In its never-ending mission to make its universal service programs more efficient, the FCC will use its February 18, 2022, meeting to initiate a Further Notice of Proposed Rulemaking (FNPRM) in Docket 17-310 to improve the Rural Health Care (RHC) Program. The Program provides support to assist rural health care providers with the costs of broadband and other communications services. It consists of two parts - The Telecommunications (Telecom) Program; and the Healthcare Connect Fund (HCF) Program.

The Telecom Program was established in 1997 to subsidize the difference between urban and rural rates for telecommunications services. The HCF Program promotes the use of broadband services and facilitates the formation of health care provider consortia that includes both rural and urban health care providers.

The FNPRM is designed to seek industry comments on the following issues:

(1). The various options for determining support in the Telecom Program and potential revisions to Telecom Program forms to improve the quality and consistency of Telecom Program data, including how to classify the inputs used to determine rates in the Telecom Program.

Importantly, to determine rates that reflect the cost of delivering service to health care providers, the data inputs used to determine rates must be consistent with section 254(h)(1)(A) of the Telecom Act, which health care providers are in “comparable rural areas,” as well as which Telecom Program supported services are “similar.” Therefore, the Commission seeks inputs related to rurality classifications for health care providers and categorization of eligible services. For example, how should a rural area be defined? What factors should be considered in determining what are “comparable rural areas” when establishing rates for telecommunication services? And whether measuring a combined set of factors such as population density, distance to a nearby urban area, topography, and existing infrastructure would be effective in establishing levels of rurality that more accurately reflect the cost of service?

Regarding “similar” services, the Commission seeks comments on potential changes to the Telecom Program’s categorization of service technologies that could further improve the accuracy of urban and rural rates in future funding years.

(2). To facilitate the Telecom Program, the FCC adopted a Rate Database in 2019. It lists (1) the eligible services in the Telecom Program, (2) the median urban and rural rates for services by state, and (3) the underlying rate data used to determine the median rates. However, it has been a flop. The Database has been filled with so many errors and inconsistencies that the Wireline Competition Bureau waived its use for funding year 2021 and funding year 2022. The FNPRM will examine the potential changes to the Database, as well as alternative rate determination mechanisms, to improve the accuracy of urban and rural rates in the Telecom Program.

(3). Potentially reforming the Commission’s funding cap rules to handle the internal cap more efficiently and effectively on multi-year commitments and upfront payments in the HCF Program by having the internal cap apply only when overall demand exceeds available funding and, if it does apply, targeting funding for equipment and services needed in the funding year at issue.

(4). Simplifying invoicing in the RHC Program by harmonizing the process between the Telecom Program and the HCF Program as part of the Commission’s efforts to strengthen protection against waste, fraud, and abuse

Finally, the Commission notes that its waiver of the requirement to use of the Rates Database expires at the end of funding year 2022 and the current Telecom Program rules and forms will govern the rate determination process and Telecom Program data collection at least through funding year 2022. It acknowledges that competitive bidding for funding year 2023 is approaching and may begin as early as July 1, 2022. Therefore, the agency seeks comments on how to manage this transition period. To the extent that the new rules for determining urban and rural rates are not in effect in time for use in funding year 2023, how should the Commission determine urban and rural rates during any transition period that may occur?

Industry comments will be due 30 days after the FNPRM appears in the Federal Register. All telecom providers that contribute to universal service are affected by this proceeding, therefore it would be wise to stay proactive as it proceeds.