FCC Healthcare Connect Fund

 

The importance of affordable access to high quality broadband for health care continues to grow every day.  Indeed, the Information Technology driven efficiencies planned for health care (Health IT) depend on robust broadband connectivity.  Unfortunately, broadband access at quality levels needed for health care is often not available or not affordable – especially for small or rural providers.  This can put certain providers at a disadvantage as they seek to upgrade their IT infrastructure, connect to their designated health information exchange (HIE), or seek to offer specialty consultations using high definition video.

Fortunately, the Federal Communications Commission (FCC) recently updated its “universal service” programs for health care.  The FCC will now provide a 65% subsidy for the cost of deploying broadband networks or subscribing to broadband services.  This subsidy is available to rural public or non-profit rural health care providers and, in some cases, to non-rural providers.

Background

Since 1998 the Federal Communications Commission (FCC) has provided universal service subsidies to offset the telecommunications costs of public or non-profit health care providers serving rural areas of the country.  This program typically helped defray the costs for plain telephone service and for point-to-point connections using T-1 lines or greater.  The program subsidy was based on the differential cost between urban and rural rates for equivalent services.  In 2003, the FCC expanded the program to partially offset Internet access costs with a flat-rate subsidy of 25%.  Unfortunately, these programs never utilized more than a fraction of the $400 million of universal service funds available annually for rural health care providers.

In 2007, the FCC launched a limited pilot program intended to increase program utilization by exploring ways to fund broadband networks dedicated to health care.  This pilot offered an 85% flat rate subsidy and ultimately committed $364 million to fund 50 regional and statewide health broadband networks in 39 states.  These pilot projects ranged from statewide networks covering hundreds of health providers, to networks serving just a few providers in a small region.

In late 2012 the FCC, based on lessons learned in the RHC pilot, created the Healthcare Connect Fund (“Health Connect Program”).  Starting January 2014, the HCF will provide a subsidy of 65% for broadband and a range of broadband related services, including Internet access.   The new HCF will replace Internet access support but will exist alongside the legacy RHC program which is now called the Telecommunications Program.  Notably, there are unique features in the Health Connect Program designed to foster efficiently designed broadband networks.  Ultimately, the FCC intends the new program to draw participants out of the legacy Telecommunications Program and to increase overall participation in the RHC program across the country.   Up to $400 million in universal service funding is available each year through these two programs.

Which Entities are Eligible to Receive the Subsidies?

With some exceptions noted below, the same types of health care entities are eligible to receive support in both the Health Connect and Telecommunications Programs:

  • Must be a not-for-profit or public;
  • Must be in a rural location (as defined by FCC); except, in Health Connect Program:
    • May be in a non-rural location if part of a consortium of eligible participants that is majority rural.
  • Must one of the following entity types:
    • Post-secondary educational institutions offering health care instruction, such as teaching hospitals and medical schools;
    • Community health centers or health centers providing health care to migrants;
    • Local health departments or agencies;
    • Community mental health centers;
    • Not-for-profit hospitals;
    • Rural health clinics;
    • Consortia consisting of one or more of the above entities;
    • Dedicated emergency departments of rural for-profit hospitals.

In addition, the following are also eligible:

  • Part-time eligible entities located in facilities that are otherwise ineligible;
  • In the Health Connect Fund only, connections carrying traffic from eligible entities to:
    • Offsite data centers;
    • Offsite administrative offices.

What Types of Products and Services are Eligible for the HCF 65 percent Subsidy?

Individual applicants:

  • Reasonable and customary installation charges;
  • Monthly recurring costs for broadband service;
    • includes recurring costs for lease of fiber and/or lighting equipment, or recurring maintenance charges;
  • Connections to research & education networks (e.g., Internet2);
  • Connections between off-site data centers & administrative offices;
  • Network equipment necessary to make broadband service functional (e.g., terminating router).

Applicants that are part of a consortium of health care providers applying together:

  • Reasonable and customary installation charges;
  • Lit fiber lease;
  • Dark fiber;
  • Recurring charges for broadband service;
    •  includes recurring costs for lease of fiber and/or lighting equipment, or recurring maintenance charges;
  • Upfront payments for rights to use fiber (“IRUs”), leases of fiber, and network equipment;
  • Connections between off-site data centers & administrative offices;
  • Connections to research & education networks (e.g., Internet2);
  • Upfront charges for deployment of new or upgraded network facilities;
  • Certain broadband facilities owned by health care providers;
  • Network equipment necessary to make broadband service functional (e.g., terminating router)
  • Equipment necessary to manage, control, or maintain broadband service or dedicated health care broadband network

Telemedicine equipment is not eligible for HCF subsidies.

Author:

Jeffrey Mitchell, Of Counsel
Lukas, Nace, Gutierrez & Sachs, LLP
8300 Greensboro Drive  Suite 1200
McLean, Virginia 22102
Phone: 703-584-8685
Fax: 703-584-8696

For information about the application process including how to form or participate in a consortium of health care providers, you may contact Jeff Mitchell, a member of the CTeL Legal Resource Team, at jmitchell@fcclaw.com.