Common Audit Findings: Rural Health Care Program
In USAC’s continuing efforts to ensure carriers are successful at implementing Federal Communications Commission (FCC) rules and program requirements, we have put together a list of some of the most common problem areas identified during audits and Payment Quality Assurance (PQA) reviews.
For more information about the audit process, review the Beneficiary and Contributor Audit Program (BCAP) page of our website. Using this information will help to expedite the audit process and should reduce or eliminate audit findings in the future.
Audit Findings
For each common audit finding, we have outlined a description of the finding and some ways to prevent a finding like this in the future. We have also, where possible, provided some examples.
Causes
Understanding multiple programs with different rules is complicated. Rural Health Care (RHC) program non-compliance is most often caused by an inadequate knowledge of or familiarity with program rules. USAC will continue to provide clarification and information to applicants in an effort to improve program compliance and success.
Rule Reference: 47 C.F.R. §54.605 –see FCC Order DA 21-394 for amended rules for FY2021 and FY2022
There are three ways that the rural rate may be calculated in the Telecom program. Method 1 is the default for calculating the rural rate. If the requirement cannot be satisfied using Method 1, proceed to Method 2 and, finally, if neither Method 1 nor Method 2 is feasible, Method 3 must be used.
Example: Rural Rate is not Calculated Correctly with FCC Rules
Method 1 is the default for calculating the rural rate. The applicant used Method 3 and submitted their interstate rural rate to the FCC for approval when they could have satisfied the requirements by using Method 1 or 2.
How to Address or Prevent this Finding
- A person who is familiar with FCC Rules for calculating rural rates should perform a secondary review to determine whether the correct method was used for calculation of the rates.
- Implement policies and procedures that address the methodology for calculating the rural rates in accordance with FCC Rules.
- Note: Additional information on calculation of rural and urban rates for FY 2021 and 2022 can be found using the Telecom Program: Urban and Rural Rates tip sheet on the USAC website.
Rule Reference: 47 C.F.R. §54.605 –see FCC Order DA 21-394 for amended rules for FY2021 and FY2022
Example: Rural Rates not Substantiated
Applicant failed to provide documentation to support the rural rate or provided inadequate documentation to support the rural rate.
How to Address or Prevent this Finding
- Maintain adequate documentation to support the rural rates calculation.
- Implement policies and procedures that address the following:
- Appropriate retention period for documentation.
- Define what would be sufficient documentation to support rural rates. Examples include:
- Documentation of the rates actually charged to commercial customers (other than healthcare providers) for identical or similar services in the rural area in which the HCP is located;
- Copies of tariffs or other publicly available rates on which the rural rate is based; and
- Support demonstrating that the service provider submitted the rate for the state commission’s approval (for intrastate rates), or the Commission’s approval (for interstate rates).
Rule Reference: 47 C.F.R. §54.602(a)
Applicant received funding for equipment or services that are ineligible in the Telecom program
Example: RHC Telecommunications Program Invoiced for Ineligible Services or Equipment
Equipment is not eligible for funding in the Telecom program. Applicant included the cost of equipment in the supported service.
How to Address or Prevent this Finding
- Any individual involved in the invoicing process should be familiar with the services that are eligible under the RHC Telecom program (examples of services that are typically eligible for support in the Telecom can be found on a tip sheet titled Telecom Program-Examples of Common Services).
- Perform a review of the service provider bills to identify any ineligible services, as part of the invoicing review process.
Rule Reference: 47 C.F.R. §54.605 –see FCC Order DA 21-394 for amended rules for FY2021 and FY2022
Applicants must provide documentation that demonstrates that the urban rate provided is in compliance with the urban rate rule.
Example: Rural Rates not Substantiated
Applicant failed to provide documentation to support the urban rate or provided inadequate documentation to support the urban rate.
How to Address or Prevent this Finding
- Maintain adequate documentation to support how the urban rate was determined
- Implement policies and procedures that address the following:
- Appropriate retention period for documentation.
- Methodology for determining the urban rates in accordance with FCC Rules.
Rule Reference: 47 C.F.R. §54.605 –see FCC Order DA 21-394 for amended rules for FY2021 and FY2022
Potential Errors: Urban rate is not calculated in accordance with FCC rules
Applicant used an urban rate that was not compliant with FCC rules.
Example: Urban Rate is not Calculated Correctly with FCC Rules
Applicant used an urban rate from another state that was not functionally similar to the service they requested.
How to Address or Prevent this Finding
- Implement policies and procedures that require urban rates to be determined as follows:
- If service is to be provided over a distance that is less than or equal to the ‘‘standard urban distance,’’ for the state in which it is located: 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.
- If service is to be provided over a distance that is greater than the ‘‘standard urban distance,’’ for the state in which it is located: a rate no higher than the highest tariffed or publicly-available rate charged to a commercial customer for a functionally similar service provided over the standard urban distance in any city with a population of 50,000 or more in that state, calculated as if the service were provided between two points within the city.
- A person who is familiar with FCC Rules for determining urban rates should perform a secondary review to determine whether the urban rate was determined in accordance with FCC rules.
- Note: Additional information on calculation of rural and urban rates for FY 2021 and 2022 can be found using the Telecom Program: Urban and Rural Rates tip sheet on the USAC website.
Rule Reference: 47 C.F.R. §54.603(b)
The service provider charged the HCP more than the approved urban rate.
Example: Service Provider Charged the Beneficiary a Rate Higher than the Urban Rate
The service provider charged the HCP more than the approved urban rate.
How to Address or Prevent this Finding
- A person who is familiar with FCC Rules for related to the RHC program should perform a secondary review of service provider bills to determine the applicant is being charged an amount no higher than the urban rate.
- Ensure any policies and procedures that govern the billing of RHC Telecommunications program applicants include a stipulation that requires that the applicant be charged no higher than the urban rate.
Rule Reference: 47 C.F.R. §54.622
All potential bidders and service providers must have access to the same information and must be treated in the in the same manner. Potential bidders and service providers are prohibited from (1) assisting with an HCP’s FCC Form 461 documents; (2) being involved in setting the bid evaluation criteria; and (3) participating in the bid evaluation or vendor selection process.
Example: Conflict of Interest
Service providers assisted in preparation of the request for services and/or Request for Proposals (RFP), and participated in the evaluation of the bids received.
How to Address or Prevent this Finding
- Avoid conflicts of interest by ensuring service providers that plan to bid are not involved in completion of forms to request service and not are involved in the bid evaluation process.
- Once a FCC Form 465 is approved, ensure that it is posted on the USAC public website for a minimum of 28 days before selecting a service provider and signing a contract.
- Document retention policy should require that the following support is retained:
- Copies of all bids received in response to the applicant’s request for services;
- Documentation concerning the applicant’s service provider selection criteria and bid evaluation analysis, including documentation showing that the applicant considered all bids submitted and selected the most cost-effective option; and
- Documentation of communications with all service providers, both bidding and potentially bidding during the competitive bid process