[Federal Register: February 14, 2008 (Volume 73, Number 31)]
[Notices]
[Page 8670-8692]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14fe08-65]
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FEDERAL COMMUNICATIONS COMMISSION
[WC Docket No. 02-60, FCC 07-198]
Rural Health Care Support Mechanism
AGENCY: Federal Communications Commission.
ACTION: Notice.
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SUMMARY: In this document, the Commission selects participants for the
universal service Rural Health Care (RHC) Pilot Program established by
the Commission in the 2006 Pilot Program Order. Sixty-nine of these
applicants have demonstrated the overall qualifications consistent with
the goals of the Pilot Program to stimulate deployment of the broadband
infrastructure necessary to support innovative telehealth and, in
particular, telemedicine services to those areas of the country where
the need for those benefits is most acute.
FOR FURTHER INFORMATION CONTACT: Thomas Buckley, Senior Deputy Chief;
Elizabeth Valinoti McCarthy, Attorney; or Antoinette Stevens,
Telecommunications Access Policy Division, Wireline Competition Bureau,
(202) 418-7400, TTY (202) 418-0484.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order,
in WC Docket No. 02-60, released November 19, 2007. The full text of
this document is available for public inspection during regular
business hours in the FCC Reference Center, Room CY-A257, 445 12th
Street, SW., Washington, DC 20554.
I. Introduction
1. In this Order, the Commission selects participants for the
universal service Rural Health Care (RHC) Pilot Program established by
the Commission in the 2006 Pilot Program Order, 71 FR 65517, November
8, 2006, pursuant to section 254(h)(2)(A) of the Communications Act of
1934, as amended by the Telecommunications Act of 1996 (1996 Act). The
initiation of the Pilot Program resulted in an overwhelmingly positive
response from those entities the Commission intended to reach when it
established the program last year--health care providers, particularly
those operating
[[Page 8671]]
in rural areas. Exceeding even the Commission's own high expectations,
the Commission received 81 applications representing approximately
6,800 health care facilities from 43 states and three United States
territories. Sixty-nine of these applicants have demonstrated the
overall qualifications consistent with the goals of the Pilot Program
to stimulate deployment of the broadband infrastructure necessary to
support innovative telehealth and, in particular, telemedicine services
to those areas of the country where the need for those benefits is most
acute.
2. Accordingly, selected participants will be eligible for
universal service funding to support up to 85 percent of the costs
associated with the construction of state or regional broadband health
care networks and with the advanced telecommunications and information
services provided over those networks. In addition, because of the
large number of selected participants, the Commission modifies the
Pilot Program so that selected participants may be eligible for funding
for the appropriate share of their eligible two-year Pilot Program
costs over a three-year period beginning in Funding Year 2007 and
ending in Funding Year 2009. By spreading the two-year costs over a
three-year commitment period, the Commission is able to increase the
available support for selected participants from the amount established
in the 2006 Pilot Program Order to approximately $139 million in each
funding year of the three-year Pilot Program. This will ensure that all
qualifying applicants are able to participate in the Pilot Program and
yet do so in an economically reasonable and fiscally responsible
manner, well below the $400 million annual cap, and enable selected
participants to have sufficient available support to achieve the goals
and objectives demonstrated in their applications. For the reasons
discussed below, the Commission also denies 12 applicants from
participating in the Pilot Program because these applicants have not
demonstrated they satisfy the overall criteria, principles, and
objectives of the 2006 Pilot Program Order.
3. In light of the many applications the Commission received
seeking funding and the wide range of network and related components
for which support is sought, the Commission further clarifies the
facilities and services that are eligible and ineligible for support to
ensure that the Pilot Program operates to facilitate the goals set
forth in the 2006 Pilot Program Order. For example, the Commission
clarifies that eligible costs include the non-recurring costs for
design, engineering, materials, and construction of fiber facilities
and other broadband infrastructure; the non-recurring costs of
engineering, furnishing, and installing network equipment; and the
recurring and non-recurring costs of operating and maintaining the
constructed network. The Commission also clarifies that ineligible
costs include those costs not directly associated with network design,
deployment, operations, and maintenance.
4. The Commission provides specific guidance to the selected
participants regarding how to submit existing FCC Forms to the
universal service Fund Administrator, the Universal Service
Administrative Company (USAC). For example, selected participants, in
order to receive universal service support, must submit with the
required FCC Forms detailed network cost worksheets concerning their
proposed network costs, certifications demonstrating universal service
support will be used for its intended purposes, and letters of agency
from each participating health care provider. In order to receive
reimbursement, selected applicants must also submit, consistent with
existing processes and requirements, detailed invoices showing actual
incurred costs of project build-out and, if applicable, network design
studies. The Commission also requires that selected participants'
network build-outs be completed within five years of receiving an
initial funding commitment letter (FCL). As discussed below, selected
participants that fail to comply with the terms of this Order and with
the USAC administrative processes will be prohibited from receiving
support under the Pilot Program. The Commission also sets forth data
reporting requirements for selected participants where participants
must submit to USAC and to the Commission quarterly reports containing
data on network build-out and use of Pilot Program funds. This
information will inform the Commission of the cost-effectiveness and
efficacy of the different state and regional networks funded by the
Pilot Program and of whether support is being used in a manner
consistent with section 254 of the 1996 Act, and the Commission's rules
and orders.
5. The Commission also addresses various requests for waivers of
Commission rules filed by applicants concerning participation in the
Pilot Program. Among other things, the Commission denies waiver
requests of the Commission's rule requiring that Pilot Program selected
participants competitively bid their proposed network projects. In
doing so, the Commission reaffirms that the competitive bidding process
is an important safeguard for ensuring universal service funds are used
wisely and efficiently by requiring the most cost effective service
providers be selected by Pilot Program participants.
6. In addition, the Commission establishes an audit and oversight
mechanism for the Pilot Program to guard against waste, fraud, and
abuse, and to ensure that funds disbursed through the Pilot Program are
used for appropriate purposes. In particular, each Pilot Program
participant and service provider shall be subject to audit by the
Commission's Office of Inspector General (OIG) and, if necessary,
investigated by the OIG to determine compliance with the Pilot Program,
Commission rules and orders, and section 254 of the 1996 Act. As
discussed in greater detail below, because audits or investigations may
provide information showing that a beneficiary or service provider
failed to comply with the statute or Commission rules and orders, such
proceedings can reveal instances in which Pilot Program disbursement
awards the Commission improperly distributed or used in a manner
inconsistent with the Pilot Program. To the extent the Commission finds
funds were not used properly, USAC or the Commission may recover such
funds and the Commission may assess forfeitures or pursue other
recourse.
7. Finally, selected participants shall coordinate the use of their
health care networks with the Department of Health and Human Services
(HHS) and, in particular, with its Centers for Disease Control and
Prevention (CDC) in instances of national, regional, or local public
health emergencies (e.g., pandemics, bioterrorism). In such instances,
where feasible, selected participants shall provide access to their
supported networks to HHS, including CDC, and other public health
officials. Similarly selected participants shall use Pilot Program
funding in ways that are consistent with HHS' health information
technology (IT) initiatives that ``provide leadership for the
development and nationwide implementation of an interoperable health
information technology infrastructure to improve the quality and
efficiency of health care.'' Accordingly, where feasible, selected
participants, as part of their Pilot Program network build-out projects
shall: (1) Use health IT systems and products that meet
interoperability standards recognized by the HHS Secretary; (2) use
health IT products certified by the Certification
[[Page 8672]]
Commission for Healthcare Information Technology; (3) support the
Nationwide Health Information Network (NHIN) architecture by
coordinating their activities with the organizations performing NHIN
trial implementations; (4) use resources available at HHS's Agency for
Healthcare Research and Quality (AHRQ) National Resource Center for
Health Information Technology; (5) educate themselves concerning the
Pandemic and All Hazards Preparedness Act and coordinate with the HHS
Assistant Secretary for Public Response as a resource for telehealth
inventory and for the implementation of other preparedness and response
initiatives; and (6) use resources available through CDC's Public
Health Information Network (PHIN) to facilitate interoperability with
public health organizations and networks.
II. Discussion
8. The 2006 Pilot Program Order generated overwhelming interest
from the health care community. The Commission received 81 applications
representing approximately 6,800 health care providers. Of these, 69
applications covering 42 states and three United States territories
demonstrate the overall qualifications consistent with the goals,
objectives, and other criteria outlined in the 2006 Pilot Program Order
necessary to advance telehealth and telemedicine in their areas by:
Describing strategies for aggregating the specific needs of health care
providers within a state or region, including providers serving rural
areas; providing strategies for leveraging existing technology to adopt
the most efficient and cost effective means of connecting those
providers; describing previous experience in developing and managing
telemedicine programs; and detailing project management plans. Rather
than limit participation to a select few among the 69 qualified
applicants, the Commission finds that it would be in the best interests
of the Pilot Program, and appropriate as a matter of universal service
policy, to accommodate as many of these qualified applicants as
possible. Moreover, having more participants will enable the Commission
to collect more data and thus enhance the Commission's ability to
critically evaluate the Pilot Program. To accommodate the 69 qualified
applicants in an economically reasonable and fiscally responsible
manner, including remaining well within the existing $400 million
annual RHC program cap, the Commission modifies the Pilot Program to
spread funding equally over a three-year period. Specifically, total
available support for Year One of the Pilot Program (FY 2007 of the
existing RHC Program), Year Two (FY 2008 of the existing RHC Program),
and Year Three (FY 2009 of the existing RHC Program) of the Pilot
Program will be approximately $139 million per funding year. With this
modification, the Commission is thus able to select all of the 69
qualified applicants as eligible to participate in the Pilot Program.
Finally, selected participants shall work with HHS and, in particular,
CDC, to make the health care networks funded by the Pilot Program
available for use in instances of nationwide, regional, or local public
health emergencies (e.g., pandemics, bioterrorism). Selected
participants shall also use funding in a manner consistent with HHS's
health IT initiatives.
A. Overview of Applicants
9. Consistent with the Commission's goal in the 2006 Pilot Program
Order to learn from the health care community through the design of a
bottom-up application process, selected participants proffered a wide
array of proposals to construct new health care networks or to upgrade
existing networks and network components in an efficient manner. The
selected proposals range from small-scale, local networks to large-
scale, statewide or multi-state networks. Examples of applicants
proposing small-scale networks include Mountain States Health Alliance
which seeks $54,400 to connect two rural Virginia hospitals to an
existing network consisting of 11 Tennessee hospitals. Rural Healthcare
Consortium of Alabama seeks $232,756 to connect four critical access
hospitals in rural Alabama to enable teleradiology, lab information
systems, video conferencing, and secure networking with academic
medical centers and universities.
10. Other applicants propose networks much larger in scope. For
instance, Tennessee Telehealth Network (TTN) seeks approximately $7.8
million to expand upon the existing Tennessee Information
Infrastructure, a pre-existing broadband network serving state, local,
and educational agencies in Tennessee. Upon completion of the project,
TTN's network will reach more than 440 additional health care providers
throughout the state enabling it to bring the benefits of innovative
telehealth, such as access to specialists in urban areas, to rural
sites. In addition, certain applicants plan to connect multi-state
networks, such as New England Telehealth Consortium (NETC) which seeks
approximately $25 million to connect 555 sites in Vermont, New
Hampshire, and Maine to the Northern Crossroads network, enabling
connectivity to hospitals and universities throughout New England,
including Rhode Island, Massachusetts, and Connecticut. NETC's
resulting network would facilitate expansive telemedicine benefits,
including remote trauma consultations, throughout the multi-state
region.
11. Numerous applicants also demonstrate the serious need to deploy
broadband networks for telehealth and telemedicine services to the
rural areas of the nation where the needs for these services are most
acute. For example, Pacific Broadband Telehealth Demonstration Project
seeks to connect Hawaii and 11 Pacific Islands to one broadband network
in the region where transportation costs are extremely high and health
care specialists are concentrated mainly in the region's urban centers
such as Honolulu.
12. Similarly, Health Care Research & Education Network
convincingly demonstrates its state's need for expanded telemedicine
services: North Dakota is an extremely rural state where 42 of its 53
counties include 30 percent or more residents living at or below 200
percent of the Federal Poverty Level. Part or all of 83 percent of
North Dakota's counties are designated as Health Professional Shortage
Areas, and 94 percent are designated as mental health shortage areas.
To help alleviate these hardships, the University seeks to construct a
high-speed data network to connect, via the existing state fiber
network, Stagenet, its medical school's four main campus sites and
clinical medical sites to five rural North Dakota health care
facilities. Doing so will allow for research which would greatly
accelerate the ability to bring contemporary treatment options to rural
areas.
13. The Wyoming Telehealth Network also demonstrates the need for
broadband infrastructure for health care use. In its application, it
explains that Wyoming is an extremely low populous and rural state,
suffering from a severe shortage of health care providers. Wyoming
ranks 45th in physicians per 100,000 people, and have only 18
psychiatrists, four certified psychological practitioners, and two
school psychologists statewide. Wyoming Telehealth Network's proposed
network will extend the reach of health care professionals by linking
the entire state's 72 hospitals, community mental health centers, and
substance abuse centers, which will enable these facilities to transmit
data to one another and videoconference. As these and other
applications
[[Page 8673]]
demonstrate, health care providers in rural areas need access to
broadband facilities for telehealth and telemedicine services to be
available in rural areas.
14. Some applicants request Pilot Program funding to support build-
out to tribal lands. For example, Tohono O'odham Nation Department of
Information Technology (Nation) seeks funding to connect three of the
Nation's remote health care facilities to Internet2 and to Arizona
health care providers with existing networks to facilitate
implementation of a comprehensive telemedicine program for the Tohono
O'odham Nation that will enable the Nation to connect into a nationwide
backbone of networks. The Nation's planned dedicated broadband network
will result in a comprehensive health care delivery system that reaches
even its most remote geographic areas--a particularly important goal
considering the Nation's extremely limited public transportation
system.
15. The Commission finds that the selected participants demonstrate
a viable strategy for effective utilization of Pilot Program support
consistent with the principles established in the 2006 Pilot Program
Order, and sufficiently set forth how their networks will meet the
detailed Pilot Program criteria set forth in the 2006 Pilot Program
Order. As discussed in detail below, while the Commission finds that
the selected applications overall satisfy the criteria set forth in the
2006 Pilot Program Order, many applicants must submit additional
information to USAC to ensure that fund commitments and disbursements
will be consistent with section 254 of the 1996 Act, this Order, and
the Commission's rules and orders.
B. Scope of Pilot Program and Selected Participants
16. In the 2006 Pilot Program Order, the Commission stated,
``[o]nce we have determined funding needs of the existing program, the
Commission will fund the Pilot Program in an amount that does not
exceed the difference between the amount committed under our existing
program for the current year and $100 million.'' The Commission
estimated that approximately $55-60 million would be available for the
Pilot Program, based on its past experience and estimates of funding
requests received under the existing program for Funding Year 2006. In
the 2006 Pilot Program Order, the Commission also established the Pilot
Program as a two-year program.
17. Funding Cap. In light of the overwhelming need for the Pilot
Program funding to build-out dedicated health care network capacity to
support telehealth and telemedicine, the Commission increases the
funding cap amount from that set in the 2006 Pilot Program Order to
approximately $139 million for each year of the Pilot Program. The
Commission finds this modification necessary to enable the 69 qualified
applicants to implement their plans to the fullest extent possible. In
particular, the Commission believes this increased amount of Pilot
Program funding will enable participants to fully realize the benefits
to telehealth and telemedicine services by making universal service
support available for significant build-out of dedicated broadband
network capacity. Increased support will also provide the Commission
with an RHC Pilot Program extensive enough to soundly evaluate and to
serve as a basis to propose to modify the existing RHC support
mechanism, all without requiring the Commission to reject otherwise
compliant applications. Although available yearly Pilot Program support
is higher than the Commission originally contemplated in the 2006 Pilot
Program Order, this amount is still well below the $400 million cap for
each funding year of the existing RHC support mechanism (even when
combined with the most recent disbursements under the existing RHC
support mechanism of $41 million), and therefore remains well within
the existing parameters of economic reasonability and fiscal
responsibility.
18. Duration of Pilot Program. To continue to maintain fiscal
discipline, the Commission modifies the duration of the Pilot Program
to require that commitments for the two-year program costs identified
by selected participants in their applications occur over a three-year
period. Funding the selected applications over a three-year period at
somewhat lower levels than requested based on a two-year program will
better serve goals of section 254(h)(2)(A) of the 1996 Act because it
provides the Commission with sufficient flexibility to support more
expansive network build-outs, thereby significantly enhancing health
care providers' access to broadband services and enabling such access
to occur considerably quicker than it otherwise would. Spreading
commitments over a three-year period will also ensure that the Program
moves forward seamlessly to facilitate uninterrupted rural telehealth/
telemedicine network build-outs, while balancing the need for economic
reasonableness and responsible fiscal management of the program,
including by staying well within the $400 million RHC mechanism cap. In
addition, expansion of the Pilot Program's duration, as well as
increasing available aggregate support, will provide greater certainty
of support to applicants that requested funding for multiple years, and
will obviate the need for reapplications during the duration of the
Pilot Program. Accordingly, the Pilot Program will begin in Funding
Year 2007 and end in Funding Year 2009 of the existing RHC support
mechanism.
19. Administration of Funding Year 2006 Funds. In establishing the
Pilot Program duration, the Commission applies to Funding Year 2007 the
moneys that USAC already collected in Funding Year 2006 for the Pilot
Program. Because the Commission did not receive approval from the OMB
until March 8, 2007, only two months prior to the application deadline
of May 7, 2007, and because applicants could not meet the June 30,
2007, deadline for submitting Funding Year 2006 forms to USAC, the
Commission finds it impracticable to begin the Pilot Program in Funding
Year 2006 as originally contemplated. Consequently, the Commission
begins the USAC application, commitment, and disbursement process for
the Pilot Program with Funding Year 2007. Total available support for
Year One of the Pilot Program (Funding Year 2007 of the existing RHC
support mechanism), Year Two (Funding Year 2008 of the existing RHC
support mechanism), and Year Three (Funding Year 2009 of the existing
RHC support mechanism) of the Pilot Program will be approximately $139
million per Pilot Program funding year. The funding total is capped by
the maximum amount allowable funding for each applicant during the
three-year period.
20. Selected Participants. Appendix B of this Order lists each
selected participant's eligible support amounts for each Pilot Program
funding year. As indicated in Appendix B, selected participants'
available support for each funding year of the Pilot Program is one-
third of the sum of their Year One and Year Two application funding
requests, as calculated by the Commission. Calculations are based on 85
percent of each selected participant's funding request. For selected
participants that did not clearly request 85 percent funding for their
total costs, the Commission has adjusted the support level to the
appropriate 85 percent level. The Commission finds that committing this
funding over a three-year period ensures the Pilot Program remains
economically reasonable and fiscally responsible while allowing
selected participants to remain eligible to receive their entire
eligible Funding Year One
[[Page 8674]]
and Year Two support as identified in their applications. Although the
Commission increases available support amounts, as explained in greater
detail below, selected participants may not exceed the available
support for each funding year as listed in Appendix B. The selected
participants also remain required to provide at least 15 percent of
their network costs from other specified sources. In addition, the
Commission requires that selected participants' network build-outs be
completed within five years of receiving an initial funding commitment
letter (FCL).
21. Priority System. Contrary to the Commission's findings in the
2006 Pilot Program Order, the Commission also, on its own motion,
modifies the Pilot Program structure by declining to establish a
funding priority system similar to the priority system provided for in
the universal service schools and libraries mechanism. In the 2006
Pilot Program Order, the Commission found that applications for support
under the existing rural health care program would be funded before
funding any of the projects proposed in the Pilot Program. The
Commission had limited funding for the Pilot Program to the difference
between the amount committed to the existing rural health care program
and $100 million. The Commission finds it is not necessary to establish
a priority system for the rural health care program because the
Commission has eliminated the $100 million cap on funding for the
existing program and the Pilot Program. As such, the Commission's
expansion of the Pilot Program will ensure that both the applicants
under the existing program and those under the Pilot Program receive
funding for all eligible expenses they have included in their
applications.
C. Qualifications of Selected Participants
22. In the 2006 Pilot Program Order, the Commission instructed
applicants to indicate how they plan to fully utilize a broadband
network to provide health care services and to present a strategy for
aggregating the specific needs of health care providers within a state
or region, including providers that serve rural areas. Overall,
selected participants demonstrated significant need for RHC Pilot
Program funding for health care broadband infrastructure and services
for their identified health care facilities, and provided the
Commission with sufficiently detailed proposals. In their applications,
each selected participant explained the goals and objectives of their
proposed networks and generally addressed other criteria on which the
Commission sought information in the 2006 Pilot Program Order. Selected
participants must meet the goals and objectives they identified in
their Pilot Program applications. In addition, each selected
participant must comply with all Pilot Program administrative
requirements discussed below to receive universal service support
funding.
23. Network Utilization. In the 2006 Pilot Program Order, the
Commission set forth the network goals and objectives for applicants to
meet to be considered for Pilot Program funding. In particular, the
Commission requested that applicants indicate how they will utilize
dedicated broadband capacity to provide health care services. Selected
participants sufficiently set forth the various ways in which they
would appropriately utilize a broadband network. For example, Virginia
Acute Stroke Telehealth Project proposes a broadband network that would
focus on the continuum of care (prevention through rehabilitation) for
stroke patients in rural and underserved areas of Virginia. Illinois
Rural HealthNet Consortium plans to use its network for a wide variety
of telemedicine applications, including video conferencing, remote
doctor-patient consultations, and tele-psychiatry. Pacific Broadband
Telehealth Demonstration Project seeks to interconnect seven existing
networks to link health care providers throughout Hawaii and the
Pacific Island region. The network will enable delivery of broadband
telehealth and telemedicine for clinical applications, continuing
medical, nursing and public health education, and electronic health
records support. Alaska Native Tribal Health Consortium plans to
connect rural health care providers throughout Alaska to urban health
centers via a network that will support teleradiology, electronic
medical records, and telepsychiatry through video conferencing.
24. Based on the Commission's review of all 81 of the applications,
the Commission finds that the 69 selected participants have shown that
they intend to utilize dedicated health care network capacity
consistent with the goals set forth in the 2006 Pilot Program Order.
Thus, in selecting these applicants as eligible to receive funding for
broadband infrastructure and services, the Commission will advance the
goals of, among other things, bringing the benefits of telehealth and
telemedicine to areas where the need for these benefits is most acute;
allowing patients to access critically needed specialists in a variety
of practices; and enhancing the health care community's ability to
provide a rapid and coordinated response in the event of a national
health care crisis.
25. Leveraging of Existing Technology. In the 2006 Pilot Program
Order, the Commission stated that applicants should leverage existing
technology to adopt the most efficient and cost effective means of
connecting providers. The Commission explained that the Pilot Program
would be ``technically feasible'' because it would not require
development of any new technology, but rather would enable participants
to utilize any currently available technology. In general, selected
participants explained how their proposed networks would leverage
existing technology. Examples of applicants leveraging existing
technology include the Association of Washington Public Hospital
Districts, which plans to create a ``network of networks'' by
interconnecting six existing networks to create a state-wide network.
And Colorado Health Care Connections proposes to leverage an existing
state network as the basis for a dedicated health care network for
Colorado's public and non-profit health care providers. The goal is to
connect all 50 rural hospitals and 76 rural clinics to the state
network, which in turn is connected to the major metropolitan tertiary
hospitals, and Internet2 and National LambdaRail.
26. Aggregation. In the 2006 Pilot Program Order, the Commission
instructed applicants to provide strategies for aggregating the
specific needs of health care providers, including providers that serve
rural areas within a state or region. In general, selected participants
sufficiently explained how their proposed networks would aggregate the
needs of health care providers, including rural health care providers.
For example, Palmetto State Providers Network plans to link large
tertiary centers, academic medical centers, rural hospitals, community
health centers, and rural office-based practices in four separate
rural/underserved areas in South Carolina into a developing fiber optic
statewide backbone which connects to Internet2, NLR, and the public
Internet. Similarly, Iowa Rural Health Telecommunications Program plans
to link 100 hospitals in 57 counties in Iowa, one Nebraska hospital,
and two South Dakota hospitals to a broadband network which will:
Facilitate timely diagnosis and initiation of appropriate treatment or
transfer of patients in rural communities; facilitate rapid access to
and transmission of diagnostic images
[[Page 8675]]
and patient information between hospitals; extend and improve terrorism
and disaster preparedness and response through communication network
interoperability between hospitals, the Iowa Department of Public
Health, and Iowa Homeland Security and Emergency Management; and enable
future remote monitoring and care coordination for intensive care
patients.
27. Creation of Statewide or Regional Health Care Networks and
Connection to Dedicated Nationwide Backbone. In the 2006 Pilot Program
Order, the Commission instructed applicants to submit proposals that
would facilitate the creation of state or regional networks and
(optionally) connect to a nationwide broadband network. These networks
should be dedicated to health care, thereby connecting public and non-
profit health care providers in rural and urban locations. The selected
participants generally demonstrated how their proposals would result in
new or expanded state or regional networks and connection to a
nationwide broadband network dedicated to health care. For example,
Wyoming Telehealth Network will connect more than 30 hospitals and 42
community health centers, providing consortium health care
professionals with access to a statewide network, and facilitating
connection to Internet2 or NLR. West Virginia Telehealth Alliance's
proposed network will facilitate access in every region, health care
market, and community in West Virginia, with particular focuses on
medically underserved rural areas; health professional shortage areas;
communities with high disease and chronic health condition disparities;
and communities that demonstrate ``readiness for deployment.''
Southwest Alabama Mental Health Consortium plans to establish a
broadband network connecting 34 mental health providers in 16 counties
in Southwest Alabama, and this network will connect to Internet2
thereby creating a large regional mental health care network that has
access to the national backbone.
28. Tribal Lands. A significant number of applicants plan to use
Pilot Program funds to create or expand health care networks serving
tribal lands. The Commission finds that network reach to tribal lands
to be a positive use of Pilot Program funds; these areas traditionally
have been underserved by health care facilities and reflect unique
health care needs, particularly compared to non-tribal areas. In
addition to inadequate access to health care, tribal lands suffer from
relatively low levels of access to important telecommunications
services. For example, Native American communities have the lowest
reported levels of telephone subscribership in America.
29. The Commission finds that these health care and
telecommunications disparities between tribal lands and other areas of
the country underscore the serious need for Pilot Program support of
telemedicine and teleheath networks in tribal areas. Many selected
participants plan to use Pilot Program support for networks on or near
tribal lands. For example, Health Care Research & Education Network
plans to construct a network that will serve a significant Native
American population. According to the Health Care Research & Education
Network, Native Americans report being uninsured at a rate of 37.1
percent and North Dakota's Indian population is 1.5 times as likely to
die of heart disease, cancer, stroke, and influenza/pneumonia as those
living on non-tribal lands. The Network seeks to alleviate some of
these disparities through use of its planned network that will provide
a link to improve educational opportunities, and will facilitate new
and ongoing research in health care delivery to rural areas.
30. In the first year of the Pilot Program, Western Carolina
University (WCU) in collaboration with the Eastern Band of Cherokee
Indians (EBCI) seeks to connect the WCU's health care facilities to
health care facilities on the reservation and in outlying areas so that
patients can access critically needed medical specialists in a variety
of practices without leaving their homes or their communities. In year
two of the Pilot Program, WCU plans to connect the United South and
Eastern Tribes, Inc. (USET), a non-profit, inter-tribal organization of
24 federally recognized tribes, to its network. The Commission finds
that these and the other planned uses of Pilot Program funds to support
network build-out to tribal lands will further our goal of bringing
innovative health care services to those areas of the country with the
most acute health care needs.
31. Cost Estimates. In the 2006 Pilot Program Order, the Commission
requested that applicants provide estimates of their network's total
costs for each year. Selected participants provided cost estimates or
budgets. Several applicants provided significant cost and budget
details, including Adirondack-Champlain Telemedicine Information
Network whose budget includes a clear analysis of network costs with
significant detail, including, e.g., cost per foot of fiber, cost of a
pole installation, number of feet of fiber, and number of poles where
fiber is installed. Alaska Native Tribal Health Consortium provides
detailed cost estimates for each phase of its network, including
deployment and services, and provides significant information about its
revenue stream, operating expenses, and maintenance for five years.
Although the Commission finds selected participants have satisfied this
criterion, to ensure support is used for eligible costs, as part of the
USAC application process, applicants must submit detailed network cost
worksheets.
32. Fair Share. To prevent improper distribution of Pilot Program
funds, in the 2006 Pilot Program Order, the Commission instructed
applicants to describe how for-profit network participants will pay
their fair share of the network and other costs. In general, selected
participants provided significant assurances that for-profit
participants will be responsible for all of their network costs.
Several applicants provided more detailed plans targeted to insuring
that all for-profit participants pay their fair share of the costs. For
instance, Northeast HealthNet states that its proposed network does not
include for-profit entities and that, if for-profit entities are added
to its network, they would be invoiced separately for each service item
and USAC would receive invoice documentation that reflects only
eligible rural health care providers. Similarly, Tennessee Telehealth
Network notes that although it will not include for-profit participants
in the first two years, for-profits will later be allowed to join and
will be required to pay 100 percent of their actual costs.
33. Funding Source. In the 2006 Pilot Program Order, the Commission
instructed applicants to identify their source of financial support and
anticipated revenues that will pay for costs not covered by the fund.
To preserve the integrity of the Pilot Program, the Commission will
continue to require selected participants to indicate how for-profit
participants pay their fare share of network costs. Accordingly,
selected participants must submit this information to USAC as part of
their detailed line-item network costs worksheet submission and Pilot
Program Participants Quarterly Data Reports. Generally, selected
participants identified their source or sources of support for costs
not covered by the Pilot Program. Several applicants provided the well-
documented assurances that their costs not supported by the Pilot
Program will be funded by reliable sources. For example, University
Health Systems of Eastern Carolina states that it, the participating
health care providers, and the North Carolina Office of Rural Health
will
[[Page 8676]]
provide funding for their network costs not supported by Pilot Program
funds. And, Wyoming Telehealth Network has received a commitment from
the Wyoming Department of Public Health and Terrorism Preparedness
Program to fund the Network's costs not covered by the Program.
34. 85 Percent Funding. The Commission also stated in the 2006
Pilot Program Order that no more than 85 percent of their costs
incurred by a participant will be funded to deploy a state or regional
dedicated broadband health care network, and to connect that network to
NLR or Internet2. Selected participants demonstrated their commitment
to seeking no more than 85 percent of their network costs from the
Pilot Program. Michigan Public Health Institute, for example, explains
that the Michigan Legislature has appropriated funds to cover a portion
of its 15 percent share of costs. California Telehealth Network stated
that it will receive its 15 percent share from the California Emerging
Technology Fund, which is operated by the California Public Utility
Commission. Iowa Health System states that it plans to fund
approximately 39 percent of the total cost of extending its existing
fiber backbone to 78 rural sites.
35. Included Facilities. With respect to health care facilities,
the Commission directed applicants in the 2006 Pilot Program Order: (1)
To list the health care facilities that will be included in their
networks; and (2) to demonstrate that they will connect more than a de
minimis number of rural health care providers in their networks. All
selected participants satisfied this request by providing the names and
details of facilities to be included and by proposing to connect more
than a de minimis number of rural health care facilities. Although some
proposals include only a few rural health care providers, relative to
the total number of facilities to be included in these networks, and
recognizing the significant benefits these networks will confer on
their rural populations, the Commission finds these small numbers of
rural health care providers are more than de minimis when viewed in
context. For example, Erlanger Health System's proposed network in
Tennessee and Georgia includes five rural health care providers out of
a total of 11 facilities, and Puerto Rico Health Department's proposed
network includes six rural health care providers out of a total of 52
facilities. Considering the total number of health care providers to be
included in these proposed networks, the Commission finds that the
number of rural health care providers is more than de minimis.
36. Prior Experience. To help ensure sufficient skill and
competency of Pilot Program participants, in the 2006 Pilot Program
Order the Commission asked whether applicants had previous experience
in developing and managing telemedicine programs, and specifically
whether applicants had successful track records in developing,
coordinating, and implementing telehealth/telemedicine programs within
their states or regions. In general, selected participants exhibited
experience with telehealth/telemedicine programs, and some exhibited
significant, impressive experience in this area. Notably, University
Health Systems of Eastern Carolina has been recognized as one of the
nation's ``100 Most Wired Healthcare Organizations'' five of the
previous six years by Hospitals and Health Networks magazine, and
connects regional hospitals via a high-speed fiber-optic network
enabling telemedicine, teleradiology and telehealth services.
University of Mississippi Medical Center's TelEmergency program already
provides real-time medical care to patients in rural emergency
departments utilizing specially-trained nurse practitioners linked with
their collaborating physicians. The Commission finds this experience,
and the experiences cited in other applications, will further the goals
of the 2006 Pilot Program Order by ensuring that applicants have the
necessary experience to successfully implement telemedicine/telehealth
programs within their states or regions.
37. Project Management. To ensure proper network oversight and
implementation, in the 2006 Pilot Program Order, the Commission
instructed applicants to provide project management plans which outline
leadership and management structures, work plans, schedules, and
budgets. Selected participants provided project management plans that
demonstrate a strong commitment to the success of their proposed
networks. For example, Southwest Alabama Mental Health Consortium sets
forth a detailed management structure, budget, and schedule, and its
work plan provides for: Establishment of a legal partnership; selection
of a service provider based on Commission requirements; installation of
WAN and connection to Internet2; monthly project assessment meetings;
implementation of telehealth and telemedicine services; implementation
evaluation; and project continuation to achieve goals and objectives.
Missouri Telehealth Network describes in detail the program manager's
responsibilities; provides a month-by-month project timeline; and lists
specific funding amounts requested for network costs, equipment,
connections, and operation.
38. Coordination. To ensure efficiencies and avoid duplication of
efforts or network facilities, in the 2006 Pilot Program Order, the
Commission instructed applicants to indicate how their proposed
telemedicine program will be coordinated throughout the state or
region. In general, selected participants sufficiently described such
coordination. Notably, New England Telehealth Consortium (NETC) members
represent 57 hospitals, three universities, 57 behavioral health sites,
eight correctional facilities' clinics, 81 federally qualified health
care centers, six health education sites, and two health research sites
throughout Maine, Vermont and New Hampshire. Each NETC member, through
its representation on the NETC Board of Directors, will be able to
provide input into critical NETC decisions including network
implementation priority among the various sites and telemedicine
programs implemented as a result of this network. According to NETC,
all members have agreed in writing that an Executive Committee will
facilitate efficient management of the organization between meetings of
the full Board. Rural Nebraska Healthcare Network (RNHN), a non-profit
membership organization consisting of nine local hospitals and their
associated clinics in the Panhandle of Nebraska, has coordinated health
care efforts in the Panhandle since 1996. RNHN plans to utilize and
enhance its existing regional coordination for programs and services by
employing a system of Regional Leadership Teams that will draft
regional priorities and be responsible for communication between all
participants. The Regional Leadership Teams also will coordinate with
the Board of Directors which includes the Chief Executive Officer of
each member hospital.
39. Self Sustainability. A primary goal of the Pilot Program is to
ensure the long-term success of rural health care networks and to
prevent wasteful allocation of limited universal service funds.
Accordingly, in the 2006 Pilot Program Order, the Commission sought
assurances from applicants that their proposed networks will be self
sustaining once established. To the extent a network is not self
sustainable once established, that may be an indicia of non-compliance
with the terms of this Order and may be considered as part of any Pilot
Program audits and oversight. Generally, selected participants provided
sufficient evidence that their proposed networks
[[Page 8677]]
will be self sustaining by the completion of the Pilot Program. For
example, Heartland Unified Broadband Network identifies three possible
scenarios for network sustainability for Year Three and beyond,
including: Reliance on the existing RHC support mechanism; reliance on
fees from network partners; and reduction (not elimination) of
bandwidth should full funding be unavailable. Wyoming Telehealth
Network envisions some ongoing costs covered by the existing RHC
support mechanism or state funding, and plans to use as a model
Nebraska's statewide telehealth network which is supported through a
combination of existing RHC support mechanisms, state funding through
the Nebraska universal service program, and minimal consortium fees.
40. USAC Application Process. As described in detail above, the
Commission finds that selected participants have sufficiently set forth
how they will meet the overall Pilot Program's goals and objectives,
and how their networks will meet the detailed Program criteria set
forth in the 2006 Pilot Program Order. Although the Commission finds
that the selected applications overall satisfy the criteria set forth
in the 2006 Pilot Program Order, additional information will be needed
from many applicants to ensure funds are disbursed and used consistent
with section 254 of the 1996 Act, this Order, and the Commission's
rules and orders. Accordingly, as described more fully below, each
selected participant will be required to comply with this Order, and to
thoroughly and clearly provide all necessary information with its forms
and other data through the USAC administrative process. These
additional requirements will ensure that Pilot Program funds are
appropriately disbursed and will prevent, to the extent possible,
waste, fraud, and abuse.
D. Denied Applications
41. In this section, the Commission denies 12 applications because
these applicants do not demonstrate that they overall satisfy the
goals, objectives, and other criteria of the 2006 Pilot Program Order.
Unlike the applications selected for participation above, the 12
applications the Commission denies either have substantial deficiencies
across the range of criteria established in the 2006 Pilot Program
Order or seek funding for costs that are well beyond the scope of the
2006 Pilot Program Order. Accordingly, the Commission finds that these
applications do not warrant further participation in the Rural Health
Care Pilot Program.
42. OpenCape Corporation Application. OpenCape fails to satisfy the
goals and objectives of the 2006 Pilot Program Order because, among
other things, its application seeks support focused not for a network
dedicated to telehealth, but instead for a network for use by public
schools, community colleges, and commercial firms. In fact, in the
application, health care is only mentioned once and the letters of
support and funding in the OpenCape application appear to be limited to
school districts, community colleges, and the towns that would be
served by the network. To the extent OpenCape seeks funding for
schools, it may do so through the universal service support mechanism
for schools and libraries (E-Rate program). Significantly, none of the
seven members of the proposed board is affiliated with a health care
provider; none of the 41 entities listed as supporting the network is a
health care provider; and none of the six entities providing funds to
cover the 15 percent minimum funding contribution is a health care
provider. The seven board members primarily come from education
backgrounds. OpenCape's application is also deficient because it fails
to provide adequate details of its costs. For example, the budget
provided with OpenCape's application provides information on tasks it
will perform, but does not provide costs associated with those tasks.
For instance, OpenCape states that it will perform a wireless
engineering study and a topography study, but does not provide the
costs associated with these studies. In addition, OpenCape does not
adequately identify its source of the financial support and anticipated
revenues that will pay for costs not covered by the Pilot Program, but
instead merely indicates that it will pursue grants, donations and
earmarks for capital funding of the full implementation. Not only does
this show that OpenCape does not presently know who will pay for its
share of the costs, the Commission cannot even determine from the
application whether its expectations to obtain funding are realistic
because OpenCape provides little to no evidence of its ability to
secure funding from these sources. Rather, OpenCape merely explains
that its federal and state legislative delegations generally (but not
for its specific Pilot Program application) have shown an interest in
expanding access to underserved regions of Massachusetts. Accordingly,
the Commission denies OpenCape's request to participate in the Pilot
Program.
43. North Link of Northern Enterprises, Inc. Application. North
Link of Northern Enterprises, Inc. (North Link of Northern Enterprises)
seeks $2.5 million in funding for a project generally described as
connecting eight hospitals and medical centers to the regional fiber
optic backbone to promote the use of a photo archiving system (PAS),
virtual intensive care units, and teleconferencing. However, beyond the
vague description of the project, North Link of Northern Enterprises
does not provide sufficient information to determine how the project
will advance the goals of the 2006 Pilot Program Order. Notably, like
OpenCape's application, North Link of Northern Enterprises fails to
provide budget information that would permit the Commission to assess
whether the application comports with program requirements including,
in particular, whether the funding request is for eligible services.
Additionally, the work plan submitted by North Link of Northern
Enterprises fails to provide specific details on the phases of
construction anticipated by Northern Enterprises. Instead, the work
plan merely states that Phase I, which consists of laying 75 miles of
the 400 miles of fiber optics, will begin June 4, 2007, with the
balance of the project completed by 2009. The Commission therefore
denies North Link of Northern Enterprises' request for Pilot Program
participation because it does not demonstrate it is qualified to be
eligible for its broad request for funding.
44. Illinois Hospital Association Application. The Commission also
denies the application of Illinois Hospital Association because it
seeks funding primarily for costs that are beyond the scope of the
Pilot Program. In particular, Illinois Hospital Association states that
it seeks over $800,000 for its proposed project to provide greater
access to the existing state broadband network, Illinois Century
Network, for rural health care providers to promote the use of
telehealth and telemedicine throughout the state. The funding, however,
is primarily for staff support and customer premises equipment, which
are outside the scope of the Pilot Program. Thus, the Commission denies
this application for participation in the Pilot Program. The Commission
notes, however, that the Illinois Rural HealthNet Consortium and the
Iowa Health System will be participants in the Pilot Program and will
offer services in Illinois. The Commission also notes that the two main
proposed recipients in Illinois Hospital Association's application,
University of Illinois College of Medicine at Rockford and Southern
[[Page 8678]]
Illinois School of Medicine, are also included in Illinois Rural
HealthNet Consortium's application.
45. Institute for Family Health Application. Similarly, the
Institute for Family Health in New York seeks $2.4 million in funding
for its proposed network that would extend its current electronic
health records (EHR) and practice management system from its New York
City-based urban network to rural health centers throughout the Mid-
Hudson Valley region. Of the requested Pilot Program funding, over 75
percent is for costs that are beyond the scope of the Pilot Program,
including customer premises equipment such as personal computers and
server hardware, personnel costs, and $1.5 million in funding for
software licenses. Accordingly, the Commission declines to select
Institute for Family Health to participate in the Pilot Program.
46. Valley View Hospital Application. The Valley View Hospital in
Colorado's application also fails to qualify for participation in the
Pilot Program because it seeks funding primarily for ineligible Pilot
Program costs. Specifically, Valley View Hospital seeks $195,000 in
funding for the rental of an RP-7 robotic system, which is a tele-
operated, mobile robotic system that enables remote presence. As stated
above, the Pilot Program funding will promote the utilization of
dedicated broadband capacity to provide health care services. Valley
View Hospital, however, seeks funding not for network design or build-
out, but for medical equipment, which is specifically excluded from
funding. The Commission finds, therefore, that participation in the
Pilot Program by Valley View Hospital is not appropriate.
47. Alabama Rural Health Network. The application submitted by the
Alabama Department of Economic and Community Affairs (Alabama Rural
Health Network) also seeks funding for ineligible Pilot Program costs.
In particular, ADECA seeks $91,275 in funding, of which $45,000 is for
a category simply labeled ``contractual.'' The rest of the funding is
divided amongst personnel costs, travel, ``fringe benefits,'' and
``indirect costs.'' None of these costs are eligible costs for which
Alabama Rural Health Network could receive reimbursement. Further, none
of those costs appear to be associated with network design or
deployment of infrastructure. Instead, Alabama Rural Health Network's
application appears to be seeking funding for a survey it will conduct
of the state's hospitals to determine their needs, and an evaluation of
the state's broadband providers to determine their capabilities. These
deficiencies in Alabama Rural Health Network's proposal warrant its
exclusion from participation in the Pilot Program.
48. Pioneer Health Network Application. Pioneer Health Network's
application states that it seeks to develop a health information system
focusing on health information technology (such as patient level health
and quality information exchange and establishing a health information
environment that emphasizes security and privacy of patient data and
that leverages technologies that are enhanced by the evolving
interoperability standards) as opposed to telehealth and telemedicine
applications. Beyond this general description, Pioneer Health Network
does not provide any details concerning its proposal except to indicate
the project involves software applications, as opposed to network
infrastructure (which the applicant states will largely be provided by
the existing statewide backbone). Because the Pilot Program does not
fund medical software applications, the Commission declines to find
Pioneer Health Network eligible for funding.
49. Taylor Regional Hospital Application. Taylor Regional
Hospital's application is so vague in providing overall details about
how it qualifies for participation in the Pilot Program that the
Commission denies its application. In particular, Taylor Regional
Hospital's application fails to specify the amount of funding it seeks,
specifying only that its proposed project would cost $7,200 per year.
In addition, Taylor Regional Hospital fails to provide any detail
supporting its costs for the Commission to determine whether these
costs are associated with network design or network costs. Taylor
Regional Hospital's stated objective is to use the funding to enhance
its imaging distribution system, community-wide scheduling system, and
its Laboratory Information System. It is unclear from the application
whether such enhancements would require network upgrades or whether
they are software application upgrades, which would be ineligible for
support. Moreover, Taylor Regional Hospital does not identify the
health care providers it seeks to connect. Instead, Taylor Regional
Hospital states that the facilities that will be included in the
network are ``Taylor Regional Hospital and all the affiliates
associated with [it].'' This omission on the part of Taylor Regional
Hospital makes it impossible, among other things, to determine whether
there will be a de minimis number of the rural health care providers;
identify network configuration; and to ensure that the proposed project
is consistent with the goals, objectives, and other criteria of the
2006 Pilot Program Order. Thus, the Commission denies this application.
50. United Health Services Application. Similarly, United Health
Services of New York (United Health Services) provides such inadequate
detail of its network costs that it does not merit further
participation in the Pilot Program. Notably, United Health Services
provides no budget, but instead merely lists its monthly connectivity
costs, without specifying whether the costs would support an existing
network or construction of a new network. The Commission notes that
United Health Services does include a management and work plan and
schedule. However, without a budget, the Commission is not able to
identify how United Health Services intends to allocate the funding for
each phase of the plan. In addition, its application fails to include
financial data or to detail in any meaningful way its proposed network
build-out and costs. Consequently, the Commission finds Pilot Program
participation by United Health Services would not be consistent with
the 2006 Pilot Program Order.
51. World Network Institutional Services Application. World Network
Institutional Services (WNIS) also fails to detail its costs or almost
any other aspect of its proposal in its cursory four-page application
to adequately assess its qualifications for participation in the Pilot
Program. WNIS seeks $100 million in funding but fails to provide a
budget breaking out its cost estimates. Additionally, WNIS does not
provide any detail as to which health care facilities it would include
in its network, preventing the Commission, among other things, from
determining whether the network would serve more than a de minimis
number of rural health care providers. Rather, WNIS states that a list
will be provided in ``later correspondence'' (which was never
provided). Further, WNIS fails to provide specific information on how
it will pay for its portion of the costs of the network. Instead, WNIS
offers that its financial support will come from ``advertisers and
users.'' Based on these deficiencies and the overall vagueness of the
application, the Commission declines to include WNIS as a participant
in the Pilot Program.
52. Hendricks Regional Health Application. Hendricks Regional
Health (Hendricks), like WNIS, fails to provide a work plan that
sufficiently details the management/leadership structure, work plan, or
budget. In particular, Hendricks provides no budget information in its
[[Page 8679]]
application. The only estimate in its application is for the per mile
cost of deploying the fiber optic cable it seeks, which is $50,000 per
mile for approximately 58 miles. And, even this information is not
accompanied by any specific detail or documentation. The Commission
also has concerns about the work plan presented by Hendricks. Instead
of providing detailed information, Hendricks provides a vague timeline
with no additional information to support its assumptions on deployment
of the fiber optic cable. Like Taylor, United Health, and WNIS, the
deficiencies in Hendricks's application do not warrant its
participation in the Pilot Program.
53. Southwest Pennsylvania Regional Broadband Health Care Network
Application. Similarly, the application submitted by Southwest
Pennsylvania Regional Broadband Health Care Consortium (Southwest
Pennsylvania Regional Broadband Health Care Network) fails to provide
information that sufficiently details its work plan or budget.
Specifically, Southwest Pennsylvania Regional Broadband Health Care
Network offers a budget that fails to provide any line-item details.
Rather, Southwest Pennsylvania Regional Broadband Health Care Network
indicates that it intends to build 180 miles of fiber optic cable and
states that it will need $7.2 million in funding to do so. Southwest
Pennsylvania Regional Broadband Health Care Network provides no detail
on how it arrived at this figure or what it includes. SW Pennsylvania
Consortium also provides no information regarding the on-going cost of
operating its network. Because there are no details in its budget, the
Commission is also not able to determine what network equipment
Southwest Pennsylvania Regional Broadband Health Care Network intends
to purchase. Additionally, Southwest Pennsylvania Regional Broadband
Health Care Network's fails to document its funding sources. It,
instead, lists the facilities that would join the network and assigns
an annual cost of $5,456.95 to each facility for five years without
providing detail on where the entities will get the additional money or
providing letters of support from these entities. Moreover, like
Hendricks, Southwest Pennsylvania Regional Broadband Health Care
Network's work plan represents nothing more than a timeline. Finally,
the Commission notes that of the 99 facilities listed in its
application, only five are eligible rural health care providers. Given
the amount of funding requested, the lack of financial and other detail
needed to justify funding, and the small percentage of rural health
care providers that will be connected, the Commission finds Pilot
Program participation would not be consistent with the 2006 Pilot
Program Order.
54. Finally, as noted above, in the 2006 Pilot Program Order, one
of the purposes of the Pilot Program was to encourage health care
providers to aggregate their connection needs to form a comprehensive
statewide or regional dedicated health care network. The applications
that the Commission is approving in this Order have fulfilled that
purpose and together will cover 42 states and three United States
territories. The Commission encourages those eligible health care
providers that are part of the denied applications to pursue ways to be
included in the approved consortia in their states or regions. The
Commission also encourages the rural health care facilities in the
denied applications to contact USAC to discuss their possible
participation in the existing RHC support mechanism. In addition, after
three years, the Commission intends to revisit its rules and determine
how to improve the current program. The Commission encourages the
denied applicants to participate in any subsequent proceedings and
reapply at that time.
E. Pilot Program Administration
55. In this section, the Commission discusses several issues
related to the effective administration of the Pilot Program. The
Commission first provides clarification regarding what entities are
eligible health care providers for purposes of the Pilot Program, which
services are eligible and ineligible for Pilot Program support, and
which sources of funding are eligible and ineligible for selected
participants' 15 percent minimum funding contribution. The Commission
also provides specific guidance concerning selected participants'
compliance with the submission of program forms to the USAC. For
example, in order to receive universal service support, selected
participants must submit with the required USAC Forms, detailed
worksheets concerning their proposed network costs, certifications
demonstrating universal service support will be used for its intended
purposes, letters of agency from each participating health care
provider, and detailed invoices showing actual incurred costs of
project build-out. As discussed below, selected participants that fail
to comply with these procedures and the other program requirements the
Commission discusses here will be prohibited from receiving support
under the Pilot Program. Finally, the Commission addresses various
requests for waiver of Commission rules filed by applicants. Among
other things, the Commission denies waiver requests of the Commission's
rule requiring that Pilot Program selected participants competitively
bid their proposed network projects. In doing so, the Commission
reaffirms that the competitive bidding process remains an important
safeguard to ensuring universal service support is used wisely and
efficiently ensuring that the most cost effective service providers are
selected by selected participants, and the Commission discusses the
factors on which selected participants should rely in making their cost
effectiveness determinations in the competitive bidding process.
1. Eligible Health Care Providers
56. As stated above, the existing RHC support mechanism utilizes
the statutory definition of ``health care provider'' established in
section 254(h)(7)(b) of the 1996 Act. Excluded from the list of
eligible health care providers are nursing homes, hospices, other long-
term care facilities, and emergency medical service facilities.
Although emergency medical service facilities are not eligible
providers for purposes of the RHC Pilot Program, Pilot Program funds
may be used to support costs of connecting emergency medical service
facilities to eligible health care providers to the extent that the
emergency medical services facility is part of the eligible health care
provider. Additionally, pharmacies are excluded from the definition of
health care providers. Accordingly, under the RHC Pilot Program, only
eligible health care providers and consortia that include eligible
health care providers may apply for and receive discounts.
Additionally, applicants, as well as individual health care facilities
included in an application, that have been convicted of a felony,
indicted, suspended, or debarred from award of federal or state
contracts, or are not in compliance with FCC rules and requirements
shall not be eligible for discounts under the Pilot Program. To the
extent that the applications the Commission selects herein contain
ineligible health care providers, such providers may participate but
must be treated by the applicant and by USAC as if the providers were
for-profit entities and therefore are ineligible to receive any support
associated with their portion of the Pilot Program network. Further,
selected participants
[[Page 8680]]
or individual health care facilities that are part of the network of a
selected participant that are delinquent in debt owed to the Commission
shall be prohibited from receiving universal service Pilot Program
support until full payment or satisfactory arrangement to pay the
delinquent debt(s) is made. Also, selected participants or individual
health care facilities included in the network of a selected
participant that are barred by the General Services Administration
(GSA) from receiving federal contracts, subcontracts, and certain types
of federal assistance shall be prohibited from receiving universal
service Pilot Program support until the GSA determines that they are
eligible for federal contracts, subcontracts, and certain types of
federal assistance.
57. Participation of State Organizations and Entities as Consortia
Members. State organizations and entities may apply for funding on
behalf of consortia members, but cannot themselves receive funding for
services under the Pilot Program unless they satisfy the statutory
definitions for health care provider under section 254(h)(7)(b) of the
1996 Act. In addition, state organizations or entities that provide
eligible service offerings are eligible to be selected as a service
provider by a Pilot Program selected participant through the
competitive bidding processes. Notably, the Commission previously
determined that the term ``health care provider'' should be interpreted
narrowly and, in the past, excluded potential entities from the
eligible health care provider definition when not explicitly included
in the statutory definition by Congress. Despite the limitations of
section 254(h)(7)(b), however, the Commission's rules allow eligible
health care providers to join consortia with other eligible health care
providers; with schools, libraries, and library consortia eligible
under Subpart F of 47 CFR part 54; and with public sector
(governmental) entities to order telecommunications services. As state
organizations or entities constitute ``public sector (governmental)
entities,'' they may join consortia under the Commission's rules.
58. Therefore, although state organizations and entities do not
constitute eligible health care providers, the Commission finds they
may apply on behalf of eligible health care providers as part of a
consortium (e.g., as consortia leaders) to function, for example, in an
administrative capacity for eligible health care providers within the
consortium. In doing so, however, state organizations and entities are
prohibited from receiving any funding from the Pilot Program. The
Commission notes that in the E-Rate context, it has explicitly required
state telecommunications networks that secure discounts under the
universal service support mechanisms on behalf of eligible schools and
libraries, or consortia that include an eligible school or library, to
pass on these discounts to the eligible schools or libraries. The
Commission clarifies here and makes explicit that any discounts,
funding, or other program benefits secured by a state entity or
organization or other ineligible entity functioning as a consortium
leader under the Pilot Program must be passed on to consortia members
that are eligible health care providers. In addition, the Commission
also finds that, like state entities, other not-for-profit ineligible
entities may apply on behalf of eligible health care providers as part
of a consortium (i.e., as consortia leaders), and otherwise function in
an administrative capacity for eligible health care providers within
the consortium. Like state organizations and entities, these not-for-
profit entities are prohibited from receiving any funding from the
Pilot Program.
2. Rural Health Care Pilot Program Network Components Eligible and
Ineligible for Support
59. In the 2006 Pilot Program Order, the Commission stated that
funding provided under the Pilot Program would be used to support the
costs of constructing dedicated broadband networks that connect health
care providers in a state or region, and that connect such state and
regional networks to the public Internet, Internet2, or NLR. The
Commission explained that eligible costs include those for initial
network design studies. The Commission stated in the 2006 Pilot Program
Order that it would fund necessary network design studies for selected
participants, as these studies would enhance access to advanced
telecommunications and information services by enabling applicants to
determine how best to deploy an efficient network that includes
multiple locations and various technologies. Several applicants
requested funding for network design studies. For example, Kentucky
Behavioral Telehealth Network proposes to complete a network design
study in Year One, and in Year Two build out the designed network to
link the existing statewide network of regional behavioral health
providers with rural health care providers to improve access to a full
range of medical care. And, Penn State Milton S. Hershey Medical Center
plans in Year One to connect several rural hospitals to the Medical
Center and to conduct a comprehensive inventory and capacity analysis
of additional facilities it seeks to add in Year Two. For purposes of
the Pilot Program, the Commission clarifies that funding for network
design studies includes costs paid to a consultant to analyze both
technical and non-technical requirements and develop feasible network
designs based on the analyses. The Commission further explained that
eligible costs also include those for deploying transmission facilities
and providing access to advanced telecommunications and information
services, including non-recurring and recurring costs. The Commission
notes that in the 2006 Pilot Program Order, it stated that authorized
purposes include the costs of ``advanced telecommunications and
information services.'' The Commission clarifies here that, consistent
with the Act, authorized purposes include the costs of access to
advanced telecommunications services. In light of the many applications
the Commission received seeking funding and the wide range of network
and related components for which support is sought, the Commission
further clarifies the services eligible and ineligible for support to
ensure that the Pilot Program operates to facilitate the goals of the
2006 Pilot Program Order. The Commission thus clarifies that eligible
non-recurring costs include those for design, engineering, materials
and construction of fiber facilities or other broadband infrastructure,
and the costs of engineering, furnishing (i.e., as delivered from the
manufacturer), and installing network equipment. Recurring and non-
recurring costs of operating and maintaining the constructed network
are also eligible once the network is operational. Further, to the
extent that a selected participant subscribes to carrier-provided
transmission services (e.g., SONET, DS3s) in lieu of deploying its own
broadband network and access to advanced telecommunications and
information services, the costs for subscribing to such facilities and
services are also eligible.
60. Ineligible costs include costs that are not directly associated
with network design, deployment, operations and maintenance. These
ineligible costs include, but are not limited to:
Personnel costs (including salaries and fringe benefits),
except for those personnel directly engaged in designing, engineering,
installing, constructing, and managing the dedicated broadband network.
Ineligible costs of this category include, for example, personnel to
perform program management and
[[Page 8681]]
coordination, program administration, and marketing.
Travel costs.
Legal costs.
Training, except for basic training or instruction
directly related to and required for broadband network installation and
associated network operations. For example, costs for end-user
training, e.g., training of health care provider personnel in the use
of telemedicine applications, are ineligible.
Program administration or technical coordination that
involves anything other than the design, engineering, operations,
installation, or construction of the network.
Inside wiring or networking equipment (e.g., video/Web
conferencing equipment and wireless user devices) on health care
provider premises except for equipment that terminates a carrier's or
other provider's transmission facility and any router/switch that is
directly connected to either the facility or the terminating equipment.
Computers, including servers, and related hardware (e.g.,
printers, scanners, laptops) unless used exclusively for network
management.
Helpdesk equipment and related software, or services.
Software, unless used for network management, maintenance,
or other network operations; software development (excluding
development of software that supports network management, maintenance,
and other network operations); Web server hosting; and Website/Portal
development.
Telemedicine applications and software; clinical or
medical equipment.
Electronic Records management and expenses.
Connections to ineligible network participants or sites
(e.g., for-profit health care providers) and network costs apportioned
to ineligible network participants.
Administration and marketing costs (e.g., administrative
costs; supplies and materials (except as part of network installation/
construction); marketing studies, marketing activities, or outreach
efforts; evaluation and feedback studies).
61. USAC may only fund eligible costs as described in this Order
and is prohibited from funding ineligible costs or providing funding to
ineligible participants. The Commission requires, as discussed below,
Pilot Program participants to identify and detail all ineligible costs,
including costs apportioned to for-profit and other ineligible network
participants or sites, in their line-item network cost worksheets
submitted to USAC with FCC Forms 465 and 466-A, and to clearly
demonstrate that Pilot Program support amounts will not be used to fund
ineligible costs. The Commission notes that some applicants sought
waivers of the 2006 Pilot Program Order, if necessary, for certain
costs. To the extent that these costs constitute ineligible costs, as
described in this Order, selected participants may not request or
receive Pilot Program funds to support these costs. Accordingly, the
Commission denies these applicants' requests to expand the scope of
funding available under the 2006 Pilot Program Order. The Commission
notes that if a product or service contains both eligible and
ineligible components, costs should be allocated to the extent that a
clear delineation can be made between the eligible and ineligible
components. The clear delineation must have a tangible basis and the
price for the eligible portion must be the most cost-effective means of
receiving the eligible service. If the ineligible functionality is
ancillary to an eligible component, the costs need not be allocated to
the ineligible functionality. An ineligible functionality may be
considered ``ancillary'' if (1) a price for the ineligible component
that is separate and independent from the price of the eligible
components cannot be determined, and (2) the specific package remains
the most cost-effective means of receiving the eligible services,
without regard to the value of the ineligible functionality.
3. Eligible Sources for 15 Percent of Non-Funded Costs
62. The Commission finds that selected participants' minimum 15
percent contribution of eligible network costs must be funded by an
eligible source as described in this Order. Selected participants are
required to identify with specificity their source of funding for the
minimum 15 percent contribution of eligible network costs in their
submissions to USAC, as discussed below. The Commission emphasizes that
selected participants' 15 percent contributions must go towards
eligible network costs only, as described in this Order. In order to
ensure that the Pilot Program operates consistent with the goals and
objectives of the 2006 Pilot Program Order and that funds are used to
the benefit of public and non-profit health care providers, the
Commission places limitations on from what source selected participants
may derive their minimum 15 percent contribution of eligible network
costs. Only funds from an eligible source will apply towards selected
participants' required 15 percent minimum contribution. Eligible
sources include the applicant or eligible health care provider
participants; state grants, funding, or appropriations; federal
funding, grants, loans, or appropriations except for RHC funding; and
other grant funding, including private grants. The Commission stresses
that participants who do not demonstrate that their 15 percent
contribution comes from an eligible source or whose minimum 15 percent
funding contribution is derived from an ineligible source will be
denied funding by USAC. Ineligible sources include in-kind or implied
contributions; a local exchange carrier (LEC) or other telecom carrier,
utility, contractor, or other service provider; and for-profit
participants. Moreover, selected participants may not obtain any
portion of their 15 percent contribution from the existing RHC support
mechanism. The Commission finds that these limitations on sources are
necessary to ensure that participating health care providers adequately
invest in their network projects to ensure efficiency in both cost and
design and to assume some minimal level of risk. Requiring participants
to have a vested interest in the approved network project safeguards
against program manipulation and protects against waste, fraud, and
abuse. The Commission recognizes that some selected participants
identified improper sources for their participant contribution in their
Pilot Program applications; however, the Commission allows those
selected participants to amend their project proposals in their
submissions to USAC solely for the purpose of coming into compliance
with the requirements of this Order. Applicants so amending their
applications are prohibited from using this opportunity to increase in
any way the amount of support they are seeking.
4. Cost Effectiveness
63. Consistent with existing rules and requirements, selected
participants must comply with the competitive bidding process to select
a service provider for their proposed projects. As part of this
requirement, the Commission reiterates that each selected participant
is required to certify to USAC that the service provider it chooses is,
to the best of the applicant's knowledge, the most cost-effective
service or facility provider available. The Commission has defined
``cost effective'' for purposes of the existing RHC support mechanism
as ``the method that costs the least after consideration of the
features, quality of transmission, reliability, and other factors that
the health care provider
[[Page 8682]]
deems relevant to * * * choosing a method of providing the required
health care services.'' In selecting the most cost-effective bid, in
addition to price, the Commission requires selected participants to
consider non-cost evaluation factors that include prior experience,
including past performance; personnel qualifications, including
technical excellence; management capability, including solicitation
compliance; and environmental objectives (if appropriate). The
Commission has previously concluded that non-price evaluation factors,
such as prior experience, personnel qualifications, and management
capability, may form a reasonable basis on which to evaluate whether a
bid is cost effective. Because designing and constructing a new network
or building upon an existing network represents a substantial
undertaking that requires technical expertise, training, and skills of
a different level than those services supported by the existing RHC
support mechanism, the Commission makes consideration of these factors
mandatory for selected participants.
64. The existing RHC support mechanism, unlike the schools and
libraries universal service support (E-Rate) program, does not require
participants to consider price as the primary factor in selecting
service providers. The Commission has stated that applicants to the RHC
support mechanism should not be required to use the lowest-cost
technology because factors other than cost, such as reliability and
quality, may be relevant to fulfill their telemedicine needs. This
rationale remains appropriate for the Pilot Program. Thus, selected
participants are not required to select the lowest bid offered, and
need not consider price as the sole primary factor in selecting bids
for construction of their broadband networks and the services provided
over those networks. The applications selected for participation in the
Pilot Program serve a variety of telemedicine and telehealth needs and
entail complex network design, as well as infrastructure planning and
construction. In developing a telemedicine network infrastructure,
selected participants may find non-cost factors to be as or more
important than price. For example, selected participants may find
technical excellence and personnel qualifications particularly relevant
in determining how to best meet their health care and telemedicine
needs. Requiring applicants to use the lowest cost technology available
could result in selected participants being relegated to using obsolete
or soon-to-be retired technology. In addition, initially higher cost
options may prove to be lower in the long-run, by providing useful
benefits to telemedicine in terms of future medical and technological
developments and maintenance. Thus, the Commission does not require
selected participants to make price the sole primary factor in bid
selection, but it must be a primary factor.
5. Network Modifications
65. Selected participants shall follow the network design plan
outlined in their applications. Nevertheless, the Commission recognizes
that selected participants may find it necessary or desirable to modify
the network design plans set forth in their Pilot Program applications.
For example, less expensive network components that may be available
since applications were compiled may permit selected participants to
acquire higher capacity at lower prices. Alternatively, selected
participants may be able to add health care providers to their network
within the available maximum support amounts. Although network
modifications may deviate from a selected participant's initial
application, to the extent a modification results in a supported
network only connecting a de minimis number of rural health care
providers, the modification may result in adjustment of available
support or denial of participation in the Pilot Program for a selected
participant. Therefore, to the extent a selected participant wishes to
upgrade, replace technology, or add eligible health care providers to
its proposed network prior to commencing and completing the competitive
bidding process, it may receive support to do so as long as that
support does not exceed the maximum available support amount and the
support is used for eligible expenses. The Commission also notes that
selected participants, including health care provider consortium
members, may decline to participate in the Pilot Program, if they
choose, subject to the restrictions noted in this Order. However, once
a service provider is selected and an FCL is issued by USAC, selected
participants' support will be capped at the FCL amount, and the
selected participant may only modify the network within that support
amount. Any modifications that would increase the amount of support
needed above the maximum available support amount for the selected
participant in this Order will not be funded by the Pilot Program.
After the issuance of the FCL, selected participants must complete the
project for which funding is awarded.
6. Public Safety and Coordination for Emergencies
66. In 2004, the President issued an Executive Order calling for
the development and implementation of a national interoperable health
information technology infrastructure. A key element of this plan is
the NHIN initiative which promotes a ``network of networks,'' where
state and regional health information exchanges and other networks that
provide health information services work together, through common
architecture (services, standards, and requirements), processes and
policies to securely exchange information. In response to the Pilot
Program, HHS has identified ways the Pilot Program and the NHIN can
advance the provision of critical patient information to clinicians at
the point of care to enable vital links for disaster preparedness and
emergency response, improve healthcare, population health, and
prevention of illness and disease.
67. The Commission agrees with HHS that the Pilot Program can
advance the goals of the NHIN initiative. Accordingly, selected
participants shall use Pilot Program funding in ways to ensure their
funded projects are consistent with HHS's health IT initiatives in
several areas: Health IT standards; certification of electronic health
records (EHRs), personal health records (PHRs), and networks; the NHIN
architecture; the National Resource for Health Information Technology;
and the Public Health Information Network (PHIN). In particular, where
feasible, selected participants shall: (1) Use health IT systems and
products that meet interoperability standards recognized by the HHS
Secretary; (2) use health IT products certified by the Certification
Commission for Healthcare Information Technology; (3) support the NHIN
architecture by coordinating activities with the organizations
performing NHIN trial implementations; (4) use resources available at
HHS's Agency for Healthcare Research and Quality National Resource
Center for Health Information Technology; (5) educate themselves
concerning the Pandemic and All Hazards Preparedness Act and coordinate
with the HHS Assistant Secretary for Public Response as a resource for
telehealth inventory and for the implementation of other preparedness
and response initiatives; and (6) use resources available through HHS's
Centers for Disease Control and Prevention PHIN to facilitate
interoperability with public health and emergency organizations. In
addition, as
[[Page 8683]]
part of the Pilot Program quarterly reporting requirements, selected
participants shall inform the Commission whether or how they have
complied with these initiatives. The Commission finds that expecting
selected participants to comply with these HHS initiatives likely will
result in more secure, efficient, effective, and coordinated use of
Pilot Program funding and the supported networks. Finally, selected
participants shall coordinate in the use of their health care networks
with HHS and, in particular, with CDC in instances of national,
regional, or local public health emergencies (e.g., pandemics,
bioterrorism). In such instances, where feasible, selected participants
shall provide access to their supported networks to HHS, including CDC,
and other public health officials.
7. Forms and Related Program Requirements
68. Selected participants are required to follow the normal RHC
support mechanism procedures. USAC currently provides funds directly to
the telecommunications service providers, not to the applicant. The
Commission reminds selected participants and service providers that
universal service support received by service providers must be
distributed to or credited against the portion of the project approved
for eligible health care providers only. In instances where credits
cannot be issued to a service provider, selected participants may
receive payment directly from USAC, provided the selected participant
complies with the administrative requirements in this Order. Under the
current program, to obtain discounted telecommunications services,
applicants must file certain forms with USAC. The Commission notes that
all selected participants must obtain FCC registration numbers (FRNs).
An FRN is a 10-digit number that is assigned to a business or
individual registering with the FCC. This unique FRN is used to
identify the registrant's business dealings with the FCC. Selected
participants may obtain an FRN through the Commission's Web site.
Selected participants may obtain a single FRN for the entire
application or consortium (i.e., each health care provider does not
need a separate FRN). First, applicants file FCC Form 465 with USAC to
make a bona fide request for supported services. FCC Form 465 is the
means by which an applicant requests bids for supported services and
certifies to USAC that the applicant is eligible to benefit from the
RHC support mechanism. USAC posts the completed FCC Form 465 on its Web
site and an applicant must wait at least 28 days from the date on which
its FCC Form 465 is posted on USAC's the Web site before making
commitments with the selected service provider(s). Next, after the 28
days have expired, an applicant submits FCC Form 466 and/or 466-A.
These forms are used to indicate the type(s) of service ordered by the
applicant, the cost of the ordered service, information about the
service provider(s), and the terms of the service agreement(s). Each
applicant must certify, on the FCC Form 466 and 466-A, that the
applicant has selected the most cost-effective method of providing the
selected service(s). FCC Form 467 is the next and final form an
applicant submits. FCC Form 467 is used by the applicant to notify USAC
that the service provider has begun providing the supported service. An
applicant must submit one FCC Form 467 for each FCC Form 466 and or
466-A that the applicant submitted to USAC. FCC Form 467 is also used
to notify USAC when the applicant has discontinued the service or if
the service was or will not be turned on during the funding year. The
Commission reminds selected participants that all health care providers
participating in the RHC Pilot Program must maintain documentation of
their purchases of service for five years from the end of the funding
year, which must include, among other things, records of allocations
for consortia and entities that engage in eligible and ineligible
activities. Upon request, beneficiaries must make available all
documents and records that pertain to them, including those of
contractors and consultants working on their behalf, to the
Commission's Office of Inspector General, to USAC, and to their
auditors. This record retention requirement also applies to service
providers that receive support for serving rural health care providers.
69. The Commission recognizes that due to the unique structure of
the Pilot Program, selected participants may have difficulty in
preparing the required RHC forms to be submitted to USAC. The
Commission therefore finds it necessary to provide guidance regarding
how these forms should be completed to minimize the possibility of
unintentional error on the part of selected participants. The
Commission also takes this opportunity to provide further guidance on
Pilot Program requirements and additional data that must be submitted
with the FCC RHC forms. In addition, the Commission directs USAC to
conduct a targeted outreach program to educate and inform selected
participants on the Pilot Program administrative process, including the
various filing requirements and deadlines, in order to minimize the
possibility of making inadvertent ministerial, or clerical errors in
completing the required forms.
70. FCC Form 465 Process. To ensure a fair and transparent bidding
process, the Commission directs selected participants to clearly
identify, on form Line 29 (description of Applicant's
telecommunications/Internet needs) of the FCC Form 465, the bids the
applicant is requesting for the network it intends to construct under
the three-year Pilot Program. The Commission reiterates that selected
participants cannot receive support that exceeds the amount designated
in Appendix B. For selected participants seeking funding in the first
year of the Pilot Program (Funding Year 2007), they should indicate
that Funding Year 2007 is the year for which they are seeking support
in Line 26 of the FCC Form 465. Selected participants should also
indicate if they will be seeking funding for Year Two (Funding Year
2008) and/or Year Three (Funding Year 2009) of the Pilot Program in
Line 29 of FCC Form 465 in their filings in Year One. Selected
participants should also indicate the Year(s) for which each health
care provider is seeking funding in the FCC Form 465 attached
spreadsheet, discussed further below.
71. Selected participants are not required to submit multiple FCC
Forms 465 for each participating health care provider, although they
may choose to do so. The Commission notes that vendors or service
providers participating in the competitive bid process are prohibited
from assisting with or filling out a selected participants' FCC Form
465. Specifically, for purposes of administrative efficiency, selected
participants may submit one master FCC Form 465, provided the
information contained in the FCC Form 465 identifies each eligible
health care provider participating in the Pilot Program and is included
in an attached Excel or Excel compatible spreadsheet. Appendix E of
this Order provides a spreadsheet for selected participants. The
Commission notes also that Southern Ohio Healthcare Network requests a
waiver of the number of locations permitted per FCC Form 465. Because
the Commission permits selected participants to submit a single master
FCC Form 465 with attachment that identifies each eligible health care
provider participating, it denies this waiver request as moot. The
Commission also requires selected
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participants to provide a brief explanation for each health care
provider participating in the network, identifying why each health care
provider is eligible under section 254 of the 1996 Act and the
Commission's rules and orders. This information should be included in
an attachment to the FCC Form 465 submitted to USAC. The Commission
notes also that FCC Form 465 requires applicants to certify that the
health care provider is located in a rural area. As described above,
the Pilot Program is open to all eligible public and non-profit health
care providers. Therefore, the Commission clarifies that a
participating non-rural eligible health care provider need not certify
that it is located in a rural area. Consistent with USAC procedures,
electronic signatures are permissible for purposes of the FCC Form 465
attachment. Selected participants that anticipate competitively bidding
out their entire approved network project need only submit FCC Form 465
and the attached spreadsheet in Year One (or the first year they intend
to competitively bid the project). Selected participants that
anticipate competitively bidding their network project each Funding
Year of the Pilot Program (e.g., Year One, Year Two, and Year Three)
shall submit a new FCC Form 465 within the appropriate Funding Year
window(s) and requisite attachments for each stage. Selected
participants whose network projects include both an initial network
design study and network construction based on that initial network
design study are required to competitively bid the network construction
portion of the project separate from the initial network design study.
To the extent that a selected participant seeks to add, remove, or
substitute a health care provider in its proposed network after a
funding commitment has been made by USAC, the selected participant must
file an amended FCC Form 465 Attachment providing any new FCC Form 465
information in order to allow USAC to determine its statutory
eligibility. The Commission notes, however, once USAC has issued an
FCL, program support for the relevant Pilot Program Funding Year is
capped at that amount. In addition, along with its FCC Form 465 and
related spreadsheet, each selected participant must also submit a copy
of the most recent record version of its application previously
submitted to the Commission as of the release date of this Order (as
modified by, or consistent with, this Order, if applicable). Selected
participants must also provide sufficient information to define the
scope of the project and network costs to enable an effective
competitive bidding process. The Commission notes that selected
participants may not pre-qualify service providers for the competitive
bidding process.
72. Finally, the Commission requires each applicant to include with
its FCC Form 465 a Letter of Agency (LOA) from each participating
health care facility to authorize the lead project coordinator to act
on its behalf, to demonstrate that each health care provider has agreed
to participate in the selected participant's network, and to avoid
improper duplicate support for health care providers participating in
multiple networks. The Commission has affirmed USAC's requirement that
an applicant applying as a consortium in the E-Rate program must submit
an LOA from each of its members expressly authorizing the applicant to
submit an applicant on its behalf. LOAs should include, at a minimum:
The name of the entity filing the application (i.e., lead applicant or
consortium leader); name of the entity authorizing the filing of the
application (i.e., the participating health care provider/consortium
member); the relationship of the facility to the lead entity filing the
application; the specific timeframe the LOA covers; the signature,
title and contact information (including phone number, physical
address, and e-mail address) of an official who is authorized to act on
behalf of the health care provider/consortium member; signature date;
and the type of services covered by the LOA. For health care providers
located on tribal lands, LOAs must also be signed by the appropriate
management representative of the health care facility. In most cases,
this will be the director of the facility. If the facility is a
contract facility that is run solely by the tribe, the appropriate
tribal leader, such as the tribal chairperson, president, or governor,
shall also sign the LOA, unless the health care responsibilities have
been duly delegated to another tribal government representative. The
Commission notes that a number of selected participants have included
health care provider participants in their networks that are also
participating in another selected participant's proposed network.
Although the Commission does not prohibit a health care provider from
participating in more than one selected participant's supported
project, it is prohibited from receiving support for the same or
similar services. Specifically, network costs for participation in one
project must be separate and distinct from network costs resulting from
participation in any other project.
73. SPIN Requirement. All service providers that participate in the
RHC Pilot Program are required to have a Service Provider
Identification Number (SPIN). SPINs must be assigned before USAC can
authorize support payments; therefore, all service providers submitting
bids to provide services to selected participants will need to complete
and submit a Form 498 to USAC for review and approval if selected by a
participant before funding commitments can be made. Only service
providers that have not already been assigned a SPIN by USAC will need
to complete and submit a Form 498. Form 498 can be found on the USAC
Web site on its forms page.
74. FCC Form 466-A Process. Selected participants should submit an
FCC Form 466-A to indicate the type(s) of network construction ordered,
the cost of the ordered network construction, information about the
service provider(s), and the terms of the service agreements. To the
extent a selected participant files an FCC Form 466 instead of an FCC
Form 466-A, USAC may permit the selected participant to amend its
filing by submitting an FCC Form 466-A to replace the FCC Form 466. The
Commission notes that although the title of this Form is ``Internet
Services Funding Request and Certification Form,'' selected
participants should use the FCC Form 466-A for all eligible funding
requests under the Pilot Program because it is suitable for Pilot
Program purposes. Selected participants are not required to submit
multiple FCC Forms 466-A for each participating health care provider
location, although they may choose to do so. Specifically, for purposes
of administrative efficiency, selected participants may submit one
master FCC Form 466-A, provided the information contained in the FCC
Form 466-A identifies the location of each health care provider
participating in the Pilot Program and is included in an attached Excel
or Excel compatible spreadsheet. Appendix F of this Order provides a
spreadsheet for selected participants. Consistent with USAC procedures,
electronic signatures are permissible for purposes of the FCC Form 466-
A attachment. Selected participants seeking funding for Year One of the
Pilot Program (Funding Year 2007) should indicate this in Line 16. For
selected participants that seek to receive support under Year One of
the Pilot Program, the due date is June 30, 2008, consistent with
Commission rules. Thereafter, the due date for each year of the Pilot
Program corresponds with the
[[Page 8685]]
existing RHC support mechanism deadline. Thus, the FCC Form 466-A is
due on June 30, and the FCC Form 465 is due 28 days prior, on June 2.
Selected participants seeking funding for Year Two (Funding Year 2008)
and/or Year Three (Funding Year 2009) of the Pilot Program should
indicate the applicable Funding Years in their description in Box 17.
In addition, on Line 18 of FCC Form 466-A, upon request, selected
participants should provide documentation to allow USAC to clearly
identify allocated eligible costs related to the provision of services
for each health care provider.
75. Along with its FCC Form 466-A, a selected participant must
submit to USAC a copy of the contracts or service agreements with the
selected service provider(s). Selected participants shall also include
a detailed line-item network costs worksheet that includes a breakdown
of total network costs (both eligible and ineligible costs). Selected
participants choosing to submit multiple FCC Forms 466-A need only
submit one master network costs worksheet. Selected participants'
network costs worksheet submissions shall demonstrate how ineligible
(e.g., for-profit) participants will pay their fair share of network
costs. Selected participants shall identify these costs with
specificity in their network costs worksheet submissions. USAC may
reject line-item worksheets that lack sufficient specificity to
determine that costs are eligible under this Order or the 1996 Act.
Selected participants shall also identify in their network costs
worksheet Pilot Program the applicable maximum funding amounts pursuant
to this Order. In addition, each selected participant must identify
with specificity its source of funding for its 15 percent contribution
of eligible network costs in its line-item network costs worksheet
submitted to USAC. A network costs worksheet for submission to USAC is
attached to this Order at Appendix G. Selected participants must use
this worksheet when submitting their funding requests to USAC.
76. A selected participant requesting funds for a multi-year
contract (e.g., Year One and Year Two, or Year One, Two, and Three)
should indicate this in its initial network costs worksheet
submissions. Although a selected participant may utilize a multi-year
contract, USAC may commit funding for only a single year in that year's
FCL for the participant, i.e., USAC shall issue a separate FCL upon
receiving the FCC Form 466-A and related attachments on an annual basis
for the applicable funding year. A participant using multi-year
contracts is not required to re-bid the contract in subsequent Pilot
Program funding years, but it must submit a network costs worksheet and
FCC Form 466-A to USAC for commitment approval for each funding year it
participates in the Pilot Program. A selected participant who seeks
funding for a multi-year agreement may only modify its network
(including adding, deleting, or substituting health care providers) to
the extent that funding does not exceed the funding year amount listed
in the selected participant's initial network costs worksheet for the
applicable funding year.
77. Selected participants alternatively may choose to competitively
bid their projects in phases (e.g., Year One--network design study;
Year Two--network construction and installation) for each year that
they participate in the Pilot Program, in which case selected
participants shall submit FCC Forms 465 and 466-A and the requisite
attachments, as described in this Order, for each year they
participate. Selected participants that elect to request funding for a
single year (e.g., Year One), but intend to request funding for
additional Pilot Program Years (e.g., Year Two or Year Three) should
submit a detailed line-item network costs worksheet for the additional
Pilot Program Years for which it intends to request funding in Year
One.
78. The Commission requires selected participants and participating
service providers (once selected through the competitive bidding
process) to file a certification with their FCC Form 466-A with the
Commission and with USAC stating that all federal RHC Pilot Program
support provided to selected participants and participating service
providers will be used only for the eligible Pilot Program purposes for
which the support is intended, as described in this Order, and
consistent with related Commission orders, section 254(h)(2)(A) of the
1996 Act, and Sec. 54.601 et seq. of the Commission's rules. For
selected participants, certifications shall be filed by the lead
applicant, as well as the legally and financially responsible
organization, if not the same entity. Pilot Program support amounts
shall only be committed by USAC to the extent that the requisite
certification has been filed. The certification must be filed with both
the Office of the Secretary of the Commission, clearly referencing WC
Docket No. 02-60, and with USAC in the form of a sworn affidavit
executed by a corporate officer attesting to the use of the Pilot
Program support for the approved Pilot Program purposes for which
support is intended. Selected participants and participating service
providers must also send a courtesy copy of their certifications to
Antoinette Stevens, (202) 418-7387, antoinette.stevens@fcc.gov in the
Telecommunications Access Policy Division, Wireline Competition Bureau,
Federal Communications Commission, 445 12th Street, SW., Washington, DC
20554. Failure to certify will result in suspension of processing of
the selected participant's forms and support. Upon receipt and approval
of a selected participant's FCC Form 466-A, USAC will then issue a FCL
for each Pilot Program funding year. USAC shall also provide the lead
project coordinator with a copy of an FCL concerning any funding
request for which it is the lead project coordinator.
79. FCC Form 467 Process. The Commission also finds that it is
necessary to provide selected participants with guidance regarding how
to fill out FCC Form 467 for reimbursement. In the third box of Block 3
on FCC Form 467, selected participants are asked to indicate, among
other things, whether ``service was not (or will not be) turned on
during the funding year.'' Selected participants should leave the third
box of Block 3 blank. Instead, the Commission directs selected
participants to notify USAC and the Commission, in writing, when the
approved network project has been initiated within 45 calendar days of
initiation. Selected participants must file a copy of this notice with
the Commission in WC Docket No. 02-60. Selected participants must also
send a courtesy copy of this notification to Antoinette Stevens, (202)
418-7387, antoinette.stevens@fcc.gov in the Telecommunications Access
Policy Division, Wireline Competition Bureau, Federal Communications
Commission, 445 12th Street, SW., Washington, DC 20554. If the selected
participant's network build-out has not been initiated within six
months of the FCL sent by USAC to the selected participant and service
provider(s) approving funding, the selected participant must notify
USAC and the Commission within 30 days thereafter explaining when it
anticipates that the approved network project will be initiated. Upon
receipt and approval of a selected participant's FCC Form 467, USAC
will then issue a Health Care Provider Support Schedule to the health
care provider and the service provider. The purpose of the support
schedule is to provide a detailed report of the approved service(s) and
support information for each health care provider and service
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provider. The service provider uses the support schedule to determine
how much credit the health care provider will receive each month. Once
the service provider receives the schedule, the provider must start
applying program discounts to the health care provider during the next
possible billing cycle based on the schedule. Selected participants
must complete build-out of the networks funded by this Pilot Program
within five years from the date of the initial FCL, after which the
funding commitments made in this Order will no longer be available. It
is appropriate to allow five years for selected participants to build
out their Pilot Program networks. Unlike the E-Rate program and the
existing RHC support mechanism which does not have deadlines for
submitting invoices to USAC, the Pilot Program, in keeping with its
limited scope, imposes a five-year invoicing deadline. The Commission
finds this time period sufficient for network build-outs. Further,
selected participants may not receive any Pilot Program support after
the expiration of the invoice deadline, which is five years from
receipt of their initial FCL for all Pilot Program funding years. To
the extent that a Pilot Program participant fails to meet this build-
out deadline, the Commission intends also to require the applicant
repay any Pilot Program funds already disbursed. In addition, selected
participants shall also notify the Commission and USAC in writing upon
completion of the pilot project construction and network buildout.
Selected participants must file a copy of this notice with the
Commission in WC Docket No. 02-60. Selected participants must also send
a courtesy copy of this notification to Antoinette Stevens, (202) 418-
7387, antoinette.stevens@fcc.gov in the Telecommunications Access
Policy Division, Wireline Competition Bureau, Federal Communications
Commission, 445 12th Street, SW., Washington, DC 20554.
80. USAC Outreach. In addition to the filing requirements discussed
above, each selected participant shall provide to USAC within 14
calendar days of the effective date of this Order the name, mailing
address, e-mail address, and telephone number of the lead project
coordinator for the Pilot Program project or consortium. Within 30 days
of the effective date of this Order, USAC shall conduct an initial
coordination meeting with selected participants. USAC shall further
conduct a targeted outreach program to educate and inform selected
participants on the Pilot Program administrative process, including
various filing requirements and deadlines, in order to minimize the
possibility of selected participants making inadvertent ministerial, or
clerical errors in completing the required forms. The Commission also
directs USAC to notify selected participants when each funding year
begins. The Commission expects that these outreach and educational
efforts will assist selected participants in meeting the Pilot
Program's requirements. Further, the Commission believes such an
outreach program will increase awareness of the filing rules and
procedures and will improve the overall efficacy of the Pilot Program.
The Commission also encourages selected participants to contact USAC
with questions prior to filing their FCC forms. The direction the
Commission provides USAC will not lessen or preclude any of its review
procedures. Indeed, the Commission retains its commitment to detecting
and deterring potential instances of waste, fraud, and abuse by
ensuring that USAC scrutinizes Pilot Program submissions and takes
steps to educate selected participants in a manner that fosters
appropriate Pilot Program participation.
81. As part of its outreach program, USAC shall also conduct
educational efforts to inform selected participants of which network
components are eligible for RHC Pilot Program support in order to
better assist selected participants in meeting the Pilot Program's
requirements. When USAC has reason to believe that a selected
participant's funding request includes ineligible network components or
ineligible health care providers, USAC shall: (1) Inform the selected
participant promptly in writing of the deficiencies in its funding
request, and (2) permit the selected participant 14 calendar days from
the date of receipt of notice in writing by USAC to revise its funding
request to remove the ineligible network components or facilities for
which Pilot Program funding is sought or allow the selected participant
to provide additional documentation to show why the components or
facilities are eligible. To the extent a selected participant does not
remove ineligible network components or facilities from the funding
request, USAC must deny funding for those components or facilities. The
14-day period should provide sufficient time for selected participants
to modify their funding requests to remove ineligible services.
82. Selected participants must submit complete and accurate
information to USAC as part of the application and review process.
Selected participants, however, will be provided the opportunity to
cure ministerial and clerical errors on their FCC Forms and
accompanying data submitted to USAC pertaining to the Pilot Program.
USAC shall inform selected participants within 14 calendar days in
writing of any and all ministerial or clerical errors that it
identifies in a selected participant's FCC Forms, along with a clear
and specific explanation of how the selected participants can remedy
those errors. USAC shall also inform selected participants within this
same 14 calendar days in writing of any missing or incomplete
certifications. Selected participants will be presumed to have received
notice five days after such notice is postmarked by USAC. USAC shall,
however, continue to work beyond the 14 days with selected participants
attempting in good faith to provide documentation. Selected
participants shall have 14 calendar days from the date of receipt of
notice in writing by USAC to amend or re-file their FCC Forms for the
sole purpose of correcting the ministerial or clerical errors
identified by USAC. Selected participants shall not be permitted to
make material changes to their applications. Selected participants
denied funding for errors other than ministerial or clerical errors are
instructed to follow USAC's and the Commission's regular appeal
procedures. Selected participants that do not comply with the terms of
this Order, section 254 of the 1996 Act, and Commission rules and
orders will be denied funding in whole or in part, as appropriate.
83. Disbursement of Pilot Program Funds. USAC will disburse Pilot
Program funds based on monthly submissions (i.e., invoices) of actual
incurred eligible expenses. The Commission notes that several
applicants requested that awarded funds be distributed in a specific
manner, departing from established USAC precedents. For the reasons
explained herein, Pilot Program funds will be distributed as described
in this Order. Service providers are only permitted to invoice USAC for
eligible services apportioned to eligible health care provider network
participants. Service providers shall submit detailed invoices to USAC
on a monthly basis for actual incurred costs. This invoice process will
permit disbursement of funds to ensure that the selected participants'
network projects proceed, while allowing USAC and the Commission to
monitor expenditures in order to ensure compliance with the Pilot
Program and prevent waste, fraud, and abuse. USAC shall respond to
service provider
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invoices in accordance with its current invoicing payment plan. USAC
follows a bi-monthly invoicing cycle. Invoices received from the 1st
through the 15th of the month will be processed by the 20th of the
month. Invoices received from the 16th through the 31st of the month
will be processed by the 5th of the following month. The Commission
directs USAC to modify its current sample ``RHCD Service Provider
Invoice'' for purposes of the Pilot Program to ensure consistency with
this Order. In doing so, USAC shall ensure that invoices reflect total
incurred eligible costs, including those eligible costs for which
selected participants will be responsible, to enable USAC to adjust
disbursements to service providers to 85 percent or less of eligible
incurred costs. All invoices shall also be approved by the lead project
coordinator authorized to act on behalf the health care provider(s),
confirming the network build-out or services related to the itemized
costs were received by each participating health care provider. The
lead project coordinator shall also confirm and demonstrate to USAC
that the selected participant's 15 percent funding contribution has
been provided to the service provider for each invoice. Further, the
Commission expects USAC to review data submitted by Pilot Program
participants to ensure that participants' data submissions are
consistent with invoices submitted as well as to ensure that network
deployments are proceeding according to the approved dedicated network
plans. Finally, the Commission directs USAC to conduct random site
visits to selected participants to ensure support is being used for its
intended purposes, as well as to conduct site visits as necessary and
appropriate based on USAC's review of the selected participants' data
submissions. If funding is disbursed to any service provider and the
approved network project is abandoned or left incomplete, the
Commission permits USAC to pursue recovery of funds from the selected
participant's financially and legally responsible organization,
eligible health care providers, or service provider, as appropriate. In
addition, as discussed infra, the Commission may seek recovery of
funds, assess forfeitures, or impose fines if it determines that Pilot
Program support has been used in violation of Commission rules or
orders, or section 254 of the 1996 Act.
8. Waivers
84. In the 2006 Pilot Program Order, the Commission indicated that,
after they are selected, the selected participants would work within
the confines of the existing RHC support mechanism, including the
requirement ``to comply with the existing competitive bidding
requirements, certification requirements, and other measures intended
to ensure funds are used for their intended purposes.'' The Commission
indicated, however, that it would waive additional program rules if
such waivers are necessary for the successful operation of the Pilot
Program. After reviewing the applications and the requested rule
waivers, the Commission finds that selected participants have not
demonstrated good cause exists to warrant waiving certain Commission
rules, including the competitive bidding rules and the rule prohibiting
resale of telecommunications services or network capacity. Among other
reasons, the Commission finds requiring selected participants to comply
with these rules will further the goals and principals of the 2006
Pilot Program Order and protect against waste, fraud, and abuse. For
the reasons discussed below, however, the Commission finds good cause
to waive the program application deadline and to clarify other
administrative rules related to participation in the Pilot Program.
a. Competitive Bidding
85. P