FCC proposes changes to how it determines Rural Health Care Program rate

The FCC on Friday approved a proposed rule that would revise to how the agency sets rates for its Rural Health Care Program.

The Rural Health Care Program, which was started in 1997, provides funding to rural healthcare providers to defray the cost of purchasing broadband and telecommunications services, in part by subsidizing the difference between rates for telecom services in rural areas and rates charged for similar services in nearby urban areas.

The proposed rule seeks comment on revised methods for determining rates for the Rural Health Care Program's Telecom Program, following issues with a process adopted in 2019.

The FCC in 2019 directed the Universal Service Administrative Co., an independent not-for-profit designated by the FCC to administer telecom funding, to develop a database of median urban and rural rates for various telecom services by state. The FCC waived using those rates for funding years 2021 and 2022 after identifying inconsistencies in the database.

Those "anomalies" included instances in which the median rates were lower in areas that were more rural, compared to less rural areas in the same state, as well as instances in which the median rates for higher bandwidth services were lower than for lower bandwidth services in similar areas, according to a draft of the proposed rule.

The proposed rule seeks comment on refined definitions for categorizing rurality and comparable telecom services, in an effort to improve the quality of program data.

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It also requests comments on whether to retain the database with such changes, and if so, what rate determination approach to use. The proposal outlines a regression model that could be used to identify a monthly rate that a provider would pay, based on variables like bandwidth, service type, rurality of the region and the state, according to the draft.

"We seek comment on whether the modifications to rurality tiers and service categorizations discussed in this further notice, or any further modifications identified by commenters, will sufficiently address those anomalies," it reads.

The proposed rule was unanimously adopted by the FCC's chairwoman and three commissioners at the agency's February monthly meeting Friday.

"The Telecom Program is a lifeline that supports telehealth efforts in some of the most remote parts of the country," said FCC Chairwoman Jessica Rosenworcel, a Democrat. "We have to get our reforms right."

FCC Commissioner Brendan Carr, a Republican, spoke of a telehealth program he had seen at a clinic in Manokotak, Alaska, a village miles away from the closest hospital in Dillingham.

"Vital telehealth connections like this are often only possible with support from the FCC's Rural Health Care Program," Carr said. "We must ensure that the program provides the required certainty to providers year after year as demand for these types of services continues to expand."

The FCC in recent years has seen demand for the Rural Health Care Program outpace available annual funding. In 2018, the agency increased funding allotted for the program, which had stayed static at $400 million per year since the program's launch in 1997. The Rural Health Care Program's funding cap is now adjusted to reflect inflation.

The FCC separately has allocated $450 million to healthcare organizations buying telecom equipment, IT services and devices for telehealth as part of its COVID-19 telehealth program.

The FCC last year also launched a Connected Care Pilot Program developed by Carr, which plans to distribute up to $100 million to defray broadband costs bringing telehealth to low-income Americans and veterans. Unlike the Rural Health Care Program, the pilot is designed for projects that connect patients with healthcare services outside of a healthcare facility.