-site data centers and administrative
106. For purposes of the rule we adopt, an “off-site administrative office” is a facility that does not provide hands-on delivery of patient care, but performs administrative support functions that are critical to the provision of clinical care by eligible HCPs. Similarly, an “off-site data center” is a facility that serves as a centralized repository for the storage, management, and dissemination of an eligible HCP's computer systems, associated components, and data. Under the new rule, we expand the connections that are supported for already eligible HCPs to include connections to these locations when purchased by HCPs in the Healthcare Connect Fund.
107. Specifically, subject to the conditions and restrictions, we provide support in the Healthcare Connect Fund for connections used by eligible HCPs: (i) Between eligible HCP sites and off-site data centers or off-site administrative offices, (ii) between two off-site data centers, (iii) between two off-site administrative offices, (iv) between an off-site data center and the public Internet or another network, and (v) between an off-site administrative office and an off-site data center or the public Internet or another network. We also expand the eligibility of network equipment to provide support for such equipment when located at an off-site administrative office or an off-site data center. In addition, we establish that support for such connections and/or network equipment is available both to single HCP applicants or consortium applicants under the Healthcare Connect Fund. Finally, we include support for connections at such off-site locations even if they are not owned or controlled by the HCP.
108. We adopt this rule with certain conditions and restrictions to ensure the funding is used to support only eligible public or non-profit HCPs and to protect the program from potential waste, fraud, and abuse. First, the connections and network equipment must be used solely for health care purposes. Second, the connections and network equipment must be purchased by an eligible HCP or a public or non-profit health care system that owns and operates eligible HCP sites. Third, if traffic associated with one or more ineligible HCP sites is carried by the supported connection and/or network equipment, the ineligible HCP sites must allocate the cost of that connection and/or equipment between eligible and ineligible sites, consistent with the “fair share” principles. These conditions and requirements should fully address the concerns of those commenters who fear that these additional supported connections may be used long-term for non-health care purposes.
109. As commenters point out, HCPs often find increased efficiencies by locating administrative offices and data centers apart from the site where patient care is provided. This is especially true for groups of HCPs, including smaller HCPs, who often share administrative offices and/or data centers, to save money and pool resources. Furthermore, it does not make practical sense to distinguish administrative offices and/or data centers that are located off-site but otherwise perform the same functions as on-site facilities, and which require the same broadband connectivity to function effectively. While off-site administrative offices and off-site data centers do not provide “hands on” delivery of patient care, they often perform support functions that are critical to the provision of clinical care by HCPs. For example, administrative offices may coordinate patient admissions and discharges, ensure quality control and patient safety, and maintain the security and completeness of patients' medical records. Administrative offices also perform ministerial tasks, such as billing and collection, claims processing, and regulation compliance. Without an administrative office capable of carrying out these functions, an eligible HCP may not be able to successfully provide patient care.
110. Similarly, off-site data centers often perform functions, such as housing electronic medical records, which are critical to the delivery of health care at eligible HCP sites. For example, the Utah Telehealth Network uses a primary data center in West Valley City, Utah with a backup secondary data center in Ogden, Utah to deliver approximately 2,500 clinical and financial applications to eligible HCP sites. North Carolina Telehealth Network plans to use data center connectivity to help public health agencies comply with “meaningful use” of EHRs.
111. By providing support for the additional connections (
112. After reviewing the record, we conclude that requiring that an eligible HCP to have majority ownership or control over an off-site administrative office or data center in order for it to be eligible for support would impose an unnecessary burden on HCPs seeking to use broadband effectively to deliver health care to their patients. Providing support for eligible expenses associated with off-site administrative offices and off-site data centers was widely endorsed by commenters, but commenters noted that there is a wide variation in the way that HCPs structure their physical facilities. For example, HHS explains that an HCP often has no ownership or control of the off-site data center hosting its health care related equipment and servers. NCTN suggests that the Commission identify “eligible functions” rather than evaluating ownership. The adopted rule addresses these concerns and provides eligible HCPs with the flexibility to use off-site data centers and administrative offices irrespective of ownership or control, subject to the conditions and requirements.
113. The adopted approach also accommodates a variety of arrangements for the operation of off-site administrative offices and/or off-site data centers. For instance, one commenter was concerned that the
114. Discussion. We will provide support for reasonable and customary installation charges for broadband services, up to an undiscounted cost of $5,000 (
115. Discussion. Eligible consortia may obtain support for upfront charges for service provider deployment of new or upgraded facilities to serve eligible HCP sites that are applying as part of the consortium, including (but not limited to) fiber facilities. Although the Pilot Program has helped thousands of HCPs to obtain broadband services, many HCPs in more remote, rural areas still lack access to broadband connections that effectively meet their needs. The Pilot Program demonstrated that many HCPs prefer not to own the physical facilities comprising their networks, but can still assemble a dedicated health care network if funds are available for service provider construction and upgrades where broadband facilities are not already available. In a number of instances, Pilot projects found that support for upfront charges for deployment of service provider facilities allowed them to find the most cost-effective services to meet their needs while obtaining the benefits of connecting to existing networks.
116. Commenters recommend that the Healthcare Connect Fund support service provider build-out charges, arguing that will result in cost-effective pricing, which in turn reduces the cost to the Fund. This solution may be particularly useful when a health care network covers a large region served by multiple vendors, because the network can maximize the use of existing infrastructure and seek funding for build-out only where necessary. For example, OHN's multi-vendor leased line network utilized 151.06 miles of existing infrastructure, and stimulated 86.41 miles of new middle-mile connectivity.
117. We adopt a rule to provide support for service provider deployment of facilities up to the “demarcation point,” which is the boundary between facilities owned or controlled by the service provider, and facilities owned or controlled by the customer. In other words, the demarcation point is the point at which responsibility for the connection is “handed off” to the customer. Thus, charges for “curb-to-building installation” or “on site wiring” are eligible if they are used to extend service provider facilities to the point where such facilities meet customer-owned terminal equipment or wiring. If the additional build-out is not owned or controlled by the service provider, it will not be eligible as service provider deployment costs. In contrast, consistent with current RHC program rules, “inside wiring” and “internal connections” are not eligible for support.
118. Because upfront charges for build-out costs can be significant, we limit eligibility for such upfront charges to consortium applications. Our experience of over a decade with the RHC Telecommunications Program suggests that individual HCPs are unlikely to attract multiple bids, which would constrain prices. As HCPs themselves acknowledge, and as we learned in the Pilot Program, consortium applications are more likely to attract multiple bidders, due to the more significant dollar amounts associated with larger projects. Furthermore, we anticipate that individual HCPs will benefit from participating in a consortium in numerous ways, including pooling administrative resources (
119. Discussion. We will provide support for network equipment necessary to make a broadband service functional in conjunction with providing support for the broadband service. In addition, for consortium applicants, we will provide support for equipment necessary to manage, control, or maintain a broadband service or a dedicated health care broadband network. Equipment support is not available for networks that are not dedicated to health care. We conclude that providing support for such equipment is important to advancing our goals of increasing access to broadband for HCPs and fostering the development and maintenance of broadband health care networks, for three reasons.
120. First, providing support for equipment will help HCPs to upgrade to higher bandwidth services. USAC states that Pilot Program funding for equipment allowed such HCPs to upgrade bandwidth without restrictions based on what their existing equipment would allow. We note that small rural hospitals and clinics often lack the IT expertise to know that they will need new equipment to use new or upgraded broadband connections, and finding funding to pay for the equipment can cause delays.
121. Second, support for the equipment necessary to operate and manage dedicated broadband health care networks can facilitate efficient network design. USAC states that urban centers, where most specialists are located, are natural “hubs” for telemedicine networks, but the cost of equipment required to serve as a hub
122. Finally, support for network equipment can also help HCPs ensure that their broadband connections maintain the necessary reliability and quality of service, which can be challenging even if the HCP has a service level agreement (SLA) with its telecommunications provider. Support for network equipment has enabled some Pilot projects to set up Network Operations Centers (NOCs) that can manage service quality and security in a cost-effective manner for all of the HCPs on the network. The NOC can proactively monitor all circuits and contact both the service provider and HCP whenever the status of a link drops below the conditions specified in the SLA. This allows proactive monitoring to find and deal with adverse network conditions “in real time and before they have a chance to impact the delivery of patient care.” A HCP-operated NOC in some cases may be more cost-effective for larger networks (
123. We do not express a preference for single- or multi-vendor networks here, nor do we suggest that it is always more efficient for a dedicated health broadband network to have its own NOC. For example, a network that chooses to obtain a single-vendor solution and obtain NOC service from that vendor may receive support for the NOC service as a broadband service, if that solution is the most cost-effective. Our actions simply facilitate the ability of a consortium to operate its own NOC, if that is the most cost-effective option.
124. Eligible equipment costs include the following:
• Equipment that terminates a carrier's or other provider's transmission facility and any router/switch that is directly connected to either the facility or the terminating equipment. This includes equipment required to light dark fiber, or equipment necessary to connect dedicated health care broadband networks or individual HCPs to middle mile or backbone networks;
• Computers, including servers, and related hardware (
• Software used for network management, maintenance, or other network operations, and development of software that supports network management, maintenance, and other network operations;
• Costs of engineering, furnishing (
• Equipment that is a necessary part of HCP-owned facilities.
125. Support for network equipment is limited to equipment purchased or leased by an eligible HCP that is used for health care purposes. We do not authorize support, for example, for network equipment utilized by telecommunications providers in the ordinary course of business to operate and manage networks they use to provide services to a broader class of enterprise customers, even if eligible HCPs are utilizing such services. Non-recurring costs for equipment purchases are subject to the limitations on all upfront charges.
126. Services and equipment eligible for support under the Healthcare Connect Fund are limited to those listed in this
127. Discussion. In keeping with our goals to increase access to broadband, foster development of broadband health care networks, and maximize cost-effectiveness, we provide support under the Healthcare Connect Fund for the cost of equipment or services necessary to make a
128. In particular, costs associated with general computing, software, applications, and Internet content development are not supported, including the following:
• Computers, including servers, and related hardware (
• End user wireless devices, such as smartphones and tablets;
• Software (unless used for network management, maintenance, or other network operations);
• Software development (excluding development of software that supports network management, maintenance, and other network operations);
• Helpdesk equipment and related software, or services (unless used exclusively in support of eligible services or equipment);
• Web hosting;
• Web site portal development;
• Video/audio/web conferencing equipment or services; and
• Continuous power source.
129. Furthermore, costs associated with medical equipment (hardware and software), and other general HCP expenses are not supported. For example, the following is not supported:
• Clinical or medical equipment;
• Telemedicine equipment, applications, and software;
• Training for use of telemedicine equipment;
• Electronic medical records systems; and
• Electronic records management and expenses.
130. Discussion. The American Telemedicine Association requests that the Commission provide support for “internal wiring.” The Healthcare Connect Fund will provide support for service provider build-out to the customer demarcation point, and for network equipment necessary to make a broadband connection functional. We conclude that support is better targeted at this time toward providing broadband connectivity
131. The
132. Discussion. Consistent with the objectives of streamlining oversight of the program and ensuring fiscal responsibility, we decline to fund administrative expenses associated with participation in the Healthcare Connect Fund. We are taking significant steps to streamline and simplify the application process, which will lessen the time and resources needed to participate in the program. Moreover, because we expect that most HCPs in the new program will choose to purchase services rather than construct and own facilities, the rationale for funding of administrative expenses is lessened.
133. The Commission has recognized that administrative expenses of organizing networks and applying for universal service support can be substantial. In response, we are taking steps throughout this
134. We recognize that many commenters support the provision of support for administrative expenses. Some commenters suggest that the funding of reasonable administrative expenses is necessary to ensure participation in the program. However, experience with the existing programs suggests that HCPs will participate even without the program funding administrative expenses. Neither the Telecommunications nor Pilot Programs fund administrative expenses, but both programs have significant participation. The number of participating HCPs in the Telecommunications Program has grown by nearly 10 percent year-over-year for the past five years. Similarly, the Pilot Program has experienced substantial and sustained interest with just over 3,800 HCP sites receiving funding commitments. We expect that the participation in the RHC support mechanism will only increase with the implementation of the Healthcare Connect Fund and its more streamlined administrative process.
135. In addition, commenters have not explained how we could readily distinguish reasonable from unreasonable administrative expenses and ensure fiscal responsibility and cost effective use of the finite support available for eligible HCPs. Without a clear standard, there would be increased complexity and cost in policing the reimbursement of these expenses to guard against waste, fraud, and abuse. By reducing the administrative burden, rather than directly funding administrative expenses, we seek to facilitate increased participation while still ensuring fiscal responsibility and the efficient use of scarce universal service funding.
136. Consistent with the approach taken by the Commission in the
• Personnel costs (including salaries and fringe benefits), except for personnel costs in a consortium application that directly relate to designing, engineering, installing, constructing, and managing the dedicated broadband network. Ineligible costs of this category include, for example, personnel to perform program management and coordination, program administration, and marketing.
• Travel costs, except for travel costs that are reasonable and necessary for network design or deployment and that are specifically identified and justified as part of a competitive bid for a construction project.
• Legal costs.
• Training, except for basic training or instruction directly related to and required for broadband network installation and associated network operations. For example, costs for end-user training, such as training of HCP personnel in the use of telemedicine applications, are ineligible.
• Program administration or technical coordination (
• Administration and marketing costs (
• Billing expenses (
• Helpdesk expenses (
137. Discussion. Costs associated with ineligible sites or ineligible components of services or equipment are ineligible for support, except as otherwise specified in this
138. There are a wide variety of contexts in which it may be more cost-effective for eligible HCPs to share costs with ineligible entities, or to procure a service or piece of equipment that includes both eligible and ineligible components. The Commission has allowed such cost-sharing in the past in the RHC Telecommunications Program and the Pilot Program, and we will allow it in the Healthcare Connect Fund. Such permissible cost-sharing includes the following:
•
•
•
•
139. We conclude that eligible HCP sites may share costs with ineligible sites, as long as the ineligible sites pay a “fair share” of the costs. We use “fair share” here as a term of art that, in general, refers to the price or cost that an ineligible site must pay to participate in a supported network, or share supported services and equipment, with an eligible HCP. To determine fair share, an applicant is required to apply the following principles:
• First, if the service provider charges a separate and independent price for each site, an ineligible site must pay the full undiscounted price. For example, if a consortium has negotiated certain rates that are applicable to all sites within the consortium, an ineligible HCP site must pay the full price without receiving a USF discount. Similarly, if the consortium has received a quote from the service provider for the individualized costs of serving each member of the consortium, an ineligible member must pay the full cost without receiving a USF discount.
• Second, if there is no separate and independent price for each site, the applicant must prorate the undiscounted price for the “shared” facility (including any supported maintenance and operating costs) between eligible and ineligible sites on a proportional fully-distributed basis, and the applicant may seek support for only the portion attributable to the eligible sites. Applicants must make this cost allocation using a method that is based on objective criteria and reasonably reflects the eligible usage of the shared facility. For example, a network may choose to divide the undiscounted price of the shared facility equally among all member sites, and require ineligible sites to pay their full share of the price. Other possible metrics, depending on the services utilized, may include time of use, number of uses, amount of capacity used, or number of fiber strands. The applicant bears the burden of demonstrating the reasonableness of the allocation method chosen.
140. Because we define eligible services and equipment for the Healthcare Connect Fund broadly in this
141. We delegate authority to the Bureau to issue further guidelines, as needed, to interpret the cost allocation methods or provide guidance on how to apply the methods to particular factual situations.
142. Applicants must submit a written description of their allocation method(s) to USAC with their funding requests.
143. Discussion. Support for upfront payments can play an important part in ensuring that HCPs can efficiently obtain the broadband connections they need in a cost-effective manner. We therefore adopt a rule providing support for upfront payments, but include certain limitations to ensure the most cost-effective use of Fund support and to deter waste, fraud, and abuse. The limitations in this section apply to all non-recurring costs, other than reasonable and customary installation charges of up to $5,000. USAC reports that in both the “Primary” (Telecommunications and Internet Access and Pilot Programs, service providers do not typically assess “installation charges” in excess of $5,000 if no new build-out is required to provide a service (
144. The limitations are as follows. First, upfront payments associated with services providing a bandwidth of less than 1.5 Mbps (symmetrical) are not eligible for support. By their nature, upfront payments are intended to amortize the cost of new service deployment or installation that will be enjoyed for years in the future; in other words, HCPs should continue to reap the benefits from the upfront payments beyond the funding year in which support is requested. We do not believe it is an efficient use of the Healthcare Connect Fund to support upfront payments for speeds which may increasingly become inadequate for HCP needs in the near future.
145. Second, we limit support for upfront payments to consortium applications, to create greater incentives for HCPs to join together in consortia and thereby obtain the pricing benefits of group purchasing and economies of scale, as demonstrated in the Pilot Program.
146. Third, we impose a $150 million annual limitation on total commitments for upfront payments and multi-year commitments. We do so in order to limit major fluctuations in Fund demand, although we anticipate that the $150 million should be sufficient to meet demand for upfront payments given the other limitations we impose. Fourth, we will require that consortia prorate support requested for upfront payments over at least three years if, on average, more than $50,000 in upfront payments is requested per HCP site in the consortium. Fifth, upfront payments must be part of a multi-year contract. At $50,000 per site, $50 million per year would provide upfront support to 1,000 HCP sites. Given that total participation in the Pilot Program since 2006 has been approximately 3,900 providers to date, we believe this is an adequate level of funding to meet HCP needs in the immediate future; we can revisit this conclusion if experience under the new program proves otherwise.
147. We do not adopt a per-provider cap for upfront payments at this time. Although most HCPs in the Pilot Program were able to obtain any necessary build-out at a cost below $50,000, a small percentage of HCPs incurred very high build-out costs. Requiring these HCPs to apply as part of consortia should help them to obtain service at a lower cost; however, adopting a per-provider cap could have the unintended consequence of excluding the highest-cost HCPs from such consortia. Although we do not adopt a per-provider cap, we note that because the HCP will be responsible for paying a substantial contribution towards the cost of services received (
148. Finally, consortia that seek certain types of upfront payments will be subject to additional reporting requirements and other safeguards to ensure effective use of support.
149. Discussion. We conclude that eligible service providers for the Healthcare Connect Fund shall include any provider of equipment, facilities, or services that are eligible for support under the program, provided that the HCP selects the most cost-effective option to meet its health care needs. We reiterate that eligible services may be provided through any available technology, consistent with our competitive neutrality policy. Commenters generally support a broad definition of eligible service providers, and state that allowing a wide variety of vendors will provide more competing options and thus will be more cost-effective. We note that the Pilot Program, which allowed similar flexibility, had over 120 different vendors win contracts to provide services.
150. We also adopt the
151. USAC shall, working with the Bureau, develop the necessary application, competitive bidding, contractual, and reporting requirements for participants to implement the requirements to ensure the objectives of the program are met.
152. The Healthcare Connect Fund will provide support for both individual applications and consortium applications. With the reforms we adopt, we encourage eligible entities to seek funding from the new program by forming consortia with other HCPs in order to obtain higher speed and better quality broadband and to recognize efficiencies and lower costs. For purposes of Healthcare Connect Fund, a “consortium” is a group of multiple HCP sites that choose to request support as a single entity.
153. Discussion. Each consortium seeking support from the Healthcare Connect Fund must identify an entity or organization that will be the lead entity (the “Consortium Leader”). As a preliminary matter, we note that the
154. The consortium need not be a
155. The Consortium Leader may be the consortium itself (if it is constituted as a legal entity), an eligible HCP participating in the consortium, or an ineligible state organization, public sector (governmental) entity (including a Tribal government entity), or non-profit entity. An eligible HCP may serve as the Consortium Leader and simultaneously receive support. If an ineligible entity serves as the Consortium Leader, however, the ineligible entity is prohibited from receiving support from the Healthcare Connect Fund, and the full value of any discounts, funding, or other program benefits secured by the ineligible entity must be passed on to the consortium members that are eligible HCPs.
156. Certain state organizations, public sector entities (including Tribal government entities), or non-profit entities may wish to perform multiple roles on behalf of consortia, including (1) serving as lead entities; (2) providing consulting assistance to consortia; and/or (3) serving as a service provider (vendor) of eligible services or equipment for which consortia are seeking support. Potential conflict of interest issues arise in the competitive bidding process, however, if an entity serves a dual role as both Consortium Leader/consultant
157. For that reason, we conclude that state organizations, public sector entities, or non-profit entities may serve as lead entities or provide consulting assistance to consortia if they do not participate as potential vendors during the competitive bidding process. Conversely, if such entities wish to provide eligible services or equipment to consortia, they may not simultaneously serve as project leaders, and may not provide consulting or other expertise to the consortium to assist it in developing its request for services. This restriction does not prohibit eligible HCPs from conducting general due diligence to determine what services are needed and to prepare for an RFP. Part of such due diligence may involve reaching out to known service providers—including state or other public sector entities—that serve the area to determine what services are available. Nor does the restriction prevent a service provider, once selected through a fair and open competitive bidding process, from assisting an eligible HCP with implementing the purchased services.
158. We recognize that certain state governmental entities, for example, may be large enough to institute an organizational and functional separation between staff acting as service providers and staff providing application assistance. Consistent with current practice in the E-rate program, we will allow state organizations, public sector entities, or non-profit entities, if they so choose, to obtain an exemption from this prohibition by making a showing to USAC that they have set up an organizational and functional separation. This exemption, however, must be obtained before the consortium begins preparing its request for services. Examples of appropriate documentation for such a showing include organizational flow charts, budgetary codes, and supervisory administration.
159. The Consortium Leader's responsibilities include the following:
•
•
•
•
•
•
160. Next, the consortium should identify all HCPs who will participate. The Consortium Leader will need to provide this information to USAC in order to request program support. We intend for eligible HCPs to have broad flexibility in organizing consortia according to their health care needs. For example, a consortium may be a pre-existing organization formed for reasons unrelated to universal service support
161. Discussion. The letter of agency requirement helps ensure that participating entities are eligible to receive support, and that the HCPs have given the project leaders the necessary authorization to act on their behalf. After considering our experience in the Pilot Program, and reviewing the comments filed regarding letters of agency, we conclude that each Consortium Leader must secure the necessary authorizations through an LOA from each HCP seeking to participate in the applicant's network that is
162. We adopt an approach that creates a two-step process of LOAs: in the first step, a Consortium Leader must obtain LOAs from members to seek bids for services, and in the second step, the Leader must obtain LOAs to apply for funding from the program. This two-step approach addresses an issue that arose in the Pilot Program, where some prospective member HCPs were reluctant to provide LOAs that would commit them to participate in a consortium network before they knew the pricing of services from prospective bidders. Under the Healthcare Connect Fund, we require that each Consortium Leader secure authorization, the required certifications, and any supporting documentation from each consortium member (i) to submit the request for services on its behalf (Form 461) and prepare and post the request for proposal on behalf of the member for purposes of the Healthcare Connect Fund and (ii) to submit the funding request (Form 462) and manage invoicing and payments, on behalf of the member. The first authorization is required prior to the submission of the request for services (Form 461), while the second authorization is only required prior to the submission of the request for funding (Form 462). An applicant may either secure both required authorizations upfront or secure each authorization as needed. Consortium Leaders may also obtain authorization, the required certifications, and any supporting documentation from each member to submit Form 460, if needed, to certify the member's eligibility to participate in the Healthcare Connect Fund. If the Consortium Leader does not obtain such authorization for a given member, that member will have to submit its own Form 460. In addition, we delegate authority to the Bureau to develop model language for the LOA required for each authorization.
163. In addition to the necessary authorizations, the LOA must include, at a minimum, the name of the entity filing the application (
164. The approach we adopt addresses many of the concerns expressed by commenters, while still ensuring applicants have the necessary authority to act on behalf of their members. Some commenters correctly point out that under the Pilot Program, an HCP was often reluctant or unable to execute an LOA that required the HCP to agree to participate in a network before accurate pricing was available. Other commenters stressed that requiring LOAs as part of the Form 465 submission was a net benefit because it enabled the project to “vet” the eligibility of interested HCPs at the outset of the application process. We conclude that the adopted approach provides flexibility to allow consortium applicants to tailor the LOA process to meet the needs of their members, within the necessary constraints.
165. Discussion. Consistent with other measures we adopt to improve the efficiency and operation of the Healthcare Connect Fund, we institute a new process for obtaining faster eligibility determinations from USAC by permitting HCPs to submit Form 460 at any time during the funding year to certify to the eligibility of particular sites. By separating the eligibility determination from the competitive bidding process, we provide HCPs with the option of receiving an eligibility determination before they move forward with preparing an application for funding. HCPs who have previously received an eligibility determination from USAC (
166. For each HCP listed, applicants will be required to provide the HCP's address and contact information, identify the eligible HCP type, provide an address for each physical location that will receive supported connectivity, provide a brief explanation for why the HCP is eligible under the Act and the Commission's rules and orders, and certify to the accuracy of this information under penalty of perjury. Consortium leaders should obtain supporting information and/or documents to support eligibility for each HCP when they collect LOAs; leaders also may be asked for this information during an audit or investigation. USAC should notify each applicant of its determination (or whether it needs additional time to process the form) within 30 days of receipt of Form 460. We caution applicants that it is their obligation to submit accurate information and certifications regarding their eligibility. Because HCP eligibility is limited by the Act, the Commission does not have discretion to waive eligibility requirements, and must recover any support erroneously disbursed to ineligible entities. We direct USAC to assign a unique identifying number to each HCP location in order to facilitate tracking of the location throughout the application process.
167. Discussion. We encourage all applicants to carefully evaluate their connectivity needs before submitting an application. We decline at this time to require applicants in the Healthcare Connect Fund to submit technology plans with their requests for service, but we may re-evaluate this decision in the future based on experience with the new program. Our goal is reduce administrative burdens and delay associated with participating in the Healthcare Connect Fund, especially for the HCPs with the fewest resources and greatest need to participate.
168. The record indicates that HCPs are a diverse group with a diverse set of needs. Our intent, consistent with precedent, is to allow HCPs to identify their specific broadband needs, which, together with the competitive bidding requirements and the required HCP 35 percent contribution, will help ensure that universal services funds are used most cost-effectively. We recognize that the amount of planning required will vary depending on a number of factors, such as the HCP's size and planned utilization of health IT, and that the amount of IT expertise and other resources available for formal planning will vary widely between different types of HCPs. In the planning process, applicants may wish to consider questions such as the following:
• What applications do we plan to use over our broadband connection (
• What broadband services do we need to support the planned applications and users?
• Do we have a plan to train our staff to use the applications?
• Do we have the necessary IT resources to deploy the broadband services and applications?
• Have we considered the benefits and drawbacks of short-term versus multi-year contracts (
• How will we pay for the undiscounted portion of supported services and equipment, and any unsupported costs?
• Should we consider joining with other HCPs to apply as a consortium? If a consortium, should we include other HCPs?
• What resources are available to help us?
169. We encourage prospective applicants to consult available resources, including those previously published by the Commission and resources available through HHS, in conducting their technology planning.
170. Discussion. The Commission has defined “cost-effective” for purposes of the existing RHC support mechanism as “the method that costs the least after consideration of the features, quality of transmission, reliability, and other factors that the HCP deems relevant to * * * choosing a method of providing the required health care services.” The Commission does not require HCPs to use the lowest-cost technology because factors other than cost, such as reliability and quality, may be relevant to fulfill their health care needs. Furthermore, initially higher cost options may prove to be lower in the long-run, by providing useful benefits to telemedicine in terms of future medical and technological developments and maintenance. Therefore, unlike the E-rate program, the RHC program does not require participants to consider price as
171. Applicants must develop appropriate evaluation criteria for selecting the winning bid
172. Typically, an applicant will develop a scoring matrix, or a list of weighted evaluation criteria, that it will use in evaluating bids. Once the applicant has developed its evaluation criteria, it should assign a weight to each in order of importance. No single factor may receive a weight that is greater than price. For example, if the HCP assigns a weight of 40 percent to cost, other factors must receive a weight of 40 percent or less individually (with the total weight equaling 100%). Each bid received should be scored against the determined criteria, ensuring they are all evaluated equally. All applicants who are not exempt from competitive bidding will be required to submit bid evaluation documentation with their funding requests.
173. Although applicants are not required to submit documentation regarding sources for the undiscounted portion of costs until they complete the competitive bidding process, they should begin identifying possible
174. All applicants must obtain FCC registration numbers (FRNs), if they do not have one already. An FRN is a 10-digit number that is assigned to a business or individual registering with the FCC, and is used to uniquely identify the business or individual in all of its transactions with the FCC. Obtaining an FRN is a quick, online process that can typically be completed in a manner of minutes through the Commission's Web site. Consortium applicants may obtain a single FRN for the consortium as a whole, if desired (
175. Discussion. Competitive bidding remains a fundamental pillar supporting our goals for the Healthcare Connect Fund, as it will allow HCPs to obtain lower rates (thereby increasing access to broadband) and increase program efficiency. The outlines of the competitive bidding process for the new program will remain the same as our existing programs: All HCPs will submit a request for services for posting by USAC, wait at least 28 days before selecting a service provider, and select the most cost-effective bid. In addition, in some circumstances, applicants will be required to prepare a formal request for proposals as well.
176. While competitive bidding is essential to the program, we acknowledge that it is not without administrative costs to participants and to the Fund. We conclude that in three situations, exempting funding requests from competitive bidding in the Healthcare Connect Fund will strike a common-sense balance between efficient use of program funds and reducing regulatory costs. First, based on our experience with the Telecommunications and Internet Access Programs, we find that it will be more administratively efficient to exempt applicants seeking support for relatively small amounts. The threshold for this exemption is $10,000 or less in total annual undiscounted costs (which, with a 35 percent applicant contribution, results in a maximum of $6,500 annually in Fund support). Second, if an applicant is purchasing services from a master service agreement negotiated by a governmental entity on its behalf, and the master service agreement was awarded pursuant to applicable federal, state, Tribal, or local competitive bidding processes, the applicant is not required to re-undergo competitive bidding. Third, we conclude that applicants who wish to request support under the Healthcare Connect Fund while utilizing contracts previously endorsed by USAC (Master Services Agreements under the Pilot Program or the Healthcare Connect Fund, or evergreen contracts in any of the health care programs, or master contracts the E-rate program) may do so without undergoing additional competitive bidding, as long as they do not request duplicative support for the same service and otherwise comply with all program requirements. In addition, consistent with current RHC program policies, applicants who receive evergreen status or multi-year commitments under the Healthcare Connect Fund are exempt from competitive bidding for the duration of the contract. Applicants who are exempt from competitive bidding can proceed directly to submitting a funding commitment request.
177. Discussion. Unless they qualify for one of the competitive bidding exemptions, all entities participating in the Healthcare Connect Fund must conduct a fair and open competitive bidding process prior to submitting a request for funding Form 462. Although it is not possible to anticipate all possible factual circumstances that may arise during the process, we set forth here three basic principles and some specific guidance that should help applicants comply with this requirement.
178. First, service providers who intend to bid should not also simultaneously help the HCP choose a winning bidder. More specifically, service providers who submit bids are prohibited from (1) preparing, signing or submitting an applicant's Form 461 documents; (2) serving as Consortium Leaders or other points of contact on behalf of applicants; (3) being involved in setting bid evaluation criteria; or (4) participating in the bid evaluation or vendor selection process (except in their role as potential vendors). Consultants, other third-party experts, or applicant employees who have an ownership interest, sales commission arrangement, or other financial stake with respect to a bidding service provider are also prohibited from performing any of the four functions on behalf of the applicant. All applicants must submit a “Declaration of Assistance” with their request for services (Form 461) to help the Commission and USAC identify third parties who assisted in the preparation of the applications.
179. Second, all potential bidders and service providers must have access to the same information and must be treated in the same manner. Any additions or modifications to the documents submitted to, and posted by, USAC must be made available to all potential service providers at the same time and using a uniform method. We direct USAC to facilitate this process by allowing applicants to submit any additions or modifications to USAC, for posting on the same Web page as the originally posted documents.
180. Finally, as is the case in the Telecommunications, Internet Access, and Pilot Programs, all applicants and service providers must comply with any applicable state or local competitive bidding requirements. The Commission's requirements apply in addition to, and are not intended to preempt, such requirements.
181. Discussion. We will require submission of RFPs with Form 461 for (1) applicants who are required to issue an RFP under applicable state, Tribal, or local procurement rules or regulations; (2) consortium applications that seek more than $100,000 in program support in a funding year; and (3) consortium applications that seek support for infrastructure (
182. Applicants who have or intend to issue an RFP must submit a copy of the RFP with their request for services. We recognize that a consortium may not know the exact cost of the project until after it completes the competitive bidding process and selects a vendor. If a consortium chooses to forego an RFP, however, its support will be capped at $100,000.
183. The Commission does not specify requirements for RFPs in the current RHC program, and USAC does not approve RFPs. Therefore, applicants may prepare RFPs in any manner that complies with program rules and any applicable state, Tribal, or local procurement rules or regulations. The RFP, however, should provide sufficient information to enable an effective competitive bidding process, including describing the HCP's service needs and defining the scope of the project and network costs (if applicable). The RFP should also specify the period during which bids will be accepted. The RFP should also include the scoring criteria that will be used to evaluate bids for cost-effectiveness, in accordance with the requirements and solicit sufficient information so that the criteria can be applied effectively. A short, simple RFP may be appropriate for smaller consortia, or for consortia whose needs are less complex. We note that consortia may choose to submit single or multiple requests for services (and multiple RFPs), depending on the structure that makes most sense for the particular project.
184. Discussion. Applicants subject to competitive bidding must submit new FCC Form 461 and supporting documentation to USAC. The purpose of these documents is to provide sufficient information on the requested services to enable an effective competitive bidding process to take place and to enable USAC to obtain certifications and other information necessary to prevent waste, fraud, and abuse.
185. Documents to be submitted to USAC with the “request for services” include the following:
•
• Applicants who include a particular service provider's name, brand, product or service on Form 461 or in the RFP must also use the words “or equivalent” in the description, in order to avoid the appearance that the applicant has pre-selected the named service provider or intends to give the service provider preference in the bidding process. In addition, an applicant may wish to describe its needs in general terms (
•
•
•
(1) Goals and objectives of the proposed network;
(2) Strategy for aggregating the specific needs of HCPs (including providers that serve rural areas) within a state or region;
(3) Strategy for leveraging existing technology to adopt the most efficient and cost effective means of connecting those providers;
(4) How the broadband services will be used to improve or provide health care delivery;
(5) Any previous experience in developing and managing health IT (including telemedicine) programs; and
(6) A project management plan outlining the project's leadership and management structure, and a work plan, schedule, and budget.
The network planning requirements are consistent with those in the Pilot Program. For purposes of the Healthcare Connect Fund, however, submission of this information is a minimum requirement, not a scoring metric for choosing funding recipients. We do not intend for this planning to be an undue administrative burden, and will continue to allow consortia to put forth a variety of strategies for accomplishing their goals, as the Commission did in the Pilot Program.
Consortium applicants are required to use program support. All applicants are subject to the Commission's procedures for audits and other measures to prevent waste, fraud, and abuse.
•
•
•
186. Applicants may submit Form 461 starting 180 days before the beginning of the funding year. Our experience in the Pilot Program is that it can take as long as six months for more complex projects to complete bid evaluation and select a vendor. To allow sufficient time to complete this process prior to the beginning of the funding year, HCPs should submit Form 461 as soon as possible after the filing window opens. USAC may provide applicants with the opportunity to cure errors on their submissions, up to the date of posting of the Form 461 package. The responsibility to submit complete and accurate information to USAC, however, remains at all times the sole responsibility of the applicant.
187. After the HCP submits Form 461, USAC will post the form and any accompanying documents (the Form 461 “package”) on its Web site. USAC may institute reasonable procedures for processing Form 461 and the associated documents and may provide applicants with an opportunity to correct errors in the submissions. We caution applicants, however, that they remain ultimately responsible for ensuring that all forms and documents submitted comply with our rules and any other applicable state or local procurement requirements. We also remind applicants that they must certify under penalty of perjury on Form 461 that all statements of facts contained therein are true to the best of their knowledge, information, and belief, and that under federal law, persons willfully making false statements on the form can be punished by fine, forfeiture, or imprisonment. If an applicant makes any changes to its RFP post-submission, it is responsible for ensuring that USAC has a current version of the RFP for the Web site posting.
188. The
189. After posting of the Form 461 package, USAC will send confirmation of the posting to the applicant, including the posting date and the date on which the applicant may enter into a contract with the selected service provider (the “Allowable Contract Selection Date,” or ACSD). Once USAC posts the package, interested bidders should submit bids directly to the applicant. Applicants must wait at least 28 calendar days from the date on which their Form 461 packages are posted on USAC's Web site before making a commitment with a service provider, so the ACSD is the 29th calendar day after the posting. Applicants may not agree to or sign a contract with a service provider until the ACSD, but may discuss requirements, rates, and conditions with potential service providers prior to that date. Applicants who select a service provider before the ACSD will be denied funding.
190. Applicants are free to extend the time period for receiving bids beyond 28 days from the posting of Form 461 and may do so without prior approval. In addition, some applicants who propose larger, more complex projects may wish to undertake an additional “best and final offer” round of bidding. Allowing sufficient time and opportunity for all potential bidders to develop and submit bids can lead to more and better bids, and has the potential to enhance the quality and lower the price of services ultimately received. We encourage HCPs contemplating more complex projects (including those with an infrastructure component) to utilize a longer bidding period, as done by many Pilot projects. If an applicant has plans to utilize a period longer than 28 days, it should so indicate clearly on the Form or in accompanying documentation. An applicant that decides to extend the bidding period after USAC's posting of Form 461 should notify USAC promptly, so that USAC can update its Web site posting with notice of the extension.
191. Once the 28-day period expires, applicants may evaluate bids, select a winning bidder and negotiate a contract. Applicants should develop appropriate evaluation criteria for selecting the “most cost-effective” bid according to the Commission's rules before submitting a Form 461 package to USAC. Applicants should follow those evaluation criteria in evaluating bids and selecting a service provider. All applicants subject to competitive bidding will be required to certify to USAC that the services and/or infrastructure selected are, to the best of the applicant's knowledge, the most cost-effective option available.
192. Applicants must submit documentation to USAC to support their certification that they have selected the most cost-effective vendor, including a copy of each bid received (winning, losing, and disqualified), the bid evaluation criteria, and any other related documents, such as bid evaluation sheets; a list of people who evaluated bids (along with their title/role/relationship to the applicant organization); memos, board minutes, or similar documents related to the vendor selection/award; copies of notices to winners; and any correspondence with service providers during the bidding/evaluation/award phase of the process. We explain how applicants may seek confidential treatment for these documents. We do not require bid evaluation documents to be in a certain format, but the level of documentation should be appropriate for the scale and scope of the services for which support is requested. Thus, for example, we expect that the documentation for a large network project will be more extensive than for an individual HCP seeking support for a single circuit. Applicants should also retain the supporting documentation for five years from the end of the relevant funding year, pursuant to the recordkeeping requirements.
193. Certain tariffed or month-to-month services are typically not provided pursuant to a signed, written contract. For all other services, the contract should be negotiated and signed before applicants submit a request for a funding commitment. Applicants who wish to enter into a multi-year contract and be exempt from competitive bidding for the duration of the contract (“evergreen status”) should ensure that the contract identifies both parties; is signed and dated by the HCP or Consortium Leader after the Allowable Contract Selection Date; and specifies the type, term, and cost of service(s). Applicants will be required to submit a copy of the final contract(s) with their funding requests.
194. An applicant that qualifies for any of the exemptions (and does not wish to use the competitive bidding process) is not required to prepare and post a Form 461. Instead, the applicant may proceed directly to filing the request for funding commitment (Form 462). If the applicant has not previously submitted Form 460 to certify to its eligibility, it should submit that form at the same time, or prior to, submitting Form 462. The exemptions only apply to participants receiving support through the Healthcare Connect Fund, not the existing RHC or Pilot Programs.
195. Discussion. Based on our experience with the Telecommunications and Pilot programs, we adopt an exemption to the competitive bidding requirements under the Healthcare Connect Fund for an applicant and any related applicants that seek support for $10,000 or less of total undiscounted eligible expenses for a single year (
196. The $10,000 annual limit is based on the average undiscounted recurring monthly cost of a 1.5 to 3.0 Mbps connection as observed under both the Telecommunications and Pilot programs. Based on this limit, small applicants, typically single HCP sites, should be able to secure support for a T–1 line or similar service without having to go through the competitive bidding process. A consortium application seeking support for undiscounted costs of $10,000 or less is also exempt from competitive bidding if the total of all consortium members' undiscounted costs for which support is sought, in this and any other application combined, is not more than $10,000 for that year. We recognize that as a practical matter, this will likely prevent all but the smallest consortia from qualifying for the exemption, but as observed under the Pilot Program, consortia can substantially benefit from the competitive bidding process in terms of better pricing and higher quality of service.
197. We recognize that an applicant may not always be able to exactly predict its annual eligible expenses in advance. If the applicant chooses to forego competitive bidding, however, its annual support will be capped at $6,500 (65 percent of $10,000) for any services that are not subject to an exemption. If a qualifying applicant later discovers that it requires additional services beyond the $10,000 limit, the applicant may receive support for the additional services if it first completes the competitive bidding process for the additional services.
198. Discussion. We adopt a competitive bidding exemption for HCPs who are purchasing services and/or equipment from MSAs negotiated by federal, state, Tribal, or local government entities on behalf of such HCPs and others, if such MSAs were awarded pursuant to applicable federal, state, Tribal, or local competitive bidding requirements. This exemption helps streamline the application process by removing unnecessary and duplicative government competitive bidding requirements while still ensuring fiscal responsibility. Because these MSAs have government requirements for competitive bidding, this fairly “removes the burden from the Rural Health Care Provider to conduct an additional competitive bid.” This exemption only applies to MSAs negotiated by, or under the direction of,
199. Commenters generally support the adoption of a competitive bidding exemption that allows applicants to take services from a government MSA, so long as the original master contract was subject to a competitive bidding process. For instance, CCHCS “recommends that the Commission exempt from competitive bidding requirements State HCPs that are required to use the State mandated Master Services Agreements for the procurement of telecommunication and/or broadband services.” Similarly, VAST argues that the “Commission should allow eligible Health Care Providers to take services from a federal or state Master Service Agreement (MSA) that has been awarded through a competitive bidding process.”
200. Discussion. We adopt a competitive bidding exemption for HCPs purchasing services or equipment from an MSA, whether the contract was originally secured through the competitive bidding process under the Pilot Program or in the future through the Healthcare Connect Fund. As the Commission stated in the July 2012
201. Discussion. As proposed in the
202. A contract entered into by an HCP or consortium as a result of competitive bidding will be designated as evergreen if it meets all of the following requirements: (1) Signed by the individual HCP or consortium lead entity; (2) specifies the service type, bandwidth and quantity; (3) specifies the term of the contract; (4) specifies the cost of services to be provided; and (5) includes the physical addresses or other
203. Participants may also exercise voluntary options to extend an evergreen contract without undergoing additional competitive bidding, subject to certain limitations. First, the voluntary extension(s) must be memorialized in the evergreen contract. Second, the decision to extend the contract must occur before the participant files its funding request for the funding year when the contract would otherwise expire. Third, voluntary extension(s) may not exceed five years, after which the service(s) must be re-bid. We find that this limitation strikes an appropriate balance between two competing considerations: (1) providing HCPs with the price and administrative savings of entering into a long-term contract; and (2) ensuring that HCPs periodically re-evaluate whether they can obtain better prices through re-bidding a service.
204. We also conclude that, if an HCP has a contract that was designated as evergreen under Telecommunications Program or Internet Access Program procedures prior to January 1, 2014, it may choose to seek support for services provided under the evergreen contract from the Healthcare Connect Fund instead without undergoing additional competitive bidding, so long as the services are eligible for support under the Healthcare Connect Fund, and the HCP complies with all other Healthcare Connect Fund rules and procedures. The Commission noted in the
205. Discussion. Consistent with § 54.501(c)(1) of our rules, we conclude that an HCP entering into a consortium with E-rate participants and becoming a party to the consortium's existing contract should be exempt from the RHC competitive bidding requirements, so long as the contract was competitively bid consistent with E-rate rules, approved for use in the E-rate program as a master contract, and the Healthcare Connect Fund applicant (
206. Discussion. We require participants to seek competitive bids from any research and education networks, including Internet2 and National LambdaRail, through our standard competitive bidding process. There may be instances where a more cost-effective solution is available from a commercial provider, or even a non-profit provider other than Internet2 or National LambdaRail, and a competitive bidding requirement will ensure that HCPs consider options from all interested service providers. Many commenters opposed the Commission's proposal to exempt National LambdaRail and Internet2 from competitive bidding, arguing, among other things, that such an exemption would be anti-competitive by disadvantaging other telecommunications providers. We find that requiring HCPs to seek bids from National LambdaRail and Internet2 through the normal competitive bidding process could result in lower-priced bids, and should therefore be required. This approach furthers our program goal to promote fiscal responsibility and cost-effectiveness.
207. Once a service provider is selected, applicants in the current RHC program submit a “Funding Request” (and supporting documentation) to provide information about the services selected and certify that the services were the most cost-effective offers received. If USAC approves the “Request for Funding,” it will issue a “Funding Commitment Letter.” USAC's role is to review the funding request for accuracy and completeness. Once an applicant receives a funding commitment, it may invoice USAC after receiving a bill from the service provider. Applicants do not need to file a Form 467 to notify USAC that the service provider began providing services for which the applicant is seeking support.
208. All vendors that participate in the Healthcare Connect Fund are required to have a Service Provider Identification Number (SPIN). The SPIN is a unique number assigned to each service provider by USAC, and serves as USAC's tool to ensure that support is directed to the correct service provider. SPINs must be assigned before USAC can authorize support payments. Therefore, all service providers submitting bids to provide services to selected participants will need to complete and submit a Form 498 to USAC for review and approval if selected by a participant before funding commitments can be made.
209. Service providers in the Healthcare Connect Fund must certify on Form 498, as a condition of receiving support, that they will provide to HCPs, on a timely basis, all information and documents regarding the supported
210. Discussion. Unless and until the Commission adopts other procedures to prioritize requests for funding, we retain the rule that requests for funding may be submitted at any point during the funding year, and direct USAC to process and prioritize funding requests on a rolling basis (according to the date of receipt) until it reaches the program cap established by the Commission. Given the historical utilization of RHC support and the implementation timetable for funding year 2013, we do not currently anticipate that demand will exceed the $400 million cap in FY 2013 or for the foreseeable future. We conclude, however, that this longstanding default rule will apply in the unlikely event that the cap is exceeded, unless and until the Commission adopts a different rule for prioritizing funding requests. We also direct USAC to periodically inform the public, through its Web site, of the total dollar amounts (1) requested by HCPs and (2) actually committed by USAC for the funding year, as well as the amounts committed in upfront payments (for purposes of the $150 million cap on upfront payments).
211. We also direct USAC to establish a filing window for funding year 2013 and for future funding years as necessary, for both the Telecommunications Program and the Healthcare Connect Fund. When USAC establishes a filing window, it should provide notice of the window in advance via public notice each year. The filing window may begin prior to the first day of the funding year, as long as actual support is only provided for services provided during the funding year.
212. As in the Telecommunications Program, applicants may initiate services at their own risk during the funding year pending the processing of their funding requests, as long as the services are provided pursuant to a contract or other service agreement that complies with program requirements (including the competitive bidding process). The contract must be signed (or the service agreement entered into) before the applicant submits a funding request.
213. Funding will be available for Pilot participants starting July 1, 2013, and starting January 1, 2014, for other applicants.
214. This information should be submitted to USAC to support a request for commitment of funds.
215. Form 462. Form 462 is the means by which an applicant identifies the service(s), rates, service provider(s), and date(s) of service provider (vendor) selection. In the Primary Program, applicants are required to submit a separate form for each service or circuit for which the applicant is seeking support. In the Healthcare Connect Fund, we will not require separate forms for each service or circuit, thereby lessening administrative burden on potential Fund recipients. Each individual applicant will submit a single form for each service provider that lists the relevant information for all service(s) or circuit(s) for which the individual applicant is seeking support at the time. Similarly, each consortium applicant will submit a single form for each service provider that lists the relevant information for all consortium members, including the service(s) or circuit(s) for which each member is seeking support at the time.
216. Certifications. Applicants must provide the following certifications on Form 462.
• The person signing the application is authorized to submit the application on behalf of the applicant, and has examined the form and all attachments, and to the best of his or her knowledge, information, and belief, all statements of fact contained therein are true.
• Each service provider selected is, to the best of the applicant's knowledge, information, and belief, the most cost-effective service provider available, as defined in the Commission's rules.
• All Healthcare Connect Fund support will be used only for the eligible health care purposes, as described in this
• The applicant is not requesting support for the same service from both the Telecommunications Program and the Healthcare Connect Fund.
• The applicant satisfies all of the requirements under section 254 of the Act and applicable Commission rules, and understands that any letter from USAC that erroneously commits funds for the benefit of the applicant may be subject to rescission.
• The applicant has reviewed all applicable requirements for the program and will comply with those requirements.
• The applicant will maintain complete billing records for the service for five years.
217. Contracts or other documentation. All applicants must submit a contract or other documentation that clearly identifies (1) the vendor(s) selected and the HCP(s) who will receive the services; (2) the service, bandwidth, and costs for which support is being requested; (3) the term of the service agreement(s) if applicable (
218. Competitive bidding documents. Applicants must submit documentation to support their certifications that they have selected the most cost-effective option. Relevant documentation includes a copy of each bid received (winning, losing, and disqualified), the bid evaluation criteria, and any other related documents. Applicants who are exempt from competitive bidding should also submit any relevant documentation to allow USAC to verify that the applicant is eligible for the exemption (
219. Cost allocation for ineligible entities or components. Applicants who seek to include ineligible entities within a consortium, or to obtain support for services or equipment that include both eligible and ineligible components, should submit a description of their cost allocation methodology per the requirements. Applicants should also submit any agreements that memorialize cost-sharing arrangements with ineligible entities.
220. Evidence of viable source for 35 percent contribution. Many projects in
221. We require all consortium applicants to submit, with their funding requests, evidence of a viable source for their 35 percent contribution. We adopt this requirement to minimize administrative processing of applications that do not have a source for the required match, which will lessen USAC's administrative costs and thereby lessen the burden on the Fund. Applicants, especially those that intend to undertake high-dollar projects, should begin identifying potential sources for their contribution as early as possible. The funding request is the last major step in the application process before applicants receive a funding commitment, and at this stage applicants should be well advanced in determining the amount of their contribution and the source for that contribution. We also note that program participants will be required to submit a certification that they have paid their 35 percent contribution before USAC will disburse universal service support, so it is important for participants to have a ready source of payment before they begin receiving services.
222. Consortia may provide evidence of a viable source by submitting a letter signed by an officer, director, or other authorized employee of the Consortium Leader. The letter should identify the entity that will provide the 35 percent contribution, and the type of eligible source (
223. Consortium applicants are not required to identify the funding source for each consortium member if each consortium member will pay its contribution individually. Instead, the Consortium Leader should (1) verify that each member will pay its contribution from an eligible source (
224. We delegate authority to the Bureau to provide more specific guidance, if needed, on the content of the letter and documentation to be submitted. USAC may, as needed, request additional documentation from applicants in order to ensure compliance with this requirement.
225. Additional documentation for consortium applicants. Consortium applicants should submit any revisions to the project management plan, work plan, schedule, and budget previously submitted with the Request for Services (Form 461). If not previously provided with the project management plan, applicants should also provide (or update) a narrative description of how the network will be managed, including all administrative aspects of the network (including but not limited to invoicing, contractual matters, and network operations.) If the consortium is required to provide a sustainability plan, the revised budget should include the budgetary factors discussed in the sustainability plan requirements. Finally, consortium applicants will be required to provide electronically (via a spreadsheet or similar method) a list of the participating HCPs and all of their relevant information, including eligible (and ineligible, if applicable) cost information for each participating HCP. USAC may reject submissions that lack sufficient specificity to determine that costs are eligible.
226. Sustainability plans for applicants requesting support for long-term capital expenses. In the
227. We largely adopt the same specific requirements for sustainability plans proposed in the
•
•
•
•
•
•
228. The Pilot Program required projects to submit a copy of their sustainability plan with every quarterly report. Based on our experience with the Pilot Program, we conclude submission of the sustainability report on a quarterly basis is unnecessarily burdensome for applicants, and provides little useful information to the Administrator. We therefore conclude that sustainability reports for the Healthcare Connect Fund should only be required to be re-filed if there is a material change in sources of future support or management, a change that would impact projected income or expenses by the greater of 20 percent or $100,000 from the previous submission, or if the applicant submits a funding request based on a new Form 461 (
229. In the
230. Discussion. We will allow applicants in the Healthcare Connect Fund to receive multi-year funding commitments that cover a period of up to three funding years. The multi-year funding commitments we adopt will reduce uncertainty and administrative burden by eliminating the need for HCPs to apply every year for funding, as is required under the Primary Program, and reduce administrative expenses both for the projects and for USAC. Multi-year funding commitments, prepaid leases, and IRUs also encourage term discounts and produce lower rates from vendors. Multi-year commitments will also allow consortium applicants to choose HCP-constructed-and-owned infrastructure where it is the most cost-effective way to obtain broadband. Applicants receiving support for long-term capital investments whose useful life extends beyond the period of the funding commitment may be subject to additional reporting requirements to ensure that such facilities continue to be used for their intended purpose throughout their useful life. We delegate authority to the Bureau to issue administrative guidance to implement such requirements.
231. Applicants requesting a funding commitment for a multi-year funding period should indicate the years for which funding is required on Form 462 and, for consortia, with the attachment that lists the HCPs and costs for each HCP within the network. If a long-term contract covers a period of more than three years, the applicant may also have the contract designated as “evergreen” if the contract meets the criteria specified, which will allow the applicant to re-apply for a funding commitment under the contract after three years without having to undergo additional competitive bidding. In choosing a three-year period, we strike a balance between allowing applicants and the Fund to reap the benefits of long-term contracts, reducing administrative burdens on applicants and the Fund, and ensuring that applicants are not “locked in” to long-term contracts which may prevent them from seeking more cost-effective options when prices drop, or they choose to upgrade to higher bandwidths/newer technologies. Three years is also consistent with our requirement that upfront payments averaging more than $50,000/site be amortized over at least three years. Commenters generally support a three-year period as being reasonable. Consistent with current rules, a multi-year funding commitment cannot extend beyond the end of the contract submitted with the request for funding. For example, if an applicant submits a two-year contract and requests a multi-year funding commitment, USAC will only issue a funding commitment for two years. Similarly, if a contract ends in the middle of the funding year, the funding commitment can only extend to the end date of the contract.
232. In the
233. Current Commission rules allow universal service support for state and federal taxes and surcharges assessed on eligible services. We recognize that taxes and surcharges can fluctuate over a three-year commitment period. In the
234. USAC will review funding requests and, if approved, issue a funding commitment letter to the applicant. We allow applicants the opportunity to cure errors on their submissions after initial USAC review, although the responsibility to submit complete and accurate information remains at all times the sole responsibility of the applicant. In order to expedite HCPs' ability to initiate service once they have selected a service provider, we specify a timeframe for USAC's initial review of funding commitment requests. Within 21 calendar days of receipt of a complete funding commitment request, USAC will inform applicants in writing of (1) any and all ministerial or clerical errors that it identifies in the funding commitment request, along with a clear and specific explanation of how the selected participants can remedy those errors; (2) any missing, incomplete, or deficient certifications; and (3) any other deficiencies that USAC finds, including any ineligible network components or ineligible network components that are mislabeled in the funding request. If USAC needs more than 21 calendar days to complete its initial review of the funding request, it should inform the applicant in writing that it needs additional time, and provide the applicant with a date on or before which it expects to provide the information. We remind applicants that this 21-day period is not a deadline for USAC to issue a funding commitment letter. Instead, it is a timeframe for USAC to check that information provided by applicants is complete and accurate, which will then allow USAC to subsequently process the funding request. If an applicant receives a notice that its funding request includes deficiencies, it will have 14 calendar days from the date of receipt of the USAC written notice to amend or re-file its funding request for the sole purpose of correcting the errors identified by USAC.
235. For purposes of prioritizing funding requests, funding requests are deemed to have been filed when the applicant submits an application that is complete. If USAC identifies any errors or deficiencies during its initial 21-day review, the application is not considered to be complete until all such errors and deficiencies are corrected. Applicants may make material changes to their funding requests prior to USAC's issuance of a funding commitment letter, but will be considered, for priority purposes, to have filed their applications as of the date when a complete notice of the material change (
236. Upon completion of its review process, USAC will send funding commitment letter or a denial. The funding commitment letter should specify whether the contract has been deemed evergreen (if requested), and whether a multi-year commitment has been issued (and if so, the annual amount of the commitment). Applicants denied funding for errors other than ministerial or clerical errors must follow USAC's and the Commission's regular appeal procedures. Applicants that do not comply with the terms of this
237. Discussion. In Healthcare Connect Fund, we adopt an invoicing procedure similar to the one currently in use by the Pilot Program. In the Pilot Program, service providers bill HCPs directly for services that they have provided. Upon receipt of a service provider's bill, the HCP creates and approves an invoice for the services it has received, certifies that the invoice is accurate and that it has paid its contribution, and sends the invoice to the service provider. The service provider then certifies the invoice's accuracy and uses it to receive payment from USAC.
238. This invoicing procedure is different from the Primary Program in two principal ways. In the Healthcare Connect Fund, as in the Pilot Program, (1) a HCP or Consortium Leader must certify to USAC that it has paid its contribution to the service provider before the invoice can be sent to USAC and the service provider can be paid, and (2) before any invoice is sent to USAC, both the HCP and service provider must certify that they have reviewed the document and that it is accurate. We believe the adoption of these requirements in the new program will help eliminate waste, fraud, and abuse by making sure that HCPs have made their required contribution to the cost of the services they receive and that the invoice accurately reflects the services an HCP is receiving and the support due to the service provider. It is permissible to certify that these steps have been taken via electronic signature of an officer, director, or other authorized employee of the Consortium Leader or HCP. All invoices must be received by the Administrator within six months of the end date of the funding commitment.
239. Discussion. The
240. Consistent with existing requirements, HCPs should look to state or local procurement laws to determine whether a proposed contract modification would be considered minor and therefore exempt from state or local competitive bidding processes. If a proposed modification would be exempt from state or local competitive bidding requirements, the applicant likewise would not be required to undertake an additional competitive bidding process in connection with the applicant's request for discounted services under the federal universal service support mechanisms. Similarly, if a proposed modification would have to be rebid under state or local competitive bidding requirements, then the applicant also would be required to comply with the Commission's competitive bidding requirements before entering into an agreement adopting the modification.
241. The
242. The cardinal change doctrine recognizes that a modification that exceeds the scope of the original contract harms disappointed bidders because it prevents those bidders from competing for what is essentially a new contract. The Commission adopted the cardinal change doctrine as the test for determining whether a proposed modification will require rebidding of the contract, absent direction on this question from state or local procurement rules, because it believed this standard reasonably applies to contracts for supported services arrived at via competitive bidding. If a proposed modification is not a cardinal change, there is no requirement to undertake the competitive bidding process again.
243. An eligible HCP seeking to modify a contract without undertaking a competitive bidding process should, within 30 calendar days of signing or otherwise entering into the contract modification, file a revised funding commitment request indicating the value of the proposed contract modification so that USAC can track contract performance. The HCP also must demonstrate that the modification is within the original contract's change clause or is otherwise a minor modification that is exempt from the competitive bidding process. The HCP's justification for exemption from the competitive bidding process will be subject to audit and will be reviewed by USAC to determine whether the applicant's request is, in fact, a minor contract modification that is exempt from the competitive bidding process. We note that program participants make contract modifications without competitive bidding at their own risk. If a participant makes a contract modification without competitive bidding, and the modification does not qualify as minor, USAC will not allow support for the modification.
244. We emphasize that even though minor modifications will be exempt from the competitive bidding requirement, parties are not guaranteed support with respect to such modified services. A commitment of funds pursuant to an initial FCC Form 462 does not ensure that additional funds will be available to support the modified services. We conclude that this approach is reasonable and is consistent with our effort to adopt the least burdensome application process possible while maintaining the ability of USAC and the Commission to perform appropriate oversight.
245. Based on our experience in the Pilot Program, we adopt a site and service substitution policy for participants in the Healthcare Connect Fund that is similar to that applied in the Pilot Program. Consortia may make site substitutions in accordance with the policy (because individual applicants are by definition single-site, no site substitutions are allowed for individual applicants). Both individual and consortium applicants may make service substitutions in accordance with the policy.
246. As the Commission found in the Pilot Program, allowing site and service substitutions minimizes the burden on consortium participants and increases administrative efficiency by enabling HCPs to ask USAC to substitute or modify the site or service without modifying the actual commitment letter. Moreover, this policy recognizes the changing broadband needs of HCPs by providing the flexibility to substitute alternative services within the constraints. This policy is a more administratively efficient approach than the Primary Program, in which any modification of funding requires a new application and a new funding commitment letter for each HCP impacted. In its
247. The Pilot Program permits site and service substitutions within a project in certain specified circumstances, in order to provide some amount of flexibility to project participants. Under the Pilot Program, a site or service substitution may be approved if (i) the substitution is provided for in the contract, within the change clause, or constitutes a minor modification, (ii) the site is an eligible HCP and the service is an eligible service under the Pilot Program, (iii) the substitution does not violate any contract provision or state or local procurement laws, and (iv) the requested change is within the scope of the controlling FCC Form 465, including any applicable Request for Proposal. Once USAC has issued a funding commitment letter, support under the letter is capped at the amount provided in the letter. Therefore, support for a qualifying site and service substitution is only guaranteed if the substitution will not cause the total amount of support under the funding commitment letter to increase. We adopt these same criteria for the Healthcare Connect Fund, which we include in a new rule.
248. Discussion. Data from participants and from the Fund Administrator are essential to the Commission's ability to evaluate whether the program is meeting the performance goals adopted and to measure progress toward meeting those goals. We anticipate collecting the necessary data through a combination of the application process and annual reporting requirements. For consortium participants under the Healthcare Connect Fund, we require the submission of annual reports. Annual, rather than quarterly, reports minimize the burden on participants and the Administrator alike while still supporting performance evaluation and enabling us to protect against waste, fraud, and abuse. Because we expect to be able to collect data from single applicants in the Healthcare Connect Fund on forms they already submit, we do not at this time expect that they will need to submit an annual report, unless a report is required for other reasons. To further minimize the burden on participants, we direct the Bureau to work with the Administrator to develop a simple and streamlined reporting system that integrates data collected through the application process, thereby eliminating the need to resubmit any information that has already been provided to the Administrator. We agree with several commenters that to the
249. In the Healthcare Connect Fund, each consortium lead entity must file an annual report with the Administrator on or before September 30 for the preceding funding year (
250. All participants are required to provide the information necessary to ensure the Commission can assess progress towards the performance goals and measures adopted. To track progress toward the first goal, increasing access to broadband, we require participants to report the characteristics, including bandwidth and price, of the connections supported by the Healthcare Connect Fund. To track progress toward the second goal, fostering broadband health care networks, we require participants to report the number and characteristics of the eligible and non-eligible sites connecting to the network. We also expect participants to report whether and to what extent the supported connections are being used for telemedicine, exchange of EHRs, participation in a health information exchange, remote training, and other telehealth applications. To track progress toward the third goal, maximizing the cost-effectiveness of the program, in addition to the reporting requirements under the first goal, we require that participants report the number and nature of all responsive bids received through the competitive bidding process as well as an explanation of how the winning bid was chosen.
251. We delegate authority to the Bureau to provide, and modify as necessary, further guidance on the reporting requirements, for both participants and the Administrator, to ensure the Commission has the necessary information to measure progress towards meeting the performance goals adopted in this
252. We also extend the current Pilot Program reporting requirement for each Pilot project through and including the last funding year in which the project receives Pilot support, but make it an annual instead of a quarterly obligation. We will also make the Pilot Program reporting requirements the same as the Healthcare Connect Fund reporting requirements and delegate to the Bureau the authority to specify whether any additional information from the quarterly report should continue to be included in the annual report that might be needed to evaluate the Pilot Program or to prevent waste, fraud, and abuse in that program. As of the effective date of this
253. In specifying these reporting requirements, we have sought to simplify and streamline the requirements as much as possible, in order to minimize the burden on participants while still ensuring the funding is used for its intended purpose. This furthers all of our performance goals—expanding access to broadband and fostering health care networks while maximizing the cost-effectiveness of the program. The data we collect will also help us to measure progress toward each of these goals.
254. We adopt additional safeguards against waste, fraud, and abuse. These are discussed set forth in new rule § 54.648, in various rule provisions requiring certifications, and elsewhere in the rules and in this
255. In addition to the requirements, we remind participants in the Healthcare Connect Fund that they will be subject to existing Commission rules governing the exclusion of certain persons from activities associated with or relating to the USF support mechanisms (the “suspension and disbarment” rules). We also remind participants that all entities that are delinquent in debt owed to the Commission are be prohibited from receiving support until full payment or satisfactory arrangement to pay the delinquent debt(s) is made, pursuant to the Commission's “red light” rule implementing the Debt Collection Improvement of 1996.
256. As proposed in the
257. Recordkeeping. Consistent with §§ 54.619(a), (b), and (d) of our current rules, program participants and vendors in the Healthcare Connect Fund must maintain for five years certain documentation related to the purchase and delivery of services, network equipment, and participant-owned facilities funded by the program, and they will be required to produce these records upon request. In particular, participants who receive support for long-term capital investments in facilities whose useful life extends beyond the period of the funding commitment shall maintain records for at least 5 years after the end of the useful life of the facility. The
258. Audits and Site Visits. The Commission will continue to use the
259. USAC must assess compliance with the program's requirements, including the new requirements established in this
260. We also direct USAC to conduct random site visits to Healthcare Connect Fund participants to ensure that support is being used for its intended purposes, or as necessary and appropriate based on USAC's review of participants' submissions to USAC. We further direct USAC to notify the Wireline Competition Bureau and the Office of the Managing Director of any site visit findings and analysis within 45 days of the site visit.
261. Certifications. We adopt certification requirements for the Healthcare Connect Fund that are similar to those in the existing RHC programs. Participants in the Healthcare Connect Fund must certify under oath to compliance with certain program requirements, including the requirements to select the most cost-effective bid and to use program support solely for purposes reasonably related to the provision of health care services or instruction.
262. For individual HCP applicants, required certifications must be provided and signed by an officer or director of the HCP, or other authorized employee of the HCP (electronic signatures are permitted). For consortium applicants, an officer, director, or other authorized employee of the Consortium Leader must sign the required certifications. USAC may not knowingly accept certifications signed by a person who is not an officer, director, or other authorized employee of the HCP or Consortium Leader.
263. Third parties may submit forms and other documentation on behalf of the applicant, including the HCP or Consortium Leader's signature and certifications, if USAC receives, prior to submission of the forms or documentation, a written, dated, and signed authorization from the relevant officer, director, or other authorized employee stating that the HCP or Consortium Leader accepts all potential liability from any errors, omissions, or misrepresentations on the forms and/or documents being submitted by the third party. Consistent with longstanding precedent, we find that a HCP or Consortium Leader may not contractually reallocate responsibility for compliance with program requirements to a consultant or similar third party.
264. We find that our actions here will preserve the integrity of the program by protecting against wasteful or unlawful use of support.
265. Discussion. As the Commission proposed in the
266. Our action here is consistent with the Commission's Pilot Program requirement that participants cannot receive support for the same service from both the Pilot Program and other universal service programs. We believe that the prohibition on using funds from other Universal Service programs as part of the HCP's 35 percent contribution requirement is equally important in our reformed RHC program, and that it will help safeguard against wasteful and unlawful duplicative distribution of universal service support.
267. We do not believe, however, that it is necessary in the Healthcare Connect Fund to prohibit the use of federal funds from non-universal service program sources to be part of the HCP's 35 percent contribution requirement. Here, the HCP contribution amount is significantly greater than in the Pilot Program (35 percent as opposed to 15 percent in the Pilot Program). While we are not aware of other sources of federal funding for HCPs that could be used towards their 35 percent contribution, we do not want to preclude the possibility that a recipient in our program could use funding from another federal agency towards its 35 percent contribution. We anticipate that even if other federal funding may be available, HCPs will still be required to secure a significant portion of the cost of broadband supported by this program through their own efforts.
268. We also do not preclude federal government entities, such as the Indian Health Service, or other Tribal entities, from receiving support under the Healthcare Connect Fund, even though their 35 percent contribution may come from federal sources, as does the balance of the budget of such entities. We also do not preclude HCPs from purchasing services from entities that have received federal funds to assist in infrastructure construction, such as through the Broadband Telecommunications Opportunities Program or the Rural Utilities Service Broadband Infrastructure Program. These programs are intended to develop broadband infrastructure in geographic areas that are unserved or underserved by broadband. It would defeat the value of federal investment in such facilities if we were to prohibit such entities from bidding to provide service under the Healthcare Connect Fund.
269. Recovery of Funds. Consistent with the 2007
270. Enforcement and Criminal Sanctions. In the 2007
271. Debarment. In order to prevent fraud, and to prevent bad actors from continuing to participate in the universal service programs, § 54.8 of the Commission's rules provides that the Commission shall suspend and debar parties for conviction of, or civil judgment for, fraud or other criminal offenses arising out of activities associated with or related to the universal service support mechanisms, absent extraordinary circumstances. These debarment procedures in § 54.8 of the Commission's rules will apply to the Healthcare Connect Fund, just as they do to other Commission universal service programs.
272. This
273. As the new Healthcare Connect Fund is implemented, we expect to consider whether the Telecommunications Program remains necessary, and if so whether reforms to the program are appropriate to ensure that any continuing support under that program is provided in a cost-effective manner. In doing so, we will, in particular, look at the needs of extremely remote places like Alaska. Such reforms could include changes to ensure subsidies provided under the program are set at appropriate levels, to provide greater incentives for cost-efficient purchasing by program participants, and to reduce the administrative costs of the program, both to participants and to USAC.
274. In the meantime, the current Telecommunications Program rules and procedures will continue to apply. In addition, because we view our health care universal service programs as accomplishing the same overarching goals, we make the performance goals and measures adopted in this
275. Discussion. There is evidence that skilled nursing facilities are particularly well-suited to improve patient outcomes through greater use of broadband. By their nature, they are often remote from doctors and sophisticated laboratory and testing facilities, making the availability of EHRs and telehealth an especially valuable benefit to convalescents or patients for whom traveling to see a doctor, diagnostician, or specialist would be especially difficult. On the record before us, however, we are unable to determine how support for SNFs can be provided as part of an ongoing program in a “technically feasible and economically reasonable” manner, as required by section 254(h)(2)(A). Nor does the record currently allow us to balance the potential benefits of supporting SNFs against the potential impact on Fund demand. On this record, we reach no conclusion about whether or under what circumstances a SNF might qualify as a health care provider under the statute. We find, however, that funding connections used by SNFs in working with HCPs has the potential to enhance access to advanced services and to generate the associated health care benefits, and that a limited pilot program would enable us to gain experience and information that would allow us to determine whether such funding could be provided on a permanent basis in the future.
276. We therefore conclude that it is both technically feasible and economically reasonable to launch, as an initial step, a pilot program to test how to support broadband connections for SNFs, with safeguards to ensure that the support is directed toward SNFs that are using broadband to help provide hospital-type care for those patients, and that are using those broadband connections for telehealth applications that improve the quality and efficiency of health care delivery. The Skilled Nursing Facilities Pilot Program (SNF Pilot) will focus on determining how we can best utilize program support to assist SNFs that are using broadband connectivity to work with eligible HCPs to optimize care for patients in SNFs through the use of EHRs, telemedicine, and other broadband-enabled health care applications. We will fund up to $50 million for this purpose within the existing health care support mechanism, which remains capped at $400 million annually. We expect to implement this SNF Pilot in Funding Year 2014. We conclude that a total of $50 million may be disbursed for the SNF Pilot over a funding period not to exceed three years, which will moderate the annual impact on Fund demand.
277. We direct the Bureau to develop scoring criteria for applications for the SNF Pilot consistent with the program goals, soliciting input from HHS
278. Once the scoring criteria are developed, the Bureau shall release a Public Notice specifying the application procedures, including dates, deadlines, and other details of the application process. Except as necessary to meet the goals of the SNF Pilot, all requirements applicable to the Healthcare Connect Fund, as described in this
279. To be eligible for funding, those seeking to participate in SNF Pilot projects must commit to robust data gathering as well as analysis and sharing of the data and to submitting an annual report. Applicants will be expected to explain what types of data they intend to gather and how they intend to gather that data. At the conclusion of the Pilot, we expect applicants to be prepared to demonstrate with objective, observable metrics the health care cost savings and/or improved quality of patient care that have been realized through greater use of broadband to provide telemedicine to treat the residents of SNFs. We authorize USAC to use administrative expenses from the Fund to perform data gathering and related functions. The Commission plans to make this data public for the benefit of all interested parties, including third parties that may use such information for their own studies and observations.
280. Discussion. In this
281. For the first funding year of the Healthcare Connect Fund (FY 2013, which runs from July 1, 2013 to June 30, 2014), we adopt a schedule in which the funding for Pilot project applicants and new applicants begins at different times. The schedule for Pilot project applicants will remain unchanged. Starting on July 1, 2013, Pilot projects can seek universal service support under the Healthcare Connect Fund at a 65 percent discount level for existing HCP sites that have exhausted funding allocated to them as well as for new sites to be added to Pilot project networks.
282. For new applicants (either current Telecommunications or Internet Access Program participants or HCPs new to the Commission's programs), the funding schedule will be different in FY 2013. For FY 2013 only, the competitive bidding process for non-Pilot Healthcare Connect Fund applicants will start in late summer 2013, with applicants eligible to receive funds starting on January 1, 2014. This six-month delay is necessary to complete administrative processes relating to the new program, including obtaining approval for new forms under the Paperwork Reduction Act. Starting in FY 2014 (July 1, 2014-June 30, 2015), all applicants will be on the same funding year schedule and will be able to request funds from USAC between July 1-June 30, after completing a competitive bidding process that may start on or after January 1. In addition, to ensure a smooth transition and to minimize the administrative burden, eligible rural HCPs may continue to receive support under the RHC Internet Access Program through the end of funding year 2013, or through June 30, 2014.
283. A timeline of the funding schedule for the first year of the program for both Pilot project applicants and non-Pilot applicants appears in the figure below.
284. As shown in the chart, starting the competitive bidding process in summer of 2013 will give non-Pilot Healthcare Connect Fund applicants time to organize as consortia, to determine their service needs, to design RFPs, and to complete the competitive bidding process before requesting funds from USAC. The experience of Pilot Program participants suggest that it takes at least six months for consortia to organize themselves, obtain the necessary authorizations from individual health care providers, assess broadband needs for the members, and
285. This funding cycle also will encourage individual HCPs to join new or existing consortia rather than applying for funding alone. We expect that some potential single HCP applicants will receive offers to join existing Pilot project networks or newly-formed consortia. We encourage this collaboration. As discussed in the
286. The same considerations do not apply to the Pilot projects. They have already completed the multi-step process of forming consortia and conducting competitive bidding. Allowing them to begin receiving funding effective July 1, 2013, will benefit both existing Pilot project HCPs and HCPs that seek to join existing Pilot projects. Allowing new sites joining existing Pilot projects to receive funds on July 1, 2013, will encourage those projects to grow and become large-scale networks. This funding schedule will also provide sites that will exhaust Pilot Program funding on or before July 1, 2013, a smooth transition into the new program. As the Commission observed in providing transitional funding to such Pilot project HCPs in the
287. Outreach efforts will be essential in order to maximize potential of the Healthcare Connect Fund to support broadband and thereby transform the provision of health care for both individual HCPs and consortia. We therefore direct the Bureau to work with USAC to develop and execute a range of outreach activities to make HCPs aware of the new program and to educate them about the application process. We expect the Bureau will consult with other health care regulatory agencies (such as HHS); with state, local, and Tribal governments; with organizations representing HCPs (especially rural HCPs); and with other stakeholder groups to identify the best means to publicize the new program and to identify likely beneficiaries of the new program—both HCPs already participating in RHC programs and those that are not. We direct USAC to produce and disseminate outreach materials designed to educate eligible HCPs about the new program. In addition, we direct USAC to implement a mechanism for any interested party to subscribe to an automated alert from USAC when Healthcare Connect Fund requests for services or RFPs are posted, based on available filtering criteria.
288. The final deadline for filing requests for funding commitments in the RHC Pilot Program was June 30, 2012. As discussed in the
289. We would expect that as the Pilot projects and their member HCPs begin to exhaust Pilot funding, they will migrate as consortia into the Healthcare Connect Fund. Pilot participants are at different points in the process of implementing their networks and invoicing for the services or infrastructure in their projects. As discussed in the Commission's
290. Several Pilot projects filed requests for additional support, asking the Commission to use funds that were originally allocated to the Pilot Program, but were relinquished or unspent by other Pilot projects that withdrew or did not use their full awards. In their requests for additional funding, these pilot projects argued, among other things, that remaining Pilot funding should be redirected to projects that have demonstrated substantial progress with their original awards and that these additional funds would facilitate expansion of these successful projects.
291. In light of our creation of the new Healthcare Connect Fund, we deny these requests for additional Pilot Program funding. First, we note that Pilot projects may now seek additional funding through the Healthcare Connect Fund, once their current awards are exhausted, so there is no reason to
292. We also dismiss a request by the Texas Health Information Network Collaborative (TxHINC) for an extension of the June 30, 2012, Pilot Program deadline for projects to choose vendors and request funding commitment letters from USAC. In its request, TxHINC explains that, due to circumstances unique to Texas, it was delayed in choosing vendors and submitting funding requests to USAC. We dismiss TxHINC's request, finding it moot because TxHINC ultimately filed its request for funding commitments by the June 30, 2012 deadline.
293. In the
294. Discussion. After consideration of the record received in response to the prioritization proposals in the
295. We believe it is unlikely that the combined health care support programs will approach the $400 million annual cap any time soon. It will likely take a significant amount of time for new consortia to organize, identify broadband needs, prepare RFPs, conduct competitive bidding, and select vendors, and for that reason it will be at least a year before funding will begin to flow to new applicants in the program. Given the Pilot Program experience, it will likely take even longer than that for many consortium applicants to be ready to seek funding under the Healthcare Connect Fund. In addition, our decision to require a 35 percent participant contribution, the limitations we impose on participation by non-rural HCPs, and the $150 million cap on annual funds for upfront payments all should moderate demand for funding in the near term. Finally, the pricing and other efficiencies made possible through consortium purchase of a broader array of services also should help drive down the cost of connections supported by the RHC component of the Universal Service Fund, as some Telecommunications Program participants migrate to the reformed program. For that reason, we project growth in the combined health care universal service fund to remain well under the $400 million cap over the next five years. Because we lack historical demand data for the Healthcare Connect Fund, and because the new program provides support for multi-year contracts and other upfront payments, we direct the Bureau, working with OMD and with the Administrator, to project the amounts to be collected for the USF for the early period of the new program, until such time as historical data provides an adequate basis for projecting demand.
296. In the
297. Discussion. While the original intent of the offset rule was to prevent waste, fraud, and abuse, we find that mandatory application of the rule is no longer necessary or advisable. Our action here is not the first instance in which the Commission has recognized the shortcomings of the offset rule. Indeed, the Bureau has waived the offset rule in several instances because strict application of the rule would have jeopardized the precarious finances and operations of some small, rural HCPs and their service providers. Further, service providers who are not required to contribute to the Fund already receive direct reimbursement. Based on the wide variety of vendors participating in the Pilot Program, we believe that direct reimbursement encouraged extensive bidding on RFPs in the Pilot Program. Likewise, we expect that enabling carriers to elect direct reimbursement in the Healthcare Connect Fund will encourage many more vendors to bid on RFPs than if offset was mandatory, because they will not have to wait to receive reimbursement until they can offset their universal service contribution amount.
298. In light of the shortcomings of the offset rule discussed above, and in consideration of the relevant comments, we revise § 54.611 of the Commission's rules to eliminate mandatory application of the offset procedure. Commenters unanimously support having the option of direct reimbursement, arguing, among other
299. We note that, while commenters unanimously support direct reimbursement, they do not agree on whether to maintain offset as an option. TeleQuality recommends that service providers be given an offset option. Several other commenters do not directly advocate for an offset option but implicitly support it in their support of our proposed rule which includes an offset option. Conversely, a few commenters seek elimination of offset even as an option, with Charter Communications asking the Commission to “formalize its recognition of the deficiencies of the offset rule by eliminating it in the new RHC programs.” While we recognize the deficiencies of mandatory offset, we conclude it is appropriate to maintain offset as an option because it affords flexibility to carriers that deem offset simpler or otherwise more beneficial than direct reimbursement. Further, while carriers such as Charter and GCI prefer, and likely will choose, direct reimbursement, an offset option will not disadvantage them in any way. Finally, our revised rule is consistent with the choice available in the E-rate program, in which service providers may opt to use the offset method or receive direct reimbursement from USAC.
300. Also as we do in the E-rate program, each January we will require service providers to elect the method by which they will be reimbursed, and require that they remain subject to this method for the duration of the calendar year using Form 498, as is the case in the E-rate program. Form 498 will need to be revised to accommodate such elections in the health care support mechanism, and the revised form is unlikely to be approved by OMB under the Paperwork Reduction Act prior to January 31, 2013. Therefore, once revised Form 498 is available, we direct the Bureau to announce via public notice a 30-day window for service providers to make their offset/direct reimbursement election for the health care support mechanism for 2013. To the extent that a service provider fails to remit its monthly universal service obligation, however, any support owed to it under the Healthcare Connect Fund or the Telecommunications Program will automatically be applied as an offset to the service provider's annual universal service obligation.
301. Given the complexities associated with modifying existing rules as well as other reforms adopted in this
302. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the NPRM. The Commission sought written public comment on the proposals in the
303. The Commission is required by section 254 of the Communications Act of 1934, as amended, to promulgate rules to implement the universal service provisions of section 254. On May 8, 1997, the Commission adopted rules that reformed its system of universal service support mechanisms so that universal service is preserved and advanced as markets move toward competition. Among other programs, the Commission adopted a program to provide discounted telecommunications services to public or non-profit health care providers (HCPs) that serve persons in rural areas. The changing technological landscape in rural health care over the past decade has prompted us to propose a new structure for the rural health care universal service support mechanism.
304. In this
305. Building on recommendations from the Staff Evaluation of the Pilot Program and comments received in response to the Commission's
306. No comments were filed in response to the IFRA attached to the
307. Several commenters expressed concern that administrative and reporting requirements for the new program might be too burdensome for small HCPs. Many commenters suggested abandoning quarterly reporting requirements in favor of annual or semi-annual reporting to reduce administrative burdens. Several commenters asked for a common
308. Responses to the
309. Finally, one commenter specifically recommended that the Commission encourage participation from small and women-owned businesses by reducing or waiving matching contributions requirements for non-profit small and women-owned businesses acting as consortium leaders; streamlining administrative reporting requirements; and increasing the performance bond minimum requirement for contracts of $300,000 or higher from the $150,000 floor. In making the determinations reflected in this
310. The RFA directs agencies to provide a description of, and, where feasible, an estimate of, the number of small entities that may be affected by the rules adopted herein. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A “small business concern” is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (SBA). In 2009, there were 27.5 million businesses in the United States, according to SBA Office of Advocacy estimates. The latest available Census data show that there were 5.9 million firms with employees in 2008 and 21.4 million without employees in 2008. Small firms with fewer than 500 employees represent 99.9 percent of the total (employers and non-employers), as the most recent data show there were 18,469 large businesses in 2008.
311. Small entities potentially affected by the reforms adopted herein include eligible non-profit and public health care providers and the eligible service providers offering them services, including telecommunications service providers, Internet Service Providers (ISPs), and vendors of the services and equipment used for dedicated broadband networks.
312. As noted earlier, non-profit businesses and small governmental units are considered “small entities” within the RFA. In addition, we note that census categories and associated generic SBA small business size categories provide the following descriptions of small entities. The broad category of Ambulatory Health Care Services consists of further categories and the following SBA small business size standards. The categories of small business providers with annual receipts of $7 million or less consists of: Offices of Dentists; Offices of Chiropractors; Offices of Optometrists; Offices of Mental Health Practitioners (except Physicians); Offices of Physical, Occupational and Speech Therapists and Audiologists; Offices of Podiatrists; Offices of All Other Miscellaneous Health Practitioners; and Ambulance Services. The category of such providers with $10 million or less in annual receipts consists of: Offices of Physicians (except Mental Health Specialists); Family Planning Centers; Outpatient Mental Health and Substance Abuse Centers; Health Maintenance Organization Medical Centers; Freestanding Ambulatory Surgical and Emergency Centers; All Other Outpatient Care Centers, Blood and Organ Banks; and All Other Miscellaneous Ambulatory Health Care Services. The category of such providers with $13.5 million or less in annual receipts consists of: Medical Laboratories; Diagnostic Imaging Centers; and Home Health Care Services. The category of Ambulatory Health Care Services providers with $34.5 million or less in annual receipts consists of Kidney Dialysis Centers. For all of these Ambulatory Health Care Service Providers, census data indicate that there are a combined total of 368,143 firms that operated for all of 2002. Of these, 356,829 had receipts for that year of less than $5 million. In addition, an additional 6,498 firms had annual receipts of $5 million to $9.99 million; and additional 3,337 firms had receipts of $10 million to $24.99 million; and an additional 865 had receipts of $25 million to $49.99 million. We therefore estimate that virtually all Ambulatory Health Care Services providers are small, given SBA's size categories. We note, however, that our rules affect non-profit and public health care providers, and many of the providers noted above would not be considered “public” or “non-profit.”
313. The broad category of Hospitals consists of the following categories, with an SBA small business size standard of annual receipts of $34.5 million or less: General Medical and Surgical Hospitals, Psychiatric and Substance Abuse Hospitals; and Specialty (Except Psychiatric and Substance Abuse) Hospitals. For these health care providers, census data indicate that there is a combined total of 3,800 firms that operated for all of 2002, of which 1,651 had revenues of less than $25 million, and an additional 627 firms had annual receipts of $25 million to $49.99 million. We therefore estimate that most Hospitals are small, given SBA's size categories.
314. The broad category of Nursing and Residential Care Facilities consists,
315. The broad category of Social Assistance consists,
316.
317.
318. We have included small incumbent LECs in this present RFA analysis. A “small business” under the RFA is one that,
319. Competitive Local Exchange Carriers (competitive LECs), Competitive Access Providers (CAPs), Shared-Tenant Service Providers, and Other Local Service Providers. Neither the Commission nor the SBA has developed a small business size standard specifically for these service providers. The closest applicable size standard under SBA rules is for Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees. According to Commission data, 1,442 carriers reported that they were engaged in the provision of either competitive local exchange services or competitive access provider services. Of these carriers, an estimated 1,256 have 1,500 or fewer employees and 186 have more than 1,500 employees. In addition, 17 carriers have reported that they are Shared-Tenant Service Providers, and all 17 are estimated to have 1,500 or fewer employees. In addition, 72 carriers have reported that they are Other Local Service Providers. Of these 72 carriers, an estimated 70 have 1,500 or fewer employees and two have more than 1,500 employees. Consequently, the Commission estimates that most providers of competitive local exchange service, competitive access providers, Shared-Tenant Service Providers, and Other Local Service Providers are small entities that may be affected by rules adopted pursuant to this
320.
321.
322.
323.
324. The first category of Satellite Telecommunications “comprises establishments primarily engaged in providing point-to-point telecommunications services to other establishments in the telecommunications and broadcasting industries by forwarding and receiving communications signals via a system of satellites or reselling satellite
325. The second category of Other Telecommunications “primarily engaged in providing specialized telecommunications services, such as satellite tracking, communications telemetry, and radar station operation. This industry also includes establishments primarily engaged in providing satellite terminal stations and associated facilities connected with one or more terrestrial systems and capable of transmitting telecommunications to, and receiving telecommunications from, satellite systems. Establishments providing Internet services or voice over Internet protocol (VoIP) services via client-supplied telecommunications connections are also included in this industry.” For this category, Census Bureau data for 2007 show that there were a total of 2,383 firms that operated for the entire year. Of this total, 2,346 firms had annual receipts of under $25 million. Consequently, we estimate that the majority of Other Telecommunications firms are small entities that might be affected by our action.
326.
327.
328.
329.
330.
331.
332.
333. The reporting and recordkeeping requirements in this
334.
335. Consortium Leaders should obtain supporting information and/or documents to support eligibility for each HCP when they collect LOAs. Consortium applicants must also submit documentation regarding network planning as part of the application process, although the Commission will monitor experience under the new rule, and may make adjustments in the future, if necessary, to ensure that this requirement is minimally burdensome while creating appropriate incentives for applicants to make thoughtful, cost-effective purchases. Applicants in the Healthcare Connect Fund are not required to submit technology plans with their requests for service, but the Commission may re-evaluate this decision in the future based on experience with the new program.
336.
337. Applicants subject to competitive bidding must submit new FCC Form 461 and supporting documentation to the Universal Service Administrative Company (USAC). On Form 461, applicants must provide basic information regarding the HCP(s) on the application (including contact information for potential bidders); a brief description of the desired services; and certifications designed to ensure compliance with program rules and minimize waste, fraud, and abuse.
338. Applicants must supplement their Form 461 with a Request for Proposals (RFP) on USAC's Web site in the following instances: (1) Consortium applications that seek more than $100,000 in program support in a funding year; (2) applicants who are required to issue an RFP under applicable state or local procurement rules or regulations; and (3) consortium applications that seek support for infrastructure (
339. Applicants also are required to submit the following documents, which will not be publicly posted by USAC.
340.
341.
342.
343. Finally, all applicants subject to competitive bidding must certify to USAC that the services and/or infrastructure selected are, to the best of the applicant's knowledge, the most cost-effective option available. Applicants must submit documentation to USAC to support their certifications, including a copy of each bid received (winning, losing, and disqualified), the bid evaluation criteria, and any other related documents, such as bid evaluation sheets; a list of people who evaluated bids (along with their title/role/relationship to the applicant organization); memos, board minutes, or similar documents related to the vendor selection/award; copies of notices to winners; and any correspondence with service providers during the bidding/evaluation/award phase of the process. Bid evaluation documents need not be in a certain format, but the level of documentation should be appropriate for the scale and scope of the services for which support is requested.
344.
345.
346. The
347.
348.
349.
350. The FRFA requires an agency to describe any significant alternatives that it has considered in developing its approach, which may include the following four alternatives (among others): “(1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance and reporting requirements under the rule for such small entities; (3) the use of performance rather than design standards; and (4) an exemption from coverage of the rule, or any part thereof, for such small entities.” Accordingly, we have taken the following steps to minimize the impact on small entities.
351.
352.
353.
354.
355.
356.
357.
358.
359.
360. This
361. The Commission will send a copy of this order to Congress and the Government Accountability Office pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).
362. Accordingly, it is ordered that, pursuant to sections 1, 2, 4(i)–(j), 201(b), and 254 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154(i), 154(j), 201(b), and 254, this Report and Order is adopted, and, pursuant to 5 U.S.C. 553(d)(3) and §§ 1.4(b)(1), 1.103(a), and 1.427(a) of the Commission's rules, 47 CFR 1.4(b)(1), 1.103(a), 1.427(a).
363. It is further ordered that Part 54 of the Commission's rules, 47 CFR Part 54, is amended as set forth in the Appendix, and such rules shall become effective April 1, 2013, except for those rules and requirements that involve Paperwork Reduction Act burdens, which shall become effective immediately upon announcement in the
364. It is further ordered that pursuant to 5 U.S.C. 801(a)(1)(A), the Commission shall send a copy of this Report and Order to Congress and to the Government Accountability Office pursuant to the Congressional Review Act.
365. It is further ordered that the Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, shall send a copy of this Report and Order, including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.
366. It is further ordered that, pursuant to the authority contained in
367. It is further ordered that, pursuant to the authority contained in sections 1–4 and 254 of the Communications Act of 1934, as amended, 47 U.S.C. 151–154 and 254, the request for an extension of the June 30, 2012, Rural Health Care Pilot Program deadline filed by the Texas Health Information Network Collaborative is dismissed as moot.
368. It is further ordered that, pursuant to the authority contained in sections 1–4 and 254 of the Communications Act of 1934, as amended, 47 U.S.C. 151–154 and 254, the requests for waiver of 47 CFR 54.611 of the Commission's rules filed by Network Services Solutions, L.L.C., and Richmond Connections, Inc., are granted.
369. It is further ordered that, pursuant to the authority contained in sections 1–4 and 254 of the Communications Act of 1934, as amended, 47 U.S.C. 151–154 and 254, USAC shall make an initial reimbursement payment to Network Services Solutions, L.L.C., and Richmond Connections, Inc., no later than December 31, 2012 as described herein.
370. It is further ordered that, pursuant to the authority contained in sections 1–4 and 254 of the Communications Act of 1934, as amended, 47 U.S.C. 151–154 and 254, the requests for stay of enforcement of 47 CFR § 54.611 of the Commission's rules filed by Network Services Solutions, L.L.C., and Richmond Connections, Inc., are dismissed as moot.
Communications common carriers, Health facilities, Reporting and recordkeeping requirements, Telecommunications, Telephone.
For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR part 54 as follows:
Secs. 5, 48 Stat. 1068, as amended; 47 U.S.C. 155.
As used in this subpart, the following terms shall be defined as follows:
(a)
(1) Post-secondary educational institution offering health care instruction, including a teaching hospital or medical school;
(2) Community health center or health center providing health care to migrants;
(3) Local health department or agency;
(4) Community mental health center;
(5) Not-for-profit hospital;
(6) Rural health clinic; or
(7) Consortium of health care providers consisting of one or more entities described in paragraphs (a)(1) through (a)(6) of this section.
(b)
(2) Notwithstanding the definition of “rural area,” any health care provider that is located in a “rural area” under the definition used by the Commission prior to July 1, 2005, and received a funding commitment from the rural health care program prior to July 1, 2005, is eligible for support under this subpart.
(c)
(a)
(2) Each separate site or location of a health care provider shall be considered an individual health care provider for purposes of calculating and limiting support under this subpart.
(b)
(a)
(b)
(c)
(d)
The addition and revisions read as follows:
(a)
(b) * * *
(1) An eligible health care provider seeking to receive telecommunications services eligible for universal service support under the Telecommunications Program shall submit a completed FCC Form 465 to the Administrator. FCC Form 465 shall be signed by the person authorized to order telecommunications services for the health care provider and shall include, at a minimum, that person's certification under oath that:
(i) The requester is a public or non-profit entity that falls within one of the seven categories set forth in the definition of health care provider, listed in § 54.600(a);
(ii) The requester is physically located in a rural area;
(a)
(2) For consortia, universal service support under the Telecommunications Program shall apply only to the portion of eligible services used by an eligible health care provider.
(b)
(c)
(a) If a rural health care provider requests support for an eligible service to be funded from the Telecommunications Program that is to be provided over a distance that is less than or equal to the “standard urban distance,” as defined in paragraph (c) of this section, for the state in which it is located, the “urban rate” for that service shall be a rate no higher than the highest tariffed or publicly-available rate charged to a commercial customer for a functionally similar service in any city with a population of 50,000 or more in that state, calculated as if it were provided between two points within the city.
(a) The amount of universal service support provided for an eligible service to be funded from the Telecommunications Program shall be the difference, if any, between the urban rate and the rural rate charged for the service, as defined herein. In addition, all reasonable charges that are incurred by taking such services, such as state and federal taxes shall be eligible for universal service support. Charges for termination liability, penalty surcharges, and other charges not included in the cost of taking such service shall not be covered by the universal service support mechanisms. Under the Telecommunications Program, rural health care providers may choose one of the following two support options.
(1) * * *
(iv) A telecommunications carrier that provides telecommunications service to a rural health care provider participating in an eligible health care consortium, and the consortium must establish the actual distance-based charges for the health care provider's portion of the shared telecommunications services.
(3)
(d) * * *
(1) Rural public and non-profit health care providers may receive support for rural satellite services under the Telecommunications Program, even when another functionally similar terrestrial-based service is available in that rural area. Support for satellite services shall be capped at the amount the rural health care provider would have received if they purchased a functionally similar terrestrial-based alternative.
(2) Rural health care providers seeking support from the Telecommunications Program for satellite services shall provide to the Administrator with the Form 466, documentation of the urban and rural rates for the terrestrial-based alternatives.
(e) * * *
(1)
The revisions read as follows:
(b)
(c)
(2) The requester is physically located in a rural area, or if the requester is a mobile rural health care provider requesting services under § 54.609(e), that the requester has certified that it is serving eligible rural areas;
(a) * * *
(1) Health care providers shall maintain for their purchases of services supported under the Telecommunications Program documentation for five years from the end of the funding year sufficient to establish compliance with all rules in this subpart. Documentation must include, among other things, records of allocations for consortia and entities that engage in eligible and ineligible activities, if applicable. Mobile rural health care providers shall maintain annual logs indicating: The date and locations of each clinic stop; and the number of patients served at each such clinic stop.
(d)
(a)
(b)
(a) The maximum support distance for the Telecommunications Program is the distance from the health care provider to the farthest point on the jurisdictional boundary of the city in that state with the largest population, as calculated by the Administrator.
(b) An eligible rural health care provider may purchase an eligible telecommunications service supported under the Telecommunications Program that is provided over a distance that exceeds the maximum supported distance.
(c) If an eligible rural health care provider purchases an eligible telecommunications service supported under the Telecommunications Program that exceeds the maximum supported distance, the health care provider must pay the applicable rural rate for the distance that such service is carried beyond the maximum supported distance.
(a)
(b)
(c)
(a)
(b)
(c)
(1)
(2)
(3)
(4)
(5)
(6)
(a)
(1) Prior to the submission of the request for services, the Consortium Leader must obtain authorization, the necessary certifications, and any supporting documentation from each consortium member to permit the Consortium Leader to submit the request for services and prepare and post the request for proposal on behalf of the member.
(2) Prior to the submission of the funding request, the Consortium Leader must secure authorization, the necessary certifications, and any supporting documentation from each consortium member to permit the Consortium Leader to submit the funding request and manage invoicing and payments on behalf of the member.
(b)
(c)
(2) For HCPs located on Tribal lands, if the health care facility is a contract facility that is run solely by the tribe, the appropriate tribal leader, such as the tribal chairperson, president, or governor, shall also sign the LOA, unless the health care responsibilities have been duly delegated to another tribal government representative.
(a)
(b)
(1) Eligible sources include the applicant or eligible health care provider participants; state grants, funding, or appropriations; federal funding, grants, loans, or appropriations except for other federal universal service funding; Tribal government funding; and other grant funding, including private grants.
(2) Ineligible sources include (but are not limited to) in-kind or implied contributions from health care providers; direct payments from vendors or other service providers, including contractors and consultants to such entities; and for-profit entities.
(c)
(d)
(1) The consortium's selection criteria and evaluation for “cost-effectiveness” pursuant to § 54.642 cannot provide a preference to bidders that offer to construct excess capacity.
(2) The applicant must pay the full amount of the additional costs for excess capacity facilities that will not be part of the supported health care network.
(3) The additional cost of constructing excess capacity facilities may not count toward a health care provider's required contribution.
(4) The inclusion of excess capacity facilities cannot increase the funded cost of the dedicated health care network in any way.
(5) An eligible health care provider (typically the consortium, although it may be an individual health care provider participating in the consortium) must retain ownership of the excess capacity facilities. It may make the facilities available to third parties only under an indefeasible right of use (IRU) or lease arrangement. The lease or IRU between the participant and the third party must be an arm's length transaction. To ensure that this is an arm's length transaction, neither the vendor that installs the excess capacity facilities nor its affiliate is eligible to enter into an IRU or lease with the participant.
(6) Any amount prepaid for use of the excess capacity facilities (IRU or lease) must be placed in an escrow account. The participant can then use the escrow account as an eligible source of funds for the participant's 35 percent contribution to the project.
(7) All revenues from use of the excess capacity facilities by the third party must be used for the health care provider contribution or for sustainability of the health care network supported by the Healthcare Connect Fund. Network costs that may be funded with any additional revenues that remain include administration, equipment, software, legal fees, or other costs not covered by the Healthcare Connect Fund, as long as they are relevant to sustaining the network.
(a)
(b)
(1) Support for recurring charges associated with dark fiber is only available once the dark fiber is “lit” and actually being used by the health care provider. Support for non-recurring charges for dark fiber is only available for fiber lit within the same funding year, but applicants may receive up to a one-year extension to light fiber if they provide documentation to the Administrator that construction was unavoidably delayed due to weather or other reasons.
(2) Requests for proposals (RFPs) that solicit dark fiber solutions must also solicit proposals to provide the needed services over lit fiber over a time period comparable to the duration of the dark fiber lease or indefeasible right of use.
(3) If an applicant intends to request support for equipment and maintenance costs associated with lighting and operating dark fiber, it must include such elements in the same RFP as the dark fiber so that the Administrator can review all costs associated with the fiber when determining whether the applicant chose the most cost-effective bid.
(c)
(2) Consortium applicants may receive support for upfront payments for maintenance costs associated with leases of dark or lit fiber, subject to the limitations in § 54.638.
(d)
(e)
(2) Support is available to extend vendor deployment of facilities up to the “demarcation point,” which is the boundary between facilities owned or controlled by the vendor, and facilities owned or controlled by the customer.
(a) Both individual and consortium applicants may receive support for network equipment necessary to make functional an eligible service that is supported under the Healthcare Connect Fund.
(b) Consortium applicants may also receive support for network equipment necessary to manage, control, or maintain an eligible service or a dedicated health care broadband network. Support for network equipment is not available for networks that are not dedicated to health care.
(c) Network equipment eligible for support includes the following:
(1) Equipment that terminates a carrier's or other provider's transmission facility and any router/switch that is directly connected to either the facility or the terminating equipment. This includes equipment required to light dark fiber, or equipment necessary to connect dedicated health care broadband networks or individual health care providers to middle mile or backbone networks;
(2) Computers, including servers, and related hardware (
(3) Software used for network management, maintenance, or other network operations, and development of software that supports network management, maintenance, and other network operations;
(4) Costs of engineering, furnishing (
(5) Equipment that is a necessary part of health care provider-owned network facilities.
(d) Additional limitations: Support for network equipment is limited to equipment:
(1) Purchased or leased by a Consortium Leader or eligible health care provider; and
(2) Used for health care purposes.
(a) Subject to the funding limitations under §§ 54.675 and 54.638 and the following restrictions, consortium applicants may receive support for network facilities that will be constructed and owned by the consortium (if the consortium is an eligible health care provider) or eligible health care providers within the consortium.
(1) Consortia seeking support to construct and own network facilities are required to solicit bids for both:
(i) Services provided over third-party networks; and
(ii) Construction of participant-owned network facilities, in the same request for proposals. Requests for proposals must provide sufficient detail so that cost-effectiveness can be evaluated over the useful life of the proposed network facility to be constructed.
(2) Support for participant-constructed and owned network facilities is only available where the consortium demonstrates that constructing its own network facilities is the most cost-effective option after competitive bidding, pursuant to § 54.642.
(b) [Reserved].
(a) The connections and network equipment associated with off-site data centers and off-site administrative offices used by eligible health care providers for their health care purposes are eligible for support under the Healthcare Connect Fund, subject to the conditions and restrictions set forth in paragraph (b) of this section.
(1) An “off-site administrative office” is a facility that does not provide hands-on delivery of patient care, but performs administrative support functions that are critical to the provision of clinical care by eligible health care providers.
(2) An “off-site data center” is a facility that serves as a centralized repository for the storage, management, and dissemination of an eligible health care provider's computer systems, associated components, and data, including (but not limited to) electronic health records.
(b)
(1) Connections eligible for support are only those that are between:
(i) Eligible health care provider sites and off-site data centers or off-site administrative offices,
(ii) Two off-site data centers,
(iii) Two off-site administrative offices,
(iv) An off-site data center and the public Internet or another network,
(v) An off-site administrative office and the public Internet or another network, or
(vi) An off-site administrative office and an off-site data center.
(2) The supported connections and network equipment must be used solely for health care purposes.
(3) The supported connections and network equipment must be purchased by an eligible health care provider or a public or non-profit health care system that owns and operates eligible health care provider sites.
(4) If traffic associated with one or more ineligible health care provider sites is carried by the supported connection and/or network equipment, the ineligible health care provider sites must allocate the cost of that connection and/or equipment between eligible and ineligible sites, consistent with the “fair share” principles set forth in § 54.639(d).
(a) Upfront payments include all non-recurring costs for services, equipment, or facilities, other than reasonable and customary installation charges of up to $5,000.
(b) The following limitations apply to all upfront payments:
(1) Upfront payments associated with services providing a bandwidth of less than 1.5 Mbps (symmetrical) are not eligible for support.
(2) Only consortium applicants are eligible for support for upfront payments.
(c) The following limitations apply if a consortium makes a request for support for upfront payments that exceeds, on average, $50,000 per eligible site in the consortium:
(1) The support for the upfront payments must be prorated over at least three years.
(2) The upfront payments must be part of a multi-year contract.
The following are examples of ineligible expenses:
1. Costs associated with general computing, software, applications, and Internet content development are not supported, including the following:
i. Computers, including servers, and related hardware (
ii. End user wireless devices, such as smartphones and tablets;
iii. Software, unless used for network management, maintenance, or other network operations;
iv. Software development (excluding development of software that supports network management, maintenance, and other network operations);
v. Helpdesk equipment and related software, or services, unless used exclusively in support of eligible services or equipment;
vi. Web server hosting;
vii. Web site portal development;
viii. Video/audio/web conferencing equipment or services; and
ix. Continuous power source.
2. Costs associated with medical equipment (hardware and software), and other general health care provider expenses are not supported, including the following:
i. Clinical or medical equipment;
ii. Telemedicine equipment, applications, and software;
iii. Training for use of telemedicine equipment;
iv. Electronic medical records systems; and
v. Electronic records management and expenses.
Ineligible administrative expenses include, but not limited to, the following expenses:
1. Personnel costs (including salaries and fringe benefits), except for personnel expenses in a consortium application that directly relate to designing, engineering, installing, constructing, and managing a dedicated broadband network. Ineligible costs of this category include, for example, personnel to perform program management and coordination, program administration, and marketing;
2. Travel costs, except for travel costs that are reasonable and necessary for network design or deployment and that are specifically identified and justified as part of a competitive bid for a construction project;
3. Legal costs;
4. Training, except for basic training or instruction directly related to and required for broadband network installation and associated network operations;
5. Program administration or technical coordination (
6. Administration and marketing costs (
7. Billing expenses (
8. Helpdesk expenses (
9. Technical support services that provide more than basic maintenance.
(i) If the vendor charges a separate and independent price for each site, an ineligible site must pay the full undiscounted price.
(ii) If there is no separate and independent price for each site, the applicant must prorate the undiscounted price for the “shared” service, equipment, or facility between eligible and ineligible sites on a proportional fully-distributed basis. Applicants must make this cost allocation using a method that is based on objective criteria and reasonably reflects the eligible usage of the shared service, equipment, or facility. The applicant bears the burden of demonstrating the reasonableness of the allocation method chosen.
(2)
(3)
(4)
(a)
(b)
(a)
(b)
(2) Vendors who intend to bid to provide supported services, equipment, or facilities to a health care provider may not simultaneously help the health care provider choose a winning bid. Any vendor who submits a bid, and any individual or entity that has a financial interest in such a vendor, is prohibited from:
(i) Preparing, signing or submitting an applicant's request for services;
(ii) Serving as the Consortium Leader or other point of contact on behalf of applicant(s);
(iii) Being involved in setting bid evaluation criteria; or
(iv) Participating in the bid evaluation or vendor selection process (except in their role as potential vendors).
(3) All potential bidders must have access to the same information and must be treated in the same manner.
(4) All applicants and vendors must comply with any applicable state, Tribal, or local competitive bidding requirements. The competitive bidding requirements in this section apply in addition to state, Tribal, and local competitive bidding requirements and are not intended to preempt such state, Tribal, or local requirements.
(c)
(d)
(e)
(1)
(i) The person signing the application is authorized to submit the application on behalf of the applicant and has examined the form and all attachments, and to the best of his or her knowledge, information, and belief, all statements of fact contained therein are true.
(ii) The applicant has followed any applicable state, Tribal, or local procurement rules.
(iii) All Healthcare Connect Fund support will be used solely for purposes reasonably related to the provision of health care service or instruction that the HCP is legally authorized to provide under the law of the state in which the services are provided and will not be sold, resold, or transferred in consideration for money or any other thing of value.
(iv) The applicant satisfies all of the requirements under section 254 of the Act and applicable Commission rules.
(v) The applicant has reviewed all applicable requirements for the program and will comply with those requirements.
(2)
(3)
(4)
(ii) An applicant must submit an RFP:
(A) If it is required to issue an RFP under applicable State, Tribal, or local procurement rules or regulations;
(B) If the applicant is a consortium seeking more than $100,000 in program support during the funding year, including applications that seek more than $100,000 in program support for a multi-year commitment; or
(C) If the applicant is a consortium seeking support for participant-constructed and owned network facilities.
(B) An RFP must specify the period during which bids will be accepted.
(C) An RFP must include the bid evaluation criteria described in paragraph (d) of this section, and solicit sufficient information so that the criteria can be applied effectively.
(D) Consortium applicants seeking support for long-term capital investments whose useful life extends beyond the period of the funding commitment (
(E) Applicants may prepare RFPs in any manner that complies with the rules in this subpart and any applicable state, Tribal, or local procurement rules or regulations.
(5)
(A) Goals and objectives of the network;
(B) Strategy for aggregating the specific needs of health care providers (including providers that serve rural areas) within a state or region;
(C) Strategy for leveraging existing technology to adopt the most efficient and cost effective means of connecting those providers;
(D) How the supported network will be used to improve or provide health care delivery;
(E) Any previous experience in developing and managing health information technology (including telemedicine) programs; and
(F) A project management plan outlining the project's leadership and management structure, and a work plan, schedule, and budget.
(ii)
(f)
(1) Form 461,
(2) Bid evaluation criteria,
(3) Request for proposal, and
(4) Network plan.
(g)
(1)
(2) Applicants who plan to request evergreen status under § 54.642(h)(4)(ii) must enter into a contract that identifies both parties, is signed and dated by the health care provider or Consortium Leader after the 28-day waiting period expires, and specifies the type, term, and cost of service.
(h)
(ii) A contract entered into by a health care provider or consortium as a result of competitive bidding may be designated as evergreen if it meets all of the following requirements:
(A) Is signed by the individual health care provider or consortium lead entity;
(B) Specifies the service type, bandwidth and quantity;
(C) Specifies the term of the contract;
(D) Specifies the cost of services to be provided; and
(E) Includes the physical location or other identifying information of the health care provider sites purchasing from the contract.
(iii) Participants may exercise voluntary options to extend an evergreen contract without undergoing additional competitive bidding, if:
(A) The voluntary extension(s) is memorialized in the evergreen contract;
(B) The decision to extend the contract occurs before the participant files its funding request for the funding year when the contract would otherwise expire; and
(C) The voluntary extension(s) do not exceed five years in the aggregate.
(a) Once a vendor is selected, applicants must submit a “Funding Request” (and supporting documentation) to provide information about the services, equipment, or facilities selected and certify that the services selected were the most cost-effective option of the offers received. The following information should be submitted to the Administrator with the Funding Request.
(1)
(2)
(i) The person signing the application is authorized to submit the application on behalf of the applicant and has examined the form and all attachments, and to the best of his or her knowledge, information, and belief, all statements of fact contained therein are true.
(ii) Each vendor selected is, to the best of the applicant's knowledge, information and belief, the most cost-effective vendor available, as defined in § 54.642(c).
(iii) All Healthcare Connect Fund support will be used only for eligible health care purposes.
(iv) The applicant is not requesting support for the same service from both the Telecommunications Program and the Healthcare Connect Fund.
(v) The applicant satisfies all of the requirements under section 254 of the Act and applicable Commission rules, and understands that any letter from the Administrator that erroneously commits funds for the benefit of the applicant may be subject to rescission.
(vi) The applicant has reviewed all applicable requirements for the program and will comply with those requirements.
(vii) The applicant will maintain complete billing records for the service for five years.
(3)
(4)
(5)
(6)
(i) Any revisions to the network plan submitted with the Request for Services pursuant to § 54.642(e)(5)(i), as necessary. If not previously submitted, the consortium should provide a narrative description of how the network will be managed, including all administrative aspects of the network, including but not limited to invoicing, contractual matters, and network operations. If the consortium is required to provide a sustainability plan as set forth in § 54.643(a)(6)(iv), the revised budget should include the budgetary factors discussed in the sustainability plan requirements.
(ii) A list of participating health care providers and all of their relevant information, including eligible (and ineligible, if applicable) cost information for each participating health care provider.
(iii) Evidence of a viable source for the undiscounted portion of supported costs.
(iv) Sustainability plans for applicants requesting support for long-term capital expenses: Consortia that seek funding to construct and own their own facilities or obtain indefeasible right of use or capital lease interests are required to submit a sustainability plan with their funding requests demonstrating how they intend to maintain and operate the facilities that are supported over the relevant time period. Applicants may incorporate by reference other portions of their applications (
(A)
(B)
(C)
(
(
(
(D)
(E)
(F)
(v)
(b) [Reserved]
(a) Participants in the Healthcare Connect Fund are permitted to enter into multi-year contracts for eligible expenses and may receive funding commitments from the Administrator for a period that covers up to three funding years.
(b) If a long-term contract covers a period of more than three years, the applicant may also have the contract designated as “evergreen” under § 54.642(h)(4) which will allow the applicant to re-apply for a funding commitment under the contract after three years without having to undergo additional competitive bidding.
(a) The Consortium Leader (or health care provider, if participating individually) must certify to the Administrator that it has paid its contribution to the vendor before the invoice can be sent to Administrator and the vendor can be paid.
(b) Before the Administrator may process and pay an invoice, both the Consortium Leader (or health care provider, if participating individually) and the vendor must certify that they have reviewed the document and that it is accurate. All invoices must be received by the Administrator within six months of the end date of the funding commitment.
(a) A Consortium Leader (or health care provider, if participating individually) may request a site or service substitution if:
(1) The substitution is provided for in the contract, within the change clause, or constitutes a minor modification;
(2) The site is an eligible health care provider and the service is an eligible service under the Healthcare Connect Fund;
(3) The substitution does not violate any contract provision or state, Tribal, or local procurement laws; and
(4) The requested change is within the scope of the controlling request for services, including any applicable request for proposal used in the competitive bidding process.
(b) Support for a qualifying site and service substitution will be provided to the extent the substitution does not cause the total amount of support under the applicable funding commitment to increase.
(a) Each consortium lead entity must file an annual report with the Administrator on or before September 30 for the preceding funding year, with the information and in the form specified by the Wireline Competition Bureau.
(b) Each consortium is required to file an annual report for each funding year in which it receives support from the Healthcare Connect Fund.
(c) For consortia that receive large upfront payments, the reporting requirement extends for the life of the supported facility.
(a)
(b)
(2) Vendors shall retain records related to the delivery of supported services, facilities, or equipment to document compliance with program rules and orders for at least 5 years after the last day of the delivery of supported services, equipment, or facilities in a particular funding year.
(3) Both participants and vendors shall produce such records at the request of the Commission, any auditor appointed by the Administrator or the Commission, or of any other state or federal agency with jurisdiction.
For individual health care provider applicants, required certifications must be provided and signed by an officer or director of the health care provider, or other authorized employee of the health care provider. For consortium applicants, an officer, director, or other authorized employee of the Consortium Leader must sign the required certifications. Pursuant to § 54.680, electronic signatures are permitted for all required certifications.
(a)
(b)
(a) Eligible health care providers that seek support under the Healthcare Connect Fund for telecommunications services may not also request support from the Telecommunications Program for the same services.
(b) Eligible health care providers that seek support under the Telecommunications Program or the Healthcare Connect Fund may not also request support from any other universal service program for the same expenses.
(a)
(b)
(c)
(1) Generally, funds shall be available to eligible health care providers on a first-come-first-served basis, with requests accepted beginning on the first of January prior to each funding year.
(2) For the Telecommunications Program and the Healthcare Connect Fund, the Administrator shall implement a filing window period that treats all eligible health care providers filing within the window period as if their applications were simultaneously received.
(3) [Reserved]
(4) The deadline to submit a funding commitment request under the Telecommunications Program and the Healthcare Connect Fund is June 30 for the funding year that begins on the previous July 1.
(d)
(e)
(f)
(1) The Administrator shall divide the total remaining funds available for the funding year by the total amount of Telecommunications Program and Healthcare Connect Fund support requested by each applicant that has filed during the window period, to produce a pro-rata factor.
(2) The Administrator shall calculate the amount of Telecommunications Program and Healthcare Connect Fund support requested by each applicant that has filed during the filing window.
(3) The Administrator shall multiply the pro-rata factor by the total dollar amount requested by each applicant filing during the window period. Administrator shall then commit funds to each applicant for Telecommunications Program and Healthcare Connect Fund support consistent with this calculation.
(a) A service provider that contributes to the universal service support mechanisms under subpart H of this part and also provides services eligible for support under this subpart to eligible health care providers may, at the election of the contributor:
(1) Treat the amount eligible for support under this subpart as an offset against the contributor's universal service support obligation for the year in which the costs for providing eligible services were incurred; or
(2) Receive direct reimbursement from the Administrator for that amount.
(b) Service providers that are contributors shall elect in January of each year the method by which they will be reimbursed and shall remain subject to that method for the duration of the calendar year. Any support amount that is owed a service provider that fails to remit its monthly universal service contribution obligation, however, shall first be applied as an offset to that contributor's contribution
(c) If a service provider providing services eligible for support under this subpart elects to treat that support amount as an offset against its universal service contribution obligation and the total amount of support owed exceeds its universal service obligation, calculated on an annual basis, the service provider shall receive a direct reimbursement in the amount of the difference. Any such reimbursement due a service provider shall be provided by the Administrator no later than the end of the first quarter of the calendar year following the year in which the costs were incurred and the offset against the contributor's universal service obligation was applied.
(a) For the purposes of this subpart, an electronic signature (defined by the Electronic Signatures in Global and National Commerce Act, as an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record) has the same legal effect as a written signature.
(b) For the purposes of this subpart, an electronic record (defined by the Electronic Signatures in Global and National Commerce Act, as a contract or other record created, generated, sent, communicated, received, or stored by electronic means) constitutes a record.