FCC Report and Order 19-78
On August 20, 2019, the Federal Communications Commission (FCC) released a Report and Order reforming the Rural Health Care (RHC) program to promote transparency and predictability, and to further the efficient allocation of limited program resources while guarding against waste, fraud, and abuse. The Report and Order was published in the Federal Register on October 11, 2019 and effective on November 12, 2019. Read the Report and Order here.
While the Report and Order includes a number of changes to the RHC program, the overall structure of the program will remain the same. As before, the RHC program will still have two sub-programs: the Healthcare Connect Fund (HCF) Program and the Telecommunications (Telecom) Program. Further, applicants will still be required to seek eligibility, submit requests for funding, requests for services, and invoicing forms.
The changes initiated by the Report and Order will apply to Funding Year (FY) 2020 and beyond, and will not affect FY2019. This page captures the major changes that affect applicants and what they should be aware of when applying for FY2020 funding but, does not cover every change impacting the RHC program. We recommend reading the Report and Order in its entirety.
As the new rules are implemented in the RHC program and My Portal, the RHC program staff will communicate all changes in advance and provide training and guidance.
On December 10, 2019, the FCC Released Public Notice DA 19-1253, providing guidance on the implementation schedule for reforms set forth by FCC Report and Order 19-78. This page has been updated accordingly.
Prioritization of Support and Rurality
Tiered Rurality
The RHC program will continue to use the same definition of “rural area” under the Commission’s rules. In the case where demand exceeds available funding, USAC will prioritize funding based on the following rurality tiers and those areas in a Medically Underserved Area/Population (MUA/P).
- Extremely Rural: areas entirely outside of a Core Based Statistical Area.
- Rural: areas within a Core Based Statistical Area that do not have an urban area or urban clusters with a population of 25,000 or greater.
- Less Rural: areas in a Core Based Statistical Area that contain an urban area or urban cluster with a population of 25,000 or greater, but are within a specific census tract that itself does not contain any part of an urban cluster or urban area with a population of 25,000 or greater.
- Non-Rural: All other non-rural areas.
What does this mean for you?
Since the rural definition has not changed, health care providers (HCPs) currently approved as “rural” will retain their rural status. The RHC program will assign your rurality tier and should funding demand exceed available funding, USAC will first fully fund all eligible requests by HCPs consistent with the FCC’s priority schedule that considers an area’s rurality and access to healthcare professional services. Rurality tiers will be established by July 1, 2020.
HCF Program Consortium Rurality
Beginning February 1, 2020 all current and new HCF Program consortia must be “majority rural.” The Report and Order eliminates the three-year grace period for consortia to become majority rural; there will also be no grandfathering of prior Pilot Program consortia or other existing consortia. “Majority rural” means that more than 50% of participating HCPs in a consortia must be rural. For example, if a consortia has five participating HCPs, at least three of those HCPs must be in a rural area for the consortia to be deemed “majority rural.” The “majority rural” consortia percentage requirement will automatically increase by 5% for the following funding year whenever RHC program demand exceeds the funding cap (up to a maximum of 75%). Funding requests filed by consortia that are not in compliance will be denied.
Competitive Bidding and Requesting Services
Competitive Bidding Period
For FY2021 and forward, the competitive bidding period will commence on July 1 of the prior calendar year. So, for FY2021, applicants may begin the competitive bidding period on July 1, 2020.
Competitive Bidding Exemptions in the Telecom Program
Starting in FY2020, Telecom Program applicants may use the following competitive bidding exemptions currently available in the HCF Program: government master service agreements, evergreen contracts, master service agreements approved in other RHC programs, and master contracts approved in E-Rate. The HCF Program’s competitive bidding exemption when requesting less than $10,000 in undiscounted support does not extend to Telecom.
Bid Evaluation Criteria
Currently, an HCP must develop weighted evaluation criteria (i.e., scoring worksheet or matrix) that demonstrates how the HCP will choose the most cost-effective bid before submitting its request for service. Starting in FY2021, the HCP must specify on its bid evaluation worksheet and/or scoring matrix the requested services for which it seeks bids, its minimum requirements for the specified criteria, and each service provider’s proposed service levels for the specified criteria. The HCP must also specify its disqualification factors, if any, that it will use to remove bids or bidders from further consideration.
Rural and Urban Rates — Telecommunications (Telecom) Program Only
The Report and Order eliminated distance-based support, use of a cost-based study to identify the appropriate rates, and the limitation of support on satellite services. This order stated, beginning in FY2021, USAC will determine the urban and rural rates for each eligible service in each state and include the rates in a database publicly available on its website. The first set of urban and rural rates were posted to USAC’s website on July 1, 2020.
For FY2021 and FY2022 – HCPs located in Alaska (only)
On January 19, 2021, the FCC released Order DA 21-83, waiving the requirement for health care providers located in Alaska to use the Telecom Program Rates Database for determining rural rates. This waiver was in place for FY2021, for which competitive bidding had already begun, and for FY2022 unless the FCC had separately addressed the pending petitions for reconsideration by January 19, 2022.
For FY2021 and FY2022 – All Telecom Program Applicants
On April 8, 2021, the FCC released Order DA 21-394, waiving the requirement that health care providers and service providers participating in the Telecom Program use the Rates Database to calculate urban and rural rates for funding years 2021 and 2022.
For FY2023 – All Telecom Program Applicants
On May 25, 2022, the FCC released Order DA 22-580 extending the waiver of the requirement to use the Telecom Program Rates Database for determining rural rates for health care providers in nationwide for FY2023.
For FY2024 and FY2025 – All Telecom Program Applicants
On January 26, 2023, the FCC released an Order on Reconsideration, Second Report and Order, Order, and Second Further Notice of Proposed Rulemaking (FCC Order 23-6) strengthening the procedures for the Rural Health Care (RHC) program. This order eliminated the Telecom Program Rates Database to calculate urban and rural rates. Beginning in FY2024, rules requiring rural rates to be calculated using Methods 1-3 and the pre-Rates Database calculation method for urban rates were reinstated with the following minor changes:
- For FY2024 and 2025, service providers will be permitted to use previously approved rates for rural rates that would otherwise be calculated under Method 3 (only).
- If there are no comparable rural rates within 30 percent of the speed of the requested service, service providers may use the rate for a higher bandwidth service that is otherwise similar to the requested service to justify a rural rate.
- Similarly, if there are no comparable urban rates within 30 percent of the speed of the requested service, health care providers may use the rate for a higher bandwidth service that is otherwise similar to the requested service to justify an urban rate.
For more information, please use the Urban and Rural Rate Information FY2024-FY2025 tip sheet.
Post-Commitment
Service Delivery Deadline
The service delivery deadline for recurring and non-recurring services is currently the funding end date, no later than June 30, as indicated on an applicant’s funding commitment letter (FCL). There are instances in which USAC has issued an FCL with a funding end date prior to June 30 to coincide with a contract end date. Effective for FY2020, the service delivery deadline is June 30 of the funding year for which the program support is sought. Applicants can receive a one-year extension of the deadline for non-recurring services if they meet the following criteria:
- applicants whose funding commitment letters are issued by USAC on or after March 1 of the funding year for which discounts are authorized;
- applicants that receive service provider change authorizations or site and service substitution authorizations from USAC on or after March 1 of the funding year for which discounts are authorized;
- applicants whose service providers are unable to complete implementation for reasons beyond the service provider’s control; or
- applicants whose service providers are unwilling to complete delivery and installation because the applicant’s funding request is under review by USAC for program compliance.
Invoice Filing Deadline
Under current FCC rules, the Telecom Program has no invoice filing deadline, and the HCF Program invoice filing deadline is six months from the funding commitment end date. Effective FY2020, the invoice filing deadline will be four months (120 days) from the service delivery deadline or the date of a revised FCL approving a post-commitment request or a successful appeal of a previously denied or reduced funding request, whichever comes later, in both RHC programs.
The Order also adopts a rule, effective FY2021, permitting a single 120-day extension of the invoice filing deadline should the HCP be prevented from meeting the invoice filing deadline for any reason, if submitted prior to the original invoice filing deadline.
Site and Service Substitutions
The HCF Program currently permits site and service substitutions. Effective for FY2021 FRNs, site and service substitution procedures are allowed in the Telecom Program. Applicants will be required to submit all site and service substitution requests by the applicable service delivery deadline.
Update: On November 30, 2020, the FCC released Order DA 20-1420 amending the effective date for site and service substitutions in the Telecom program. The effective date for site and service substitutions in Telecom is moved up to cover the remainder of FY2020, 30 days after publication in the Federal Register. Under these Orders, Telecom Program applicants may request a service substitution using the same guidelines for individual applicants in the HCF Program. Learn more.
SPIN Changes
The scenarios under which SPIN changes can be requested under the HCF and Telecom Programs have now been formalized. Starting in FY2021, all SPIN changes must be requested by the service delivery deadline.
Additional Changes
HCF Program $150M Cap
In FY2020 and subsequent funding years, the $150 million cap on multi-year commitments and upfront payments in the HCF Program shall also be increased annually to take into account increases in the rate of inflation similar to the overall cap for the RHC program.
Gift Rule
Beginning February 1, 2020, RHC program applicants and their consultants, if any, are prohibited from soliciting or accepting gifts from service providers. The new requirement, modeled after E-Rate’s gift rule, specifically prohibits an RHC program applicant and/or its consultant from directly or indirectly soliciting or accepting anything of value (including meals, tickets to sporting events or trips) from a service provider.
Consultant or Outside Expert Information (Declaration of Assistance)
If an HCP uses a consultant or outside expert, it must provide information for the consultant or outside expert in a declaration of assistance. Required information includes: the consulting firm name, street address, city, state, and zip code; consulting firm telephone number; and consulting firm email address. The HCP must also describe the nature of the relationship it has with any consultant or other outside expert identified in its declaration of assistance.
Starting in FY2021, service providers will have to include a declaration of assistance when approving invoices and describe the nature of the relationship they have with a consultant, vendor, or outside expert who aids them in the preparation of their application.