FCC Announces Key Changes to Rural Health Care Program for FY2020 and FY2021

Last week, the FCC adopted new rules reforming the Rural Health Care (RHC) program in the hope of distributing its limited program funds more efficiently and equitably, increasing predictability and transparency for health care and service providers, and strengthening safeguards against waste, fraud, and abuse.

Changes begin in Funding Year (FY) 2020. The most significant change is in how projects will be funded based on geographic location and need. The FCC adopted a new process that prioritizes funding based on the rurality of the site location and whether the area is considered medically underserved to ensure the most underserved rural communities receive the services they need.

Projects will be funded based on both the area’s rurality and by whether or not that area is considered a “Medically Underserved Area/Population” (MUA/P) as determined by the Department of Health and Human Services’ Health Resources & Services Administration. Rural designation will follow the Census Bureau’s four-tier system using Core Based Statistical Areas (CBSAs), which are areas with at least one densely populated area or “core” with more than 10,000 people:

• Extremely Rural – areas entirely outside of a CBSA;
• Rural – areas within a CBSA that do not have an urban area with a population of 25,000 or greater;
• Less Rural – areas in a CBSA that contain an urban area with a population of 25,000 or greater, but are within a specific census tract that itself does not contain any part of a place or urban area with a population of greater than 25,000; and
• Urban – areas with urban cores with at least 50,000 people.

Funding will flow first to those in areas that are in the Extremely Rural Tier and designated as MUA/P, then to those in the Rural Tier and MUA/P and so on until all program funds are used:

1. Extremely Rural Tier and MUA/P
2. Rural Tier and MUA/P
3. Less Rural Tier and MUA/P
4. Extremely Rural Tier but not MUA/P
5. Rural Tier but not MUA/P
6. Less Rural Tier but not MUA/P
7. Urban Area and MUA/P
8. Urban Area but not MUA/P

If funds are not available for all service requests, the lowest tier will be prorated to ensure that everyone receives some funding. Both programs (the Telecom Program and the Healthcare Connect Fund Program) will be treated equally in this process.

There are several other changes that will begin in FY2020:

• Health Care Providers (HCPs) will be required to seek bids for specific services, not for the tasks they would like the service to do.
• The price of the service will be the highest determining factor when selecting a service provider. Applicants must certify, and provide documentation supporting their certification, that they have selected the most cost-effective option.
• Invoices will be due four months (120 days) after the service delivery deadline or the date of a revised funding commitment letter approving a post-commitment request made by the applicant or service provider, whichever is later, for both the Telecom and the Healthcare Connect Fund programs. There will be an automatic 120-day extension if requested.
• Applicants will be required to identify and describe the nature of the relationship with each consultant, vendor, or other outside expert that assisted them in preparing their applications.
• Participating service providers also will be required to disclose, on the appropriate RHC Program form, the names of any consultants or third parties that helped them identify the applicant’s RFP or otherwise helped them to connect with the health care provider.

Three more program changes will occur in FY2021:

• USAC will determine the urban and rural rates for similar services from health care and service providers in order to determine the discount rate. Additionally, USAC will create a publicly available database that lists the eligible services in the Telecom Program and the median urban and rural rates for each such service in each state.

• HCPs will have additional time for competitive bidding for both the Telecom and the Healthcare Connect Fund programs. They will be allowed to begin the process as early as July 1 of the prior year.
• The FCC will establish an initial filing window with an end date no later than 60 days prior to the start of the funding year, similar to the E-rate program.

JSI is available to assist clients learn more about the recently adopted changes and the Rural Health Care program in general. For assistance, please contact Chresanthe Staurulakis, Cassandra Heyne, or John Kuykendall in the Maryland office at 301-459-7590 or Terri DeLong in the Texas office at 512-338-0473.