Federal Communications Commission Expands Availability of 400 Million Dollar Rural Health Care Support Mechanism

Executive Summary: The Federal Communications Commission has released an Order significantly expanding access to $400 million in funds available to health care providers for more accessible and affordable broadband services.
The Federal Communications Commission has released an Order that makes available $400 million annually to qualified health care providers (“HCPs”) to pay for 65% of the cost of “any advanced telecommunications or information service that enables HCPs to post their own data, interact with stored data, generate new data, or communicate, by providing connectivity over private dedicated networks or the public Internet for the provision of health information technology.”
The fund previously was only available to a limited number of rural HCPs. Now consortia composed of both rural and non rural health care providers will be able to receive 65% of their cost of using broadband facilities for health care purposes. The FCC hopes to encourage the growth or formation of state-wide, regional, and Tribal broadband networks in order to access patient records, involve distant specialists, increase the speed and efficiency of medical treatment and lower health care costs.
The program will support the cost of (1) broadband and other advanced services; (2) upgrading existing facilities to higher bandwidth; (3) equipment necessary to create networks of HCPs, as well as equipment necessary to receive broadband services; and (4) HCP-owned infrastructure where shown to be the most cost-effective option. The hybrid approach of the Healthcare Connect Fund provides flexibility for HCPs to create broadband networks that best meet their needs and that can most readily be put to use for innovative and effective tele-health applications. However, it will require that program participants demonstrate that they have chosen the most cost-efficient option through a competitive bidding process. Although the new program replaces the current Internet Access Program, it will provide continuing support for Pilot Program consortia as they exhaust any remaining funding already committed under the Pilot Program.
A consortium is eligible for funding if it is composed of qualified rural and non-rural HCPs and the majority of the members are rural HCPs. Both the rural and non-rural HCPs can receive funding, although funding for non-rural HCPs with more than 400 beds is capped at $30,000 per year for recurring charges and $70,000 for non-recurring charges over a five-year period.
Eligible entities include:
  • Post Secondary institutions offering health care instruction, including teaching hospitals or 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 healthcare clinics; and
  • Consortia of health care providers
For-profit entities are not eligible for support, but they can be part of a qualified consortium if the for-profit entity pays its far share.
One of the reasons that the Rural Health Care program was expanded was because during the prior operation of the program funding never approached the 400 million dollars available annually. The program adopted pursuant to the Order provides an excellent opportunity for rural, non-rural, and even for-profit HCPs to form consortia that will reduce the cost of using broadband facilities for health care purposes. The Order also provides an excellent opportunity for providers of broadband services to expand the reach of their facilities to interconnect rural and non-rural HCPs.
If you would like to know more about the Order, or how to form a qualified consortium, please contact Mark Palchick or Rebecca Jacobs at Womble Carlyle Sandridge and Rice.