83 FR 303 - Promoting Telehealth in Rural America

FEDERAL COMMUNICATIONS COMMISSION

Federal Register Volume 83, Issue 2 (January 3, 2018)

Page Range303-330
FR Document2017-27746

In this document, the Federal Communications Commission (Commission) proposes measured steps as part of a Notice of Proposed Rulemaking and Order to ensure that rural healthcare providers get the support they need while guarding against waste, fraud, and abuse, considers a series of measures to ensure the Rural Health Care (RHC) Program operates efficiently and considers the appropriate size of the funding cap. The Commission takes targeted, immediate action in the Order section of the item to mitigate the impact of the existing RHC Program cap on rural healthcare providers in funding year (FY) 2017. Because the Order section does not establish any final rules, we do not incorporate the Order section in this document.

Federal Register, Volume 83 Issue 2 (Wednesday, January 3, 2018)
[Federal Register Volume 83, Number 2 (Wednesday, January 3, 2018)]
[Proposed Rules]
[Pages 303-330]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-27746]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket No. 17-310; FCC 17-164]


Promoting Telehealth in Rural America

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Federal Communications Commission 
(Commission) proposes measured steps as part of a Notice of Proposed 
Rulemaking and Order to ensure that rural healthcare providers get the 
support they need while guarding against waste, fraud, and abuse, 
considers a series of measures to ensure the Rural Health Care (RHC) 
Program operates efficiently and considers the appropriate size of the 
funding cap. The Commission takes targeted, immediate action in the 
Order section of the item to mitigate the impact of the existing RHC 
Program cap on rural healthcare providers in funding year (FY) 2017. 
Because the Order section does not establish any final rules, we do not 
incorporate the Order section in this document.

DATES: Comments are due February 2, 2018, and reply comments are due on 
or before February 20, 2018. If you anticipate that you will be 
submitting comments, but find it difficult to do so within the period 
of time allowed by this document, you should advise the contact listed 
below as soon as possible.

ADDRESSES: You may submit comments, identified by WC Docket No. 17-310, 
by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Federal Communications Commission's website: http://apps.fcc.gov/ecfs/. Follow the instructions for submitting comments.
     People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by email: [email protected] or phone: (202) 418-
0530 or TTY: (202) 418-0432.
    For detailed instructions for submitting comments and additional 
information on the rulemaking process, see the SUPPLEMENTARY 
INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: Radhika Karmarkar, Wireline 
Competition Bureau, (202) 418-7400 or TTY: (202) 418-0484.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking (NPRM) in WC Docket No. 17-310; FCC 17-164, 
adopted on December 14, 2017 and released on December 18, 2017. 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 or at the following internet 
address: https://apps.fcc.gov/edocs_public/attachmatch/FCC-17-164A1.pdf.

I. Introduction

    1. In this Notice of Proposed Rulemaking (NPRM), the Commission 
proposes measured steps to ensure that rural healthcare providers get 
the support they need while guarding against waste, fraud, and abuse. 
The Commission considers a series of measures to ensure the Rural 
Health Care (RHC) Program operates efficiently and in the appropriate 
size of the funding cap.
    2. As technology and telemedicine assume an increasingly critical 
role in healthcare delivery, a well-designed RHC Program is more vital 
than ever. Trends suggest that rural communities across the country are 
falling behind when it comes to the availability of high-quality 
healthcare. Indeed, the American Hospital Association (AHA) reports 
that ``obtaining access to care in rural America is a significant 
challenge.'' Over the last seven years, over 80 rural hospitals have 
closed and hundreds more are at risk of closing. On a per capita basis, 
there are far fewer doctors in rural areas than in urban areas. In sum, 
``rural hospitals are facing one of the great slow-moving crises in 
American health care.''
    3. By improving rural healthcare provider access to modern 
communications services, the RHC Program can help in overcoming some of 
the obstacles to healthcare delivery faced in isolated communities. 
Through broadband-enabled technology, a rural clinic can transmit an x-
ray in a matter of seconds to a radiologist located thousands of miles 
away. Via video-conferencing, a woman with a high-risk pregnancy has 
access to the type of pre-natal care that enables her baby to be 
delivered much closer to term. This in turn leads to fewer days in the 
Neonatal Intensive Care Unit for the baby and potentially places the 
child and family on a more positive future trajectory. With a high-
speed data connection, a surgeon can perform an emergency procedure 
remotely. In places where the nearest pharmacist is a plane ride away, 
vending machine-like devices can dispense prescription medications.
    4. The efforts by the Commission's Connect2HealthFCC 
(Connect2Health) Task Force have illustrated the significant impact 
communications services can have on addressing the healthcare needs of 
persons living in rural and underserved areas, and how communities are 
leveraging broadband-enabled health technologies to improve access to 
health and care throughout the country. For example, in Mississippi, 
the Connect2Health Task Force highlighted the positive impact of 
public-private partnerships on health outcomes and how broadband-
enabled health technologies have made a difference to diabetes patients 
in Mississippi. Additionally, in Texas, the Connect2Health Task Force 
emphasized how broadband-enabled health technologies can improve access 
to mental health care.
    5. It is therefore crucial that the benefits of the RHC Program are 
fully realized across the nation. But current RHC Program rules and 
procedures may be holding back the promise of the RHC Program for the 
rural healthcare providers that need it most. For the second funding 
year (FY) in a row, demand for RHC Program support is anticipated to 
exceed available program funding, leaving healthcare providers to 
potentially pay more for service than expected. Unfortunately, part of 
that growth is due to an increase in waste, fraud, and abuse in the RHC 
Program. Further, the Telecommunications (Telecom) Program, a component 
of the RHC Program, has not been significantly reviewed or revised 
since its inception in 1997.

II. Notice of Proposed Rulemaking

A. Addressing RHC Program Funding Levels

1. Revisiting the RHC Program Funding Cap
    6. The current cap on the RHC Program has remained at $400 million 
since its inception in 1997. RHC Program demand, however, exceeded the 
cap in FY 2016 and is expected to exceed the cap in FY 2017 and in 
future years. The proration that comes with capped funding may be 
especially hard on small, rural healthcare providers with limited 
budgets, and so the Commission examines whether a cap of $400 million 
is an appropriate level of

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funding for the RHC Program going forward. Since the time the cap was 
set, the RHC Program has grown and changed and now, under the 
Healthcare Connect Fund (HCF) Program, covers more services than its 
predecessor program. With this change in RHC Program eligibility comes 
an increased demand for services. Likewise, advances in technology have 
improved telehealth and telemedicine capabilities and with it a need 
for expanded bandwidth.
    7. The Commission seeks comment on increasing the cap for the RHC 
Program and whether to retroactively increase the cap for FY 2017. 
Looking ahead, beyond FY 2017, by how much should the Commission 
increase the cap? Likewise, what would be an appropriate increase for 
FY 2017? One metric would be to consider what the cap would have been 
if adjusted by inflation since its adoption. If the Commission had 
adjusted the $400 million cap annually for inflation since 1997, based 
on the GDP-CPI (which the E-rate Program uses to adjust its cap), the 
RHC Program cap would have been approximately $571 million for FY 2017. 
Another consideration, however, is whether potential waste in the 
Telecom Program (which the Commission discusses in more depth below) 
has contributed to the RHC Program reaching the cap sooner than 
anticipated--when the Commission adopted the HCF Program in 2012, it 
did not expect the RHC Program to reach the cap in the foreseeable 
future. Growth in the Telecom Program has outpaced inflation since the 
HCF Program was adopted. Since 2011, inflation-based demand for the 
Telecom Program would have increased from $102 million to approximately 
$110 million in FY 2016. In that case, total RHC Program demand for FY 
2016 would have been $270 million, including $160 million in actual HCF 
Program demand. Does this fact argue against a cap increase or to 
moderate any such increase? Further, some commenters argue that the 
current scope of the RHC Program and advances in telehealth and 
telemedicine warrant a further increase in the cap. How should advances 
in medical services delivered over communications services impact the 
Commission's evaluation of the cap? The Commission asks that commenters 
provide data in the record regarding the current state of the 
telehealth market, specifically data on the types of telehealth 
services used by Program participants, the bandwidth required for such 
services, and any trends in services that will likely impact the needs 
of rural healthcare providers in the telehealth arena in the near 
future. What other factors should the Commission consider before 
increasing the cap? Should the Commission consider the universe of 
potential rural healthcare providers and estimate the average or median 
support needed? How should the Commission factor the impact of an 
increased cap on other programs within the Universal Service Fund (USF 
or Fund) and on the consumers that ultimately will pay for any 
increases? The Commission recognizes that any increase in Program 
expenditures must be paid for with contributions from ratepayers and 
that the Commission must carefully balance the need to meet universal 
service support demands against the effects of a greater contribution 
burden. The Commission seeks comment on how the Commission should 
evaluate this trade off as it considers the appropriate funding level.
    8. Additionally, within the RHC Program, multiyear commitments and 
upfront costs are capped within the HCF Program to $150 million per 
funding year. The Commissions seek comment on whether the $150 million 
cap for multiyear commitments and upfront costs within the HCF Program 
should also be adjusted--i.e., increased, eliminated, or modified in 
some other way.
    9. Finally, the funding caps for some of the other federal 
universal service support programs incorporate inflation adjustments. 
Commenters, likewise, argue that the RHC Program cap should be adjusted 
annually for inflation. The Commission seeks comment on whether to 
adopt a similar mechanism here to automatically increase the RHC 
Program caps for inflation and, if so, what form such a mechanism 
should take.
    10. The Commission also seeks comment on whether to roll over 
unused funds committed in one funding year into a subsequent funding 
year. The Commission seeks comment on the types of unused funds from a 
given funding year to roll over to subsequent funding years. For 
example, the Commission proposes to include in any roll over mechanism 
unused or released funds the Universal Service Administrative Company 
(USAC) previously held in reserve for appeals and any funds committed 
to a healthcare provider but not used by the healthcare provider. The 
Commission seeks comment on specific limitations that should apply to 
funds that are rolled over. Should roll over funding be limited to RHC 
funding requests received only for the next funding year? Or, may 
unused funds from one year be rolled over to multiple funding years 
until they are ultimately disbursed? In the latter case, should the 
Commission establish separate caps on the amount that may be rolled 
over from a single funding year, as well as the cumulative amount of 
roll over funding? The Commission notes that, in the E-rate Program, 
all unused funding from previous funding years is made available for 
subsequent funding years.
    11. The Commission also seeks comment on how to best distribute the 
roll over funds across the RHC Program. Should roll over funds first be 
used to defray the impact on, for example, individual rural healthcare 
providers with any remaining unused funds being used for rural 
consortia applicants? What are the material differences between 
individual healthcare providers and those participating in a 
consortium?
2. Prioritizing Funding if Demand Reaches the Cap
    12. In 2012, the Commission considered whether to adopt a mechanism 
by which to prioritize funding if demand exceeded the $400 million 
funding cap. Given the funding levels at that time, however, the 
Commission determined that the existing rule requiring proration would 
be sufficient while it conducted further proceedings regarding 
prioritization. The recent growth in RHC Program demand and the 
uncertainty associated with possible proration makes it difficult for 
healthcare providers to make service selections and telehealth plans, 
and can create unexpected financial difficulties for healthcare 
providers, especially in highly remote areas. The Commission seeks 
comment on whether to consider changes in how to prioritize the funding 
of eligible RHC Program requests. Below, the Commission discusses a 
number of prioritization approaches, some of which could be combined to 
more efficiently distribute funds.
    13. At the outset, the Commission notes that section 254(b) of the 
Act requires that to preserve and advance universal service by 
establishing, among other things, access to advanced telecommunications 
for health care and specific and predictable support mechanisms. By 
adopting a prioritization plan, would the RHC Program disbursements be 
more specific and predictable when demand exceeds the cap? Are there 
additional principles the Commission could adopt to further a 
prioritization plan? Are there prioritization methods other than those 
described below that the Commission should consider? Is proration, 
itself a method of prioritization, preferable to some alternate form of 
prioritization?

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    14. The Commission also seeks comment on the mechanics of how to 
distribute funding if a prioritization system is adopted. For example, 
would the Commission fully fund the requests at 100 percent (or some 
other percentage), starting with the requests that meet its highest 
prioritization criteria and then proceed through the prioritization 
tiers at 100 percent funding (or the chosen percentage), until funds 
are depleted? Or, should the Commission fund the highest prioritization 
requests at, for example, 100 percent, and the requests at the next 
prioritization tier at, for example, 95 percent, with decreasing 
support as the prioritization declines? Are there other ways to 
distribute funding based on an adopted prioritization system that would 
maximize the efficient use of RHC Program support?
    15. Prioritizing Based on Rurality or Remoteness. The Commission 
first seeks comment on whether to prioritize requests from healthcare 
providers based on the rurality or the remoteness of the area served by 
an eligible healthcare provider. Given the directive from Congress to 
support eligible rural healthcare providers, should the Commission 
consider using gradations of rurality to prioritize funding requests, 
ranking areas as extremely rural, rural, less rural, and urban, and 
prioritizing Program support first to the most rural areas?
    16. The Act does not define the terms ``rural'' or ``rural area.'' 
The RHC Program, however, employs a definition of ``rural area'' that 
relies upon a healthcare provider's location relative to the Census 
Bureau's Core Based Statistical Area designations. Does section 
254(h)(1)(A) of the Act, which requires that rates for 
telecommunications services for healthcare providers serving rural 
areas be comparable to urban rates, permit the Commission to consider 
how rural a given healthcare provider's site is in determining how much 
funding to allocate to that healthcare provider? Could the Commission 
prioritize funding requests based on the varied levels of rurality 
contained in its current definition of ``rural area,'' with the highest 
priority given to the healthcare providers in the most rural areas? 
Likewise, should the Commission consider the rurality of a healthcare 
provider in the HCF Program under section 254(h)(2)(A) when 
prioritizing funds?
    17. Using FY 2016 data, approximately 3,500 healthcare providers 
received approximately $165 million (or about 53 percent) of the 
commitments in the extremely rural areas, approximately 1,580 
healthcare providers received approximately $41 million (or about 13 
percent) of the commitments in rural areas, and approximately 1,870 
healthcare providers received approximately $50 million (or about 16 
percent) of the commitments in less rural areas.
    18. The Commission seeks comment on the value this proposal would 
provide. Would this approach or a similar approach focus RHC Program 
dollars to areas in greatest need of access to health care? Are there 
other factors to consider as the Commission decides whether to target 
scarce RHC Program funds to the most rural areas?
    19. The Commission also must explore how to handle requests for 
funding from consortia under the HCF Program. Consortia allow diverse 
healthcare providers to pool resources and expertise in order to access 
high-capacity broadband at affordable prices; the participation of 
urban-based healthcare providers in the consortia can provide value to 
the rural healthcare providers. What factors would the Commission use 
to determine the rurality of a consortium, and thus the prioritization 
of its request if the consortium has rural and urban healthcare 
providers? Would the Commission balance or average the number of rural 
healthcare providers with the urban healthcare providers? Or would the 
Commission consider the interdependence between the healthcare 
providers say, for example, if a highly skilled urban healthcare 
provider supported a number of extremely rural healthcare providers 
versus a consortium of healthcare providers where the rurality of the 
member healthcare providers did not vary greatly? Alternatively, could 
the Commission consider the rurality of the individual healthcare 
provider for prioritization purposes? Would healthcare providers in the 
same consortium serving areas with different gradations of rurality 
receive different levels of prioritization?
    20. The Commission also seeks comment on whether to adopt the 
approach of the Department of Veterans Affairs' (VA) Highly Rural 
Transportation Grant program as a proxy for rurality in the RHC 
Program. This VA program provides veterans who live in highly rural 
counties, defined as counties with fewer than seven people per square 
mile, with free transportation to VA or VA-authorized health care 
facilities. These eligible counties are located in eleven states. GCI 
identifies these areas as ``Highly Rural'' and proposes that funding 
requests for healthcare providers in Highly Rural areas be prioritized 
over other funding requests in both the Telecom and HCF Programs. Under 
this proposal, however, if demand exceeds the RHC Program cap and 
proration is required, GCI proposes to require Highly Rural healthcare 
providers to pay a minimum amount that increases each year over five 
years to ``bring greater fiscal discipline to the Telecommunications 
Program so that Highly Rural priority will not unduly restrict support 
outside of Highly Rural communities.'' Under GCI's proposal, additional 
costs of service to healthcare providers in these ``Highly Rural'' 
areas would be limited in FY 2018 to the higher of the urban rate or 
one percent of the rural rate. In FY 2019 through FY 2022, the amount 
that highly rural healthcare providers would pay would increase by one 
percent per year, so that in FY 2019 they would pay two percent of the 
rural rate, in FY 2020 three percent, and so on up to a maximum 
contribution of five percent in FY 2022. GCI argues that ``[p]hased-in 
increased contributions for Highly Rural healthcare providers in [the] 
Telecom Program addresses concerns about sufficient `skin in the game' 
to hold down costs.'' The Commission seeks comment on this proposal and 
whether one percent of the rural rate (or the urban rate, whichever is 
higher) is the appropriate minimum payment amount and whether one 
percent incremental increases and the five percent cap are appropriate. 
Further, the Commission seeks comment on whether it's a need to 
safeguard the HCF Program under GCI's proposal. The Commission also 
seeks comment on other ways to alleviate the burden of proration in 
extremely rural high cost areas.
    21. Alternatively, the Commission seeks comment on whether to 
modify its current definition of the term ``rural area'' or adopt a new 
definition entirely. Does the definition of rural area in Sec.  
54.600(b) of the Commission's rules meet the needs of the RHC Program 
for purposes of prioritization? Would the definitions of ``rural'' as 
used in the Connect America Fund Program, the E-rate Program, or the 
Lifeline Program better target the most rural areas than the current 
RHC Program definition? Would it make sense to prioritize the extremely 
high cost census blocks identified as eligible for Remote Areas Fund 
funding for RHC Program prioritization? Finally, are there alternative 
definitions of ``rural'' the Commission should consider enhancing the 
efficiency of the RHC Program?
    22. Prioritizing Based on Type of Service. The Commission seeks 
comment on whether to prioritize

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distribution of funds based on type of funding request. The RHC Program 
supports telecommunications services, advanced telecommunications and 
information services, and infrastructure. Healthcare providers may 
request funding for the monthly costs of telecommunications or 
information services, or for one-time upfront costs such as for 
infrastructure. Would prioritizing the funding request based on whether 
the request is for a recurring cost or a one-time infrastructure cost 
advance the goals of the RHC Program? Does one type of support, such as 
monthly recurring costs or one-time, upfront costs, have a greater 
impact in rural areas? Are there other meaningful distinctions to make 
between types of services, such as prioritizing broadband services of a 
certain speed or type over voice services? Is the Commission limited by 
the statutory language of section 254(h)(1)(A) and/or section 
254(h)(2)(A) of the Act in prioritizing funding requests based on the 
type of service requested?
    23. Prioritizing Based on RHC Program. The Telecom Program and HCF 
Program have similar, but slightly different focuses. One, the Telecom 
Program, seeks to improve healthcare providers' access to 
telecommunications services by discounting the rural rate for service 
to match the urban rate, making access more affordable for the rural 
healthcare provider; the other, the HCF Program, seeks to expand access 
to affordable broadband for healthcare providers, especially in rural 
areas, and encourages the creation of state and regional broadband 
health care networks. Should the Commission prioritize one RHC Program 
over the other? Currently, the Commission's rules provide for equal 
treatment of the two programs when the cap is exceeded, for purposes of 
prorating support. The Commission also notes that section 254(h)(2)(A) 
of the Act requires the Commission to establish competitively neutral 
rules for healthcare provider access to advanced telecommunications and 
information services to the extent ``economically reasonable.'' Some 
entities nevertheless have argued that funding for the Telecom Program 
is mandatory and that the Commission therefore is required to fund 
Telecom Program requests in their entirety before funding HCF Program 
requests. The Commission seeks comment on the relevance of these and 
other statutory provisions to the Commission's options for prioritizing 
support. The Commission also seeks comment on how prioritizing one 
program over the other might affect funding between the two programs 
and how it would, or would not, lead to an efficient use of the RHC 
Program's funding and accomplish Congress's goals for this universal 
service support program.
    24. Prioritizing Based on Economic Need or Healthcare Professional 
Shortages. The Commission seeks comment on whether the RHC Program 
should likewise take into consideration the economic need of the 
population served by the healthcare provider when prioritizing 
disbursements. If so, would Medicaid eligibility be an appropriate 
measure of economic need? Would Medicaid eligibility be an appropriate 
measure to use to prioritize funds to maximize the efficiency of the 
Commission's funding dollars? Is there another metric of economic need 
that would be more appropriate? If the Commission prioritize funding 
based on economic need of the population served by the healthcare 
provider, how would consortia be handled?
    25. The Commission also seeks comment on whether to prioritize 
funding to areas with health care professional shortages. Telemedicine 
and telehealth can be a valuable resource where a shortage of health 
professionals is present. For example, using telemedicine and 
telehealth, rural healthcare providers that may be understaffed or lack 
highly skilled health professionals can connect with medical 
professionals and specialists located elsewhere to provide care to the 
patient and avoid the need and expense of either the patient or 
professional traveling to the other. The Health Resources and Services 
Administration (HRSA) currently identifies Health Professional Shortage 
Areas (HPSA), based on geographic area, population groups and 
facilities; Medically Underserved Areas and Medically Underserved 
Populations (MUA/P), which identify geographic areas and populations 
with a lack of access to primary care services; and state identified 
rural health care clinics that do not otherwise qualify for HPSA or 
MUA/P designation. The Commission seeks comment on whether prioritizing 
funding requests based on the designations by the HRSA would better 
serve its goal of using each funding dollar to its maximum benefit. If 
the Commission were to use these designations, would it also be 
required to consider whether the persons served by the healthcare 
provider lived in rural areas to satisfy the requirements of section 
254(h)(1)(A) of the Act? Would this overlay of HRSA designations on the 
rural areas focus funding on the areas of the country that most need 
access to health care? Would this target the RHC Program funding to its 
most efficient use?
3. Targeting Support to Rural and Tribal Healthcare Providers
    26. Recognizing that the primary emphasis of the RHC Program is to 
defray the cost of supported services for rural healthcare providers, 
the Commission seeks comment in this section on several proposals to 
direct proportionally more funding to rural healthcare providers, 
including healthcare providers on rural Tribal lands.
    27. Rural Healthcare Providers in HCF Program. Currently, the HCF 
Program provides support for non-rural healthcare providers in 
majority-rural consortia. Although the HCF Program places an emphasis 
on increasing broadband access to healthcare providers that serve rural 
areas, the Commission recognized in the HCF Order (78 FR 13935, March 
1, 2013), that non-rural healthcare provider participation may confer 
benefits upon affiliated rural healthcare providers, including lower 
broadband costs, access to medical specialists, administrative support, 
and technical expertise. The Commission agrees that non-rural 
healthcare provider participation in HCF consortia benefits rural 
healthcare providers and patients, and therefore propose the measures 
below to promote continued non-rural healthcare providers' 
participation yet still direct the greater part of HCF Program support 
to rural healthcare providers.
    28. First, the Commission seeks comment on increasing the HCF 
Program consortia ``majority rural'' healthcare provider requirement 
from a ``more than 50 percent rural healthcare providers'' threshold to 
some higher percentage. As of November 2017, 27 HCF consortia were 
required to meet the existing ``majority rural'' requirement and had 
rural healthcare provider percentages ranging from 45 to 100 percent, 
with an average of 79 percent rural healthcare providers. The 
Commission seeks comment on whether the current ``majority rural'' 
threshold accurately reflects the needs of rural healthcare providers, 
and whether to increase the minimum percentage of rural healthcare 
providers in HCF consortia. If so, what might be an appropriate 
percentage? What would be the practical implications of an increase in 
the percentage of rural healthcare providers necessary in a consortium?
    29. Second, the Commission seeks comment on elimination of the 
three-year grace period during which HCF consortia may come into 
compliance with the ``majority rural'' requirement.

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As of November 2017, of the 160 HCF consortia that were still within 
the three-year grace period for ``majority rural'' compliance, 143, or 
89 percent, already had met the requirement and had rural healthcare 
provider percentages ranging from 55 to 100 percent, with an average of 
81 percent rural healthcare providers. If commenters propose that the 
Commission establishes a grace period of less than three years, what 
period would be appropriate, and why?
    30. Finally, the Commission seeks comment on whether to require a 
direct healthcare-service relationship between an HCF consortium's non-
rural and rural healthcare providers that receive Program support. 
Currently, the Commission does not require a consortium's non-rural 
healthcare providers to provide clinical care or other healthcare-
related services to patients of their affiliated rural healthcare 
providers. Should non-rural healthcare provider support be limited to 
only those healthcare providers directly providing healthcare-related 
services to rural areas? Or, should the Commission provide HCF support 
to some percentage of each consortium's non-rural healthcare providers 
that do not provide healthcare services to rural areas, recognizing 
that, among other things, many non-rural healthcare providers provide 
significant non-healthcare-related benefits to affiliated rural 
healthcare provider consortia members, such as consortium formation and 
leadership; administrative resources; and greater bargaining power with 
service providers?
    31. Rural Tribal Healthcare Providers in Telecom and HCF Programs. 
Given emphasis on targeting more support to rural healthcare providers 
and healthcare providers on rural Tribal lands, the Commission seeks 
comment from Tribal governments in particular on whether any of the 
proposals here would impact Tribal populations and, if so, how. 
Additionally, the Commission seeks comment on what measures would help 
ensure that adequate Telecom and HCF Program support is directed toward 
healthcare providers on rural Tribal lands.

B. Promoting Efficient Operation of the RHC Program To Prevent Waste, 
Fraud, and Abuse

    32. In light of the pricing increases and shrinking out-of-pocket 
costs borne by healthcare providers, the Commission next turn to the 
issue of inadequate price-sensitivity in the Telecom Program. In the 
HCF Order, the Commission stated that reforms to the Telecom Program 
could provide greater incentives for healthcare providers to make more 
cost-efficient service purchases and the Commission believes promoting 
price-sensitivity and encouraging healthcare providers to make more 
efficient purchasing decisions is particularly important considering 
growth in the RHC Program. Efficiency entails both ensuring that 
limited Telecom Program funding is directed to healthcare providers 
that need it and encouraging healthcare providers to be price sensitive 
in choosing services and carriers. One goal of the Telecom Program is 
to reduce the effect of healthcare providers' location on the effective 
(out-of-pocket) price of available services. If incentives were well 
aligned, healthcare providers receiving support would choose the same 
service levels that an identical urban counterpart would purchase under 
the circumstances. At the same time, the Commission seeks to ensure 
that, by improving efficiency, and not restricting necessary funding 
for those healthcare providers whose service costs are legitimately 
high due to their unique geography and topography.
1. Controlling Outlier Costs in the Telecom Program
    33. To ensure that limited funding is distributed efficiently, the 
Commission proposes to establish objective benchmarks to identify 
outlier funding requests, using information already provided by Telecom 
Program participants to USAC. The Commission seeks comment on whether 
establishing an objective benchmark to identify those outlying funding 
requests will provide greater transparency for RHC Program participants 
and clearer guidance to USAC. Under the Commission's proposal, outlier 
funding requests that exceed the benchmark will be subject to enhanced 
review by USAC before issuing commitments. Then, the Commission seeks 
comment on the measures to use in evaluating those outlier requests for 
funding support.
a. Identifying Healthcare Providers With Particularly High Support 
Levels
    34. Under section 254(h)(1)(A) of the Act, rural healthcare 
providers pay discounted rates for telecommunications services that are 
``reasonably comparable'' to rates charged for ``similar services'' in 
urban areas. A discount rate benchmark identifies those healthcare 
providers paying a smaller share of the costs toward their selected 
services. For example, some healthcare providers in the Telecom Program 
receive discounts in excess of 99 percent and therefore contribute less 
than one percent of the price of services. In contrast, a healthcare 
provider with a discount rate of 75 percent, for example, pays one 
fourth of the service costs. Since high discount rates will tend to 
suggest high differentials between the rural and urban rates, the 
Commission seeks comment on using the discount rate to establish a 
benchmark based on data from the preceding funding year, and a 
rebuttable presumption that Telecom Program support levels above the 
benchmark will not result in rates that meet the Act's ``reasonably 
comparable'' standard.
    35. Specifically, the Commission seeks comment on establishing a 
benchmark based on the discount rates in the Telecom Program, which 
USAC would use to identify outlying high-support requests. One approach 
would make the benchmark discount rate equal to the lowest discount 
rate from among the five percent of healthcare providers receiving the 
highest discount rates in the immediately preceding funding year--in 
2016, five percent of healthcare providers got discounts of 99 percent 
or more and received more than 52 percent of all Telecom Program 
funding. Each year, USAC would publish this benchmark well in advance 
of the filing window period to assist service providers in making bids 
and rural healthcare providers in making service selections. This 
approach could limit the pool of applicants the rate applies to while 
maximizing its impact--but the benchmark would change significantly 
year to year.
    36. Another approach would require USAC to set a fixed benchmark 
(such as 90 percent or 99 percent) that would remain either static from 
year to year or change gradually over time (such as a 99 percent 
initial benchmark that decreases 1 percent each year and stops at 90 
percent). The Commission seeks comment on the appropriate level of this 
discount rate cutoff.
    37. Should the benchmark also incorporate other considerations, 
such as the overall size of a healthcare provider's funding request? 
Should the benchmark be calculated on a nationwide basis or per state? 
Commenters should also discuss other measures that may be useful 
benchmarks. Alternatively, since high discount rates may reflect in 
large part unusually high rural rates, should the Commission consider 
setting benchmarks directly based on the service costs? For instance, 
should the Commission look at those rural rates for service that are 
above a certain percentile when compared to rural rates contained in 
all funding requests, possibly normalized by some

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characteristic of the healthcare providers? How would such a benchmark 
be implemented?
b. Funding Requests That Exceed the Benchmark
    38. In this section, the Commission addresses what steps to take 
when a healthcare provider's request in the Telecom Program exceeds the 
established benchmark. The Commission's objective is to make service 
providers and healthcare providers more sensitive to price in an effort 
to reduce unnecessary spending while at the same time allowing for 
support in accordance with the Act. The proposals below are intended to 
incentivize healthcare providers to consider costs more carefully and, 
thereby, ensure a more efficient use of scarce RHC Program funds.
(i) Enhanced Review for Outlier Funding Requests
    39. The Commission proposes that a funding request that exceeds the 
relevant benchmark be subject to a two-step enhanced review--one to 
determine whether the rural rate is improperly high and another to 
determine whether the urban rate is improperly low. Under current 
rules, a carrier is supposed to calculate the rural rate by taking its 
own ``average of the rates actually being charged to commercial 
customers'' in the relevant area, looking to the rates charged by other 
carriers or costs only as a secondary approach. And under current 
rules, urban rates are set as ``no higher than the highest tariffed or 
publicly-available rate charged to a commercial customer for a 
functionally similar service in any city with a population of 50,000 or 
more in that state.''
    40. As a first step, the Commission seeks comment on requiring the 
carrier to justify the underlying costs in the rural rate presented in 
the funding request, including the costs materially affecting the price 
of each feature that the healthcare provider included in its Request 
for Proposal (RFP). Under this approach, USAC would limit the 
acceptable rural rate associated with the funding request to those 
specific costs plus a reasonable rate of return. That allowable return 
on the rate set for rate-of-return carriers is currently 10.75 percent, 
and is set to decline by 0.25 percent annually until 2021, when it will 
be 9.75 percent. The Commission seeks comment on limiting the rural 
rate to what can be cost-justified as one form of enhanced review of 
rural rates.
    41. If the Commission adopts this approach, what information should 
the service provider be required to submit to justify costs? Which 
features, if different from those being analyzed under the enhanced 
similarity review, should be included? Should such a cost review limit 
the mark up that resellers can impose on resold services? In the past, 
the Commission has suggested that a wholesale discount of 17 percent to 
25 percent would reasonably reflect the avoided costs of a 
wholeseller--should the Commission look beyond those discounts in 
selecting a maximum markup? The Commission seeks comment on this 
approach and especially solicit examples of how similar reviews have 
been conducted in other contexts. For example, should the Commission 
incorporate the Commission's recent non-exhaustive list of expenses 
that should not be included in the cost base for rate-of-return 
carriers into the cost study analysis proposed here? Should the 
Commission continue to incorporate updates to the items in the High 
Cost Public Notice (FCC 15-133, rel. Oct. 19, 2015)? To ensure that 
support is limited to ``telecommunications services which are necessary 
for the provision of health care services,'' the Commission seeks 
comment on whether to adapt the ``used or useful'' standard from the 
High-Cost context to this proposed cost review? As the Commission has 
noted, plant that is actually being used to send signals to customers 
is ``used and useful.'' For example, should the Commission adapt that 
test to the review of a service that exceeds the healthcare provider's 
minimum needs? In that case, should USAC limit support to a return on 
only the costs needed to provide the healthcare provider's minimum 
needs?
    42. Commenters should discuss whether this proposal should replace 
the current comprehensive support calculation in Sec.  54.607(b) of the 
Commission's rules. The Commission also seeks comment on the costs and 
benefits of carrying out this approach. In addition, commenters should 
discuss how this enhanced review would interact with other reforms 
discussed below, such as proposals for calculating the urban and rural 
rates.
    43. As an alternative first step, the Commission seeks comment on 
USAC limiting the rural rate to the lowest market rate it can find for 
identical or similar services in the rural area. The Commission expects 
that USAC would examine at least the commercial rates that the carrier 
itself used in creating an average rural rate in evaluating the lowest 
cost option, as well as the rates charged by other service providers 
for commercial customers and any other rates for such services that 
USAC can find. What would be the impact of such an approach? What data 
sources should USAC look to in determining other commercial rates in 
the rural area?
    44. Second, the Commission seeks comment on USAC setting the urban 
rate based on the highest urban rate for an identical or similar 
service in any city of 50,000 or more in that state. Such a change 
would take the ability to set the urban rate out of the hands of a 
carrier that might be seeking to compete for a rural healthcare 
provider by offering an artificially low urban rate. What factors 
should the Commission consider in evaluating this option?
    45. Alternatively, the Commission seeks comment on requiring USAC 
to conduct a detailed review of the healthcare provider's funding 
request to ensure that the rural and urban services being compared are 
sufficiently similar. USAC's analysis would include a feature-by-
feature review of the similarity between the requested rural services 
and their urban counterparts, as well as the similarity between the 
services being provided in comparable rural areas. USAC's similarity 
review would be based on the service information contained in the 
documents supporting the healthcare provider's funding request. The 
Commission also seeks comment on how to best address those support 
requests that do not satisfy the similar services stage of the enhanced 
review inquiry. Should USAC deny those funding requests outright, or 
allow healthcare providers and their service providers to recalculate 
and reapply with a revised urban rate?
    46. Which of these approaches will best balance the Commission's 
goals of fairness and efficiency? Are there alternative approaches the 
Commission should consider? What burdens would each of the enhanced 
review options have on rural healthcare providers, their carriers, and 
USAC? What options would lead to the best incentives for rural 
healthcare providers to choose cost-effective options? Would any of the 
options be particularly efficient at ferreting out waste, fraud, and 
abuse in the RHC Program? Would any of the options be sufficient to 
encourage carriers to bid to serve rural healthcare providers at rural-
urban differentials that would be low enough to avoid the enhanced 
review?
(ii) Capping Funding Requests That Exceed the Benchmark
    47. As an alternative to enhanced review, the Commission seeks 
comment on capping high-support funding requests in the Telecom Program 
to ensure efficient distribution of funding to the greatest number of 
healthcare providers. Under this alternative,

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healthcare providers whose support requests exceed the proposed 
benchmark would be conclusively deemed to be requesting service at 
rates that are not reasonably comparable to those charged for similar 
services in urban areas, and support would be capped at the benchmark. 
Carriers are limited under the Act to receive only the difference 
between rural rates and reasonably comparable rates in urban areas for 
similar services. The Commission seeks comment on this alternative, 
including on associated issues such as the appropriate geographic unit 
to which to apply it.
    48. The Commission also seeks comment on an alternative proposal in 
which to establish discount rate tiers that would provide diminishing 
support to healthcare providers as their service costs increase 
relative to similar healthcare providers. To provide certainty to 
healthcare providers, these tiers would be established each year based 
on the preceding funding year's participant data. Under this ``soft'' 
funding cap approach, healthcare providers would be grouped based on 
specific, identified factors such as entity size, geographic location, 
and purchased services. For example, within each healthcare provider 
group, the Telecom Program could fully fund the urban-rural rate 
difference if the cost of the requested service falls at or below the 
25th percentile of spending for the relevant group. For requests with 
costs in the second-lowest quartile between the 25th percentile and the 
median for the group, funding would be substantial but less than the 
full urban-rural rate difference, and funding would decrease 
accordingly for succeeding quartiles above the median cost. Thus, under 
this marginal ``soft'' funding cap approach, only healthcare providers' 
marginal spending increases relative to similar healthcare providers 
will be subject to diminishing support.
    49. The Commission seeks comment on whether this approach provides 
helpful incentives for healthcare providers to seek the lowest costs 
for services. The Commission also seeks comment on how it can best be 
implemented. Is quartile of healthcare provider eligible service 
spending the best way to establish marginal support tiers? What level 
of marginal support for each tier will provide the most efficient 
reduction? What factors should the Commission consider in grouping 
healthcare providers in order to best compare their spending or service 
levels? For example, if the Commission distinguishes between healthcare 
providers by size, should the Commission measure size by patient 
capacity, actual patient numbers, staff levels, or some other measure? 
What service features should the Commission use for grouping similar 
healthcare providers? Are the features in similar services proposal 
appropriate, or should the Commission include additional features for 
purposes of this proposal?
    50. The Commission believes the approaches discussed above meet the 
efficiency goals because they ensure that healthcare providers--even 
those receiving particularly high levels of support--will continue to 
receive support for necessary telecommunications services under the 
Telecom Program while also realigning healthcare providers' incentives 
to select services and carriers more efficiently. The Commission seeks 
comment on how these various proposals help align healthcare providers' 
incentives to select services and carriers efficiently, thereby 
promoting these efficiency goals for the Program.
2. Reforming the Rules for Calculating Support in the Telecom Program
    51. In accordance with the goal of calculating funding 
disbursements in a consistent and transparent manner and minimizing 
excessive RHC Program spending, the Commission next seeks to reduce 
opportunities for manipulating the rural and urban rates in the Telecom 
Program more generally.
a. Calculating Urban and Rural Rates
    52. The Commission proposes more detailed requirements about how 
the urban and rural rates are determined in the Telecom Program to 
minimize potential variances and rate manipulation. The Commission 
believes these changes will ultimately reduce the burden on healthcare 
providers and service providers to calculate urban and rural rates, and 
the need for USAC to engage in detailed rate reviews.
    53. The subsidy provided to the service provider is based on the 
difference between the ``urban rate'' and the ``rural rate.'' The 
concepts of urban rate and rural rate are defined in the Commission's 
rules. Pursuant to the rules, the rural rate is calculated in one of 
three ways. In the first instance, the rural rate is ``the average of 
the rates actually being charged to commercial customers, other than 
[healthcare providers], for identical or similar services provided by 
the telecommunications carrier providing the service in the rural area 
in which the [healthcare provider] is located.'' If the service 
provider is not providing an identical or similar service in the rural 
area, then the rural rate should be ``the average of the tariffed and 
other publicly available rates . . . charged for the same or similar 
services in that rural area . . . by other carriers.'' If there are no 
tariffed or publicly available rates for such services in that rural 
area, then the Commission's rules provide a mechanism for deriving a 
cost-based rate.
    54. The Commission recognizes that there are often few customers of 
a size comparable to the healthcare provider in the rural area and 
often even fewer service providers. This circumstance may make it 
difficult to develop an average rate consistent with the Commission's 
rules for determining the rural rate. The Commission is moreover 
concerned that, at times, permitting service providers to put forward 
rural rates based only on their own rates to other rural customers may 
artificially inflate the rural rate by excluding other service 
providers' service rates to rural customers for functionally similar 
services. This situation also risks conflating the rural rate concept 
with the carrier's own price for providing service, and opens the door 
to potentially boundless rural rate increases, and difficult-to-detect 
abuse. Moreover, healthcare providers may have little incentive to 
check service provider pricing (since rural healthcare providers pay 
the urban rate no matter what the differential under current rules).
    55. Nevertheless, the Commission appreciates that reliance on 
publicly available rate data leads to greater transparency. To address 
the issue about the paucity of rate data in rural areas, the Commission 
offers several proposals. Going forward, rather than distinguishing 
between the rates of the healthcare provider's selected service 
provider and the rates of other service providers, the rural rate would 
be the average of all publicly available rates charged for the ``same 
or similar services'' in the rural area in which the healthcare 
provider is located. This average of all publicly available rates would 
include the service provider's own rates to other non-healthcare 
provider customers, as well as tariffed rates in the rural area, and 
undiscounted rates offered to schools and libraries in the rural area 
via the E-rate Program. Are there other sources of publicly available 
rate information that the Commission should consider adding? Should the 
Commission retain the inclusion of tariffed rates in the calculation of 
the rural rate? Is there a risk that service providers may be able to 
file tariffs with artificially high rates in order to increase the 
rural rate? If so, can the Commission mitigate that risk

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by limiting the use of tariffed rates to services actually being 
provided to at least one non-healthcare provider commercial customer in 
the rural area? In addition, the Commission proposes, in the event the 
only available rates in the healthcare provider's rural area are the 
service provider's own rates, to require the service provider to 
calculate a rural rate based on publicly available rates in another 
comparable rural area in the healthcare provider's state where at least 
one other service provider offers publicly available rates for 
functionally similar services. Through this proposal the Commission 
seeks to minimize the service provider's ability to offer an 
unjustified, high rural rate. To this end, should the Commission direct 
USAC to substitute publicly available rates it is aware of in the 
healthcare provider's rural area if those rates are lower than the rate 
average submitted by the healthcare provider? The Commission also seeks 
comment on whether USAC should establish a database containing all the 
rate information submitted each year. If so, in subsequent years the 
rural rate could be based on an average of the rates in the rural area 
from the preceding year.
    56. The Commission also seeks comment on whether to retain Sec.  
54.609(d) of the rules, which provides that healthcare providers may 
receive support for satellite service even if there is a functionally 
equivalent terrestrial service in the healthcare provider's rural area, 
but such support may not exceed the amount of support that would be 
available for the relevant terrestrial service. In light of the 
Commission's proposals to reform the rules for calculating the rural 
rate, along with the proposals for competitive bidding reform, Sec.  
54.609(d) of the Commission's rules may no longer be necessary. The 
Commission's rural rate proposal, for example, would place a check on 
the service provider's rate by requiring the rural rate be calculated 
by taking an average of publicly available rates including at least one 
other service provider in addition to the healthcare provider's service 
provider. Using a competitive service provider's rate to limit support 
to a healthcare provider may make unnecessary limitations to Sec.  
54.609(d of the rules on support available for satellite service where 
terrestrial service is also available. If the Commission retains Sec.  
54.609(d) of the rules, should the Commission modify that provision, 
based on Alaska Communications Systems' (ACS) suggestion, to cap 
support at the lower of the satellite service rate or the terrestrial 
service rate where both services are available? Is it the case that the 
prices for satellite and terrestrial services diverge greatly only in 
Alaska, or does this occur in other parts of the country as well? If 
the Commission were to modify Sec.  54.609(d) of the rules in the 
manner suggested by ACS, should the Commission require all healthcare 
providers to provide rate information about both satellite and 
terrestrial services, or should there be some criteria for determining 
when such a comparison is required?
    57. The Commission likewise seeks comment on whether to retain the 
cost-based support mechanism in Sec.  54.609(b) of the rules. 
Currently, service providers may propose a rural rate, supported by the 
service provider's itemized costs of providing the requested service. 
The above proposals would reduce the chance that there are no publicly 
available rates to use in calculating a rural rate for a service. 
Nevertheless, the Commission seeks comment on whether the rule would 
continue to benefit service providers that may believe that rural rates 
calculated consistent with its proposal above are unfair. Are there 
alternatives that would ensure that the rural rate was calculated in a 
manner such that establishing a cost-based rural rate would not be 
necessary?
    58. The Commission also proposes to modify its rules regarding the 
calculation of the urban rate. Under the current rules, the urban rate 
can be ``no higher than the highest tariffed or publicly-available rate 
. . . for a functionally similar service'' offered in a city in that 
state of 50,000 or more at a distance no greater than the standard 
urban distance (SUD). Basing the urban rate on only one rate example 
may lead to ``cherry-picking'' and a search for the lowest possible 
rate regardless of whether this rate is representative of the average 
urban rate for a similar service. This incentive to find the lowest 
possible urban rate so as to maximize the discount contributes to 
excessive Telecom Program spending. Requiring a rate average would 
eliminate this incentive.
    59. The Commission next explores the best sources for the various 
rate data required to calculate the average rates and the discount. 
While the healthcare provider currently submits urban and rural rate 
data along with its application, healthcare providers may obtain these 
rates from carriers, third party consultants or through other means. 
The Commission seeks comment on standardizing this process by having 
the healthcare provider's service provider give the healthcare provider 
the urban and rural rates and averages for the relevant urban and rural 
areas, along with rate documentation to the healthcare provider. The 
healthcare provider would then file that documentation with its 
application. The Commission believes the service provider can most 
easily access the rate information and this approach will ease the 
burden on healthcare providers and USAC to compare urban and rural 
rates from difference sources. The Commission seeks comment on this 
approach.
    60. Nevertheless, having the carrier, the entity with the most to 
gain financially, provide the rate information may promote incentives 
that are not aligned with the Commission's goals of efficiency in the 
RHC Program. To remove concerns about misaligned incentives and provide 
greater transparency in the Telecom Program review process, the 
Commission seeks comment on whether USAC should collect and make 
available the relevant urban and rural rate data, rather than the 
service provider. Under this approach, for each relevant urban and 
rural area, USAC would collect and aggregate the prior year's Telecom 
Program and E-rate rate data as well as any other publicly available 
rate data. USAC would post this rate data on its website. At the time 
of application, a healthcare provider's service provider would develop 
an average rural and urban rate for the relevant service based on a 
combination of its own price data and that found on USAC's website. The 
Commission seeks comment on this idea and ask how USAC can best 
accumulate reliable rate information. How would this approach work in 
the event there is no data, or insufficient data, from the preceding 
year for the rural area in which the healthcare provider is located 
and/or the relevant urban area?
    61. The Commission must next define the geographic contours of 
rural and urban areas for the purpose of determining the urban and 
rural rates. The Commission believes that averaging rates within state 
rural areas containing similar cost attributes is consistent with the 
goal of section 254(h)(1)(A) of the Act to ensure that healthcare 
providers in rural and urban areas pay reasonably comparable rates. The 
Commission seeks comment on that belief. Consistent with that approach, 
the Commission proposes to establish an appropriate rural definition 
for the RHC Program that is simple to understand and apply. The rural 
area must be completely enclosed by a state and should contain enough 
telecommunications service offerings to calculate a meaningful average 
rural rate. The Commission seeks examples of such appropriate rural 
areas. The

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Commission also seeks comment on methods to ensure services are 
averaged with similarly rural services. Should the Commission consider 
establishing tiers of rurality so average rates in the most rural areas 
will not be reduced by including rates from only slightly rural areas? 
The relevant rural area could be defined by the boundaries of the tier 
in which the healthcare provider is located and the rural rate would be 
the average of the rates of ``similar services'' within that boundary. 
What data sources could the Commission look to in order to ensure 
healthcare providers and service providers are only using rates from 
like rural areas when calculating the discount? Should the Commission 
consider using types of rural areas that align with the prioritization 
tiers discussed below? Would establishing rural areas in this manner 
result in appropriate rates and discounts for RHC Program participants? 
The Commission seeks comment on any other approaches consistent with 
the statute.
    62. As for urban areas, should the Commission continue to follow 
the approach currently set forth in the Commission's rules, whereby the 
urban rate is based on rate data from any city in the relevant state 
with a population of 50,000 or more? Given the increased availability 
of telecommunications services in smaller cities, should the Commission 
modify the city population size used to generate the urban rate? The 
Commission seeks comment on methods to identify the appropriate urban 
rate for discount calculation.
    63. Finally, the Commission seeks comment on whether, in lieu of 
using rate averaging to instead adopt a median-based approach. Might 
such an approach, rather than an average-based approach, limit the 
effect of very high and low rates?
b. Defining Similar Services
    64. To limit possible waste and modernize the rules to reflect 
services actually purchased by healthcare providers, the Commission 
seeks comment on services supported by the Program. The Commission 
first seeks comment on changes to the Commission's interpretation of 
``similar services.'' Under section 254(h)(1)(A) of the Act, and the 
Commission's rules, carriers are permitted to receive reimbursement for 
the difference between the urban and average rural rates for ``similar 
services.'' In 2003, the Commission concluded that services are 
``similar'' under 254(h)(1)(A) of the Act if they are ``functionally 
similar as viewed from the perspective of the end user.'' To implement 
this standard, the Commission established a voluntary ``safe harbor'' 
whereby a healthcare provider could claim that two services are similar 
if they both fall within one of five speed tiers (the highest tier 
grouped all services at 50 Mbps and above) and are either symmetrical 
or asymmetrical. Although the Commission anticipated updating these 
tiers to account for market changes and to ``reflect technological 
developments,'' the tiers have not been updated since 2003. The 
Commission's experiences with the RHC Program shows that having a 
voluntary safe-harbor system based on speed tiers that do not reflect 
current healthcare provider service needs has led to significant 
variability in how the ``similar services'' analysis is conducted and 
is a potential source of waste.
    65. The current safe-harbor healthcare providers and service 
providers use when calculating urban and rural rate determinations may 
be contributing to RHC Program waste as it allows healthcare providers 
and service providers to rely on services that are in fact materially 
different. For example, due to the highest tier grouping all bandwidths 
of 50 Mbps or higher, in determining the applicable discount rate for a 
60 Mbps service under the safe-harbor, the average rural rate could be 
set based on rates for two services at 200 Mbps and three services at 
500 Mbps, all of which are priced significantly higher than the 
undiscounted price for the 60 Mbps service. The healthcare provider 
could also select an urban rate based on the price of a 50 Mbps 
service. These services, however, are unlikely to be ``functionally 
similar as viewed from the perspective of the end user'' given the huge 
disparity between a 50 Mbps service and a 300 Mbps service. Yet the 
safe-harbor tiers currently permit a comparison of these services when 
calculating the discount for the service ordered.
    66. Going forward, the Commission proposes to retain the concept of 
``functionally similar as viewed from the perspective of the end 
user,'' and require healthcare providers to analyze similarity under 
specific criteria. First, the Commission proposes to retain the concept 
of bandwidth tiers from the current safe-harbor framework, but update 
the speeds to ensure that each tier includes only bandwidths in a range 
that are ``functionally similar as viewed from the perspective of the 
end user.'' As with the existing safe-harbor, each tier will be made up 
of bandwidths within a specific range and any service within that range 
will be considered ``similar'' for purposes of the bandwidth criterion.
    67. Next, the Commission seeks comment on how the bandwidth tiers 
should be established and updated. The Commission proposes that the 
bandwidth tiers be set by reference to the healthcare providers' 
requested bandwidth in each instance. For example, the tier for a 
healthcare provider requesting a 50 Mbps service would include all 
services within 30 percent of 50 Mbps (i.e., 35 Mbps to 65 Mbps), where 
the average rural rate would be the average rate of all services within 
this 30 percent bandwidth range in the relevant rural area. All 
services within the stated percentage above or below the bandwidth 
requested by the healthcare provider would be considered ``similar'' 
for purposes of the bandwidth criteria. Under this approach, there 
would be no need to update the bandwidth tiers over time. If the 
Commission adopts this approach, what is an appropriate percentage to 
establish the range? Should this percentage vary depending on the 
bandwidth requested? Should the Commission use something besides a 
percentage? In the alternative, the Commission seeks comment on 
resetting the current bandwidth tiers at higher bandwidths and updating 
those tiers periodically over time based on common bandwidths for which 
healthcare providers seek funding. For example, one bandwidth tier 
could consist of all services in a rural area with bandwidth speeds 
between 1 Gbps and 2 Gbps.
    68. The Commission also seeks comment on other criteria to use to 
establish ``similar services.'' For example, should packetization be a 
criterion? Packetized services can provide traffic prioritization and 
can be purchased in more granular bandwidth increments than non-
packetized, TDM-based services. Do these differences mean that 
packetized and non-packetized services cannot be ``functionally similar 
as viewed from the perspective of the end user?''
    69. In addition, as the Commission explores revisiting the service 
tiers, should the Commission consider adopting a minimum bandwidth 
requirement? What about minimum requirements for other service 
characteristics? Would any minimum requirements be appropriate for the 
Telecom or the HCF Programs? The Commission seeks comment on whether to 
do so and, if so, appropriate minimum levels. Also, could a list of 
services eligible for support under each of the RHC Programs be useful? 
Further, the Commission seeks comment on supporting services that have 
not traditionally received support in the

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RHC Program. For example, under the statute, could the Commission 
support patient home monitoring services? The Commission notes the 
statute defines ``health care provider'' as one of the following 
entities: Post-secondary educational institutions offering health care 
instruction, teaching hospitals, and medical schools; community health 
centers or health centers providing health care to migrants; local 
health departments or agencies; community mental health centers; not-
for-profit hospitals; rural health clinics; skilled nursing facilities; 
and consortia of those entities. How would support for patient home 
monitoring or any other service not currently supported comply with the 
statute given the definition of health care provider? If allowable 
under the statute, how would the support mechanism work vis-[agrave]-
vis the Commission's proposed support calculation and competitive 
bidding rules?
c. Eliminating Distance-Based Analysis
    70. The Commission next proposes to eliminate the distance-based 
support approach considering its limited use and the administrative 
benefits that result from using one standardized support calculation 
methodology. Under the current rules, carrier support is based on an 
urban/rural rate comparison or, if the offered service includes an 
explicit distance-based charge, USAC will provide support for distance-
based charges up to the maximum allowable distance (MAD) equal to the 
distance of the requested service as calculated in the service's 
distance-based charge minus the SUD. The SUD is the average of the 
longest diameters of all cities with a population of 50,000 people or 
more in a state. The MAD is the distance from the healthcare provider 
to the farthest point on the jurisdictional boundary of the city in 
that state with the largest population. The healthcare provider must 
pay for any distance-based charges incurred for mileage greater than 
the MAD. The per-mile charge can be ``no higher than the distance-based 
charges for a functionally similar service in any city in that state 
with a population of 50,000 over the SUD.'' Despite these detailed 
rules, virtually no healthcare providers use a distance-based approach.
    71. The Commission proposes to eliminate any consideration of a 
distance-based approach. Based on the low use of this methodology, the 
Commission believes it is no longer necessary to use as a proxy for the 
appropriate support amount. The Commission also believes eliminating 
this option will reduce the administrative burden on USAC by 
eliminating the need to manage two separate rate methodologies. 
Moreover, eliminating this option and focusing support on urban/rural 
rate comparisons, particularly in conjunction with some of the changes 
on which the Commission seeks comment elsewhere in this item, will also 
simplify the application process for healthcare provider and service 
providers. The Commission seeks comment on removing the distance-based 
approach.
    72. In the absence of a distance-based approach, should there be 
some other method to determine rates for supported telecommunications 
services in those limited cases where ``similar'' urban and rural 
services cannot be found to generate a discount rate? Under the 
Commission's current rules, carriers may submit a ``cost-based rate'' 
to the Commission or state (for intrastate services) if they cannot 
find similar services to use in calculating the rural rate. If the 
Commission eliminates a distance-based approach, could the enhanced 
review described above be used in lieu of the current cost-based 
approach? If, after conducting such a review, USAC deemed the costs to 
be justified, would such an approach provide sufficient safeguards to 
enable the Commission to find the rural rate ``reasonably comparable'' 
to an urban rate? The Commission seeks comment on these proposals.
3. Defining the ``Cost-Effectiveness'' Standard Across the RHC Programs
    73. To receive funding for eligible services under the Telecom and 
HCF Programs, applicants must conduct a competitive bidding process and 
select the most ``cost-effective'' service offering. In each Program, 
``cost-effective'' is the ``method that costs the least after 
consideration of the features, quality of transmission, reliability, 
and other factors that the applicant deems relevant to choosing a 
method of providing the required health care services.'' The ability to 
look at ``features, quality of transmission, reliability, and other 
factors'' places virtually no limitation on how healthcare providers 
make their service selections. Moreover, healthcare providers need not 
provide much detail about their service needs when posting their 
requests for services, nor do they need to provide detailed information 
to potential bidders about how they will score responsive bids. This 
lack of transparency about the healthcare provider's needs and its 
anticipated vendor selection process, may lead to inefficiencies in the 
competitive bidding process.
    74. As a result, under the current system, a healthcare provider 
could post a request for services merely stating that it seeks a 
connection between points A and B to transmit voice and video. In 
response to this request for services, the healthcare provider could 
receive two bids--one offering 100 Mbps service for $10 a month and the 
second offering 1 Gbps service for $100 a month but with additional 
features such as additional bandwidth or others not specified in the 
request. Under the current ``cost-effectiveness'' standard and vendor 
selection process, the healthcare provider can select the 1 Gbps 
service even if its basic communications needs could have been met by 
the cheaper 100 Mbps service. The healthcare provider can simply state 
that the 1 Gbps service was the most ``cost-effective'' after including 
the additional features in its consideration. Nevertheless, selecting 
services that exceed the healthcare provider's needs is a waste of RHC 
Program funds. Such selections are particularly troubling at a time 
when the RHC Program is already having difficulty meeting the funding 
needs of healthcare providers.
    75. The Commission seeks comment on ways to minimize opportunities 
for this type of waste. For example, the Commission seeks comment on 
whether narrowing the current definition of ``cost effectiveness'' 
could help to prevent such wasteful spending as well as give healthcare 
providers more structure as they develop their bid evaluation 
processes. Should the Commission define ``cost-effectiveness'' in both 
Programs as the lowest-price service that meets the minimum 
requirements for the products and services that are essential to 
satisfy the communications needs of the applicant? Would this standard, 
combined with the Commission's other competitive bidding requirements, 
provide a sufficient safeguard against wasteful spending and allow for 
flexibility in the bid evaluation to reflect the differing needs of 
healthcare providers? Should the Commission require healthcare 
providers to be more specific about their communications service needs 
in their RFPs and/or requests for services, including a description of 
what the minimum requirements are to meet those needs and to list the 
specific evaluation criteria in their RFPs and/or requests for services 
to provide more transparency in the bidding process? Should the 
Commission provide more guidance for healthcare providers in how they 
structure their vendor selection and evaluation processes? The

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Commission seeks comment and solicits information about other systems 
or procedures to employ improving the competitive bidding process in 
the RHC Program.

C. Improving Oversight of the RHC Program

    76. Below, the Commission explores proposals to simplify and 
streamline various RHC Program requirements to improve the stakeholder 
experience and ease administrative burdens. The Commission believes 
these proposals will facilitate smoother and swifter funding 
determinations, while minimizing the opportunity for waste, fraud, and 
abuse.
1. Establishing Rules on Consultants, Gifts, and Invoicing Deadlines
    77. In this section, the Commission seeks comment on several 
proposals to minimize waste, fraud, and abuse in the Telecom and HCF 
Programs. In particular, the Commission proposes to revise RHC Program 
rules to codify requirements for consultants or anyone acting on behalf 
of RHC Program applicants as well as gift restrictions. The Commission 
anticipates that the measures proposed here, if codified in the 
Commission's rules, will assist in its continuing effort to ensure that 
the Fund is being used by applicants as Congress intended and will 
deter RHC Program participants from engaging in improper conduct.
a. Establishing Rules on the Use of Consultants
    78. To harmonize the Commission's rules under the Telecom and HCF 
Programs regarding consultants, the Commission proposes to adopt 
specific requirements that will give consultants well-defined 
boundaries as they guide applicants through the RHC Program funding 
process. Under HCF Program rules, applicants are required to identify, 
through a ``declaration of assistance,'' any consultants, service 
providers, or any other outside experts who aided in the preparation of 
their applications. These disclosures facilitate the ability of USAC, 
the Commission, and law enforcement officials to identify and prosecute 
individuals who manipulate the competitive bidding process or engage in 
other illegal acts. Currently, applicants participating in the Telecom 
Program are not required to make similar disclosures. Therefore, to 
align RHC Program requirements regarding the use of consultants, the 
Commission proposes to adopt a new rule in the Telecom Program 
containing a similar ``declaration of assistance'' requirement for 
Telecom Program applicants and seek comment on this proposal. Should 
the Commission also require service providers to disclose the names of 
any consultants or third parties who helped them identify the 
healthcare provider's RFP or helped them to connect with the healthcare 
provider in some other way? Would requiring the consultant or outside 
expert to obtain a unique consultant registration number from USAC, as 
is the current practice in the E-rate Program, be a more effective way 
of identifying those individuals providing consulting services to RHC 
Program participants? Should the Commission also require the applicant 
to describe the relationship it has with the consultant or other 
outside expert providing the assistance?
    79. Other than the ``declaration of assistance'' requirement for 
HCF Program participants, the Commission has not adopted detailed rules 
regarding consultant participation in the RHC Program. USAC procedures, 
however, subject consultants to the same prohibitions as the applicant 
itself with respect to the competitive bidding process. In particular, 
USAC procedures prohibit consultants or outside experts who have an 
ownership interest, sales commission arrangement, or other financial 
stake with respect to a bidding service provider from performing any of 
the following functions on behalf of the applicant: (1) Preparing, 
signing, or submitting the FCC Form 461 or FCC Form 465 or supporting 
documentation; (2) serving as consortium leaders or another point of 
contact on behalf of a healthcare provider; (3) preparing or assisting 
in the development of the competitive bidding evaluation criteria; or 
(4) participating in the bid evaluation or service provider selection 
process (except in their role as potential providers). The purpose of 
these procedures is to ensure that consultants or outside experts do 
not undermine the competitive bidding process by simultaneously acting 
on behalf of the healthcare provider and the service provider. These 
procedures are essential in order to ensure the integrity of the 
competitive bidding process, to ensure that the competitive bidding 
process has been conducted in a fair and open manner, and in order to 
prevent waste, fraud, and abuse. The Commission seeks comment on 
whether to require healthcare providers and service providers to 
certify on the appropriate form that the consultants or outside experts 
they hire have complied with RHC Program rules, including fair and open 
competitive bidding. The Commission also seeks comment on whether to 
require healthcare providers and service providers to certify that the 
consultants and outside experts they hire do not have an ownership 
interest, sales commission arrangement, or other financial stake in the 
vendor chosen to provide the requested services. Should the Commission 
also hold healthcare providers and service providers accountable for 
the actions of their consultants or outside experts should those 
consultants or experts have engaged in improper conduct? Are there 
other measures not mentioned here that would improve the Commission's 
and USAC's ability to ensure consultant and outside expert 
participation comports with the requirements of the RHC Program?
b. Establishing Consistent Gift Restrictions
    80. Under E-rate Program rules, specific restrictions apply with 
respect to the receipt of gifts by applicants from service providers 
participating in or seeking to participate in the E-rate Program. 
Although there is no specific rule in the RHC Program, a gift from a 
service provider to an RHC applicant is nonetheless considered to be a 
violation of the Commission's competitive bidding rules because it 
undermines the integrity of the competitive bidding process. The 
Commission proposes to codify this requirement by adding for the RHC 
Program a gift rule that is similar to the codified rule in the E-rate 
Program.
    81. The E-rate Program gift rules are consistent with the gift 
rules applicable to federal agencies, which permit only certain de 
minimis gifts. Generally, federal rules prohibit a federal employee 
from directly or indirectly soliciting or accepting a gift (i.e., 
anything of value, including meals, tickets to sporting events, or 
trips) from someone who does business with his or her agency or 
accepting a gift given as a result of the employee's official position. 
Two exceptions to this rule include (1) modest refreshments that are 
not offered as part of a meal (e.g., coffee and donuts provided at a 
meeting) and items with little intrinsic value solely for presentation 
(e.g., certificates and plaques); and (2) items that are worth $20 or 
less, as long as those items do not exceed $50 per employee from any 
one source per calendar year. Like the federal rules, E-rate Program 
rules also include an exception for gifts to family members and 
personal friends when those gifts are made using personal funds of the 
donor (without reimbursement from an employer) and are not related to a 
business transaction or business relationship.

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    82. The Commission proposes to codify these rules for the RHC 
Program and seeks comment on this proposal. Specifically, the 
Commission seeks comment on whether the codified E-rate gift 
restrictions are suitable for the RHC Program. Do they provide 
sufficient guidance about the appropriateness of a particular offering 
or gift? Do they offer a fair balance between prohibiting gifts that 
may compromise a procurement process and acknowledging the realities of 
professional interactions? Are there other gift restrictions that 
should be considered for the RHC Program? If so, what are they and 
under what conditions should they apply or be applied? Should service 
providers be allowed to make charitable donations to healthcare 
providers participating in the RHC Program? If so, what parameters 
should be in place for allowing such donations?
    83. Regarding the applicability of gift restrictions in the RHC 
Program, the Commission seeks comment on which entities should be 
subject to such restrictions. Should they apply to both applicants and 
service providers participating in or seeking to participate in the RHC 
Program? Should they apply to consultants and their employees, as well 
as to family members of the consultants and employees? Should they also 
apply to healthcare providers that may be part of a consortium but are 
not eligible to receive RHC Program support? Are there any challenges 
to applying a gift restriction in this manner? If so, what are the 
challenges and how could they be addressed or minimized?
    84. The Commission also seeks comment on when gift restrictions 
should apply. Should they be triggered only during the time period that 
an applicant's competitive bidding process is taking place (i.e., the 
28-day period after an FCC Form 461, FCC Form 465, or RFP is posted) or 
should they also apply outside of the bidding period (i.e., before and/
or after such forms or documents are posted)? Should the Commission 
require applicants and anyone acting on behalf of applicants to certify 
that they have not solicited or accepted a gift or any other thing of 
value from their selected service provider or any other service 
provider participating in their competitive bidding process? Should the 
Commission also require service providers to certify that they have not 
offered or provided a gift or any other thing of value to the applicant 
for which it will provide services? The Commission reminds commenters 
that any gift restrictions to adopt will apply in addition to the 
applicant and service provider's state and local restrictions regarding 
gifts.
c. Harmonizing Invoicing Deadlines
    85. The Commission proposes to adopt a new rule establishing the 
same invoicing deadline for the Telecom Program as that applicable to 
the HCF Program. Currently, there is no deadline in the Telecom Program 
for service providers to complete and submit their online invoices to 
USAC. Consequently, over the years, USAC has often had to contact 
applicants and service providers to encourage them to complete and 
submit their invoices. Allowing service providers to submit invoices 
whenever they choose has compromised USAC's ability to administer the 
Telecom Program's disbursement process efficiently and effectively and 
has forced USAC to keep committed but undisbursed funding on its books 
for excessively long periods of time.
    86. To alleviate further inefficiencies with respect to the 
disbursement process, the Commission proposes to adopt a firm invoice 
filing deadline for Telecom Program participants, similar to the 
invoicing deadline adopted in the HCF Program. In particular, the 
Commission seeks comment on whether to require service providers in the 
Telecom Program to submit all invoices to USAC within six months (180 
days) of the end date of the time period covered by the funding 
commitment. In the Commission's experience, the HCF Program invoicing 
deadline has resulted in more efficient administration of the HCF 
Program's disbursement process, as well as faster funding timetables. 
It also provides specific guidance to applicants and service providers 
when submitting applications for universal service support. The 
Commission seeks comment on whether there are other ways to eliminate 
delays and lack of response from service providers in submitting 
invoices to USAC. The Commission invites commenters to also address the 
appropriate consequences should the service provider fail to submit an 
invoice to USAC in a timely manner.
2. Streamlining the RHC FCC Forms Application Process
    87. The Commission seeks comment on ways to streamline the data 
collection requirements as part of the FCC Forms for the RHC Program. 
Currently, the HCF and Telecom Programs each have their own online 
forms to collect information, leading to a total of seven FCC Forms. 
The use of multiple online forms for the RHC Program can cause 
confusion on the part of applicants and reduces the administrative 
efficiency of the application process. Applicants often must 
familiarize themselves with two sets of fairly intricate filing 
requirements. This complexity may lead many applicants to hire outside 
consultants to assist them in submitting the necessary information to 
seek funding under the RHC Program every year.
    88. As one means to streamline and improve the efficiency of the 
application process, while also reducing the administrative burden upon 
applicants, the Commission proposes condensing the RHC Program 
application process to use fewer online FCC Forms. The Commission 
proposes to use four forms--Eligibility Form, Request for Services 
Form, Request for Funding Form, and Invoicing/Funding Disbursement 
Form. Applicants could use the same online form whether applying under 
the Telecom or HCF Programs by indicating on each online form under 
which RHC Program they seek funding for services. Applicants thus would 
no longer have to switch between the online forms when applying for 
services under both the HCF and Telecom Programs. The Commission seeks 
comment on the feasibility of this proposal and whether certain data 
fields on the current online FCC Forms could impede this approach to 
simplify the application process. Also, are there data elements 
requested on the online forms that, in applicants' view, are no longer 
needed? The Commission welcomes alternative proposals to streamline the 
RHC FCC Forms application process to alleviate the burden upon 
applicants. Commenters should be detailed in their proposals as to 
which data elements should be eliminated and those that should continue 
to apply.
    89. SHLB suggests the Commission improve the processing of 
consortia applications and find ways to speed the processing of the 
various FCC HCF Forms and streamline the treatment of individual health 
care sites. Because the SHLB filings did not contain specific 
suggestions, and due to changes in the RHC Program procedures after the 
recent increase in demand, the Commission seeks comment here on how to 
improve the processing of consortia applications. What are the 
obstacles faced by commenters when filing consortia applications? From 
the applicants' perspective, what are the reasons for the delay in the 
review and processing of consortia applications? Are there ways in 
which the Commission can, in the instant rulemaking, facilitate USAC's 
ability to process consortia applications more

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quickly? Commenters should provide specific examples of the problems 
they encounter during the consortia application review process. At the 
same time, the Commission has directed USAC to ensure that funding is 
disbursed to eligible recipients for eligible services. Thus, any 
suggestions provided should account for the Commission's need to 
balance administrative efficiency with protecting against waste, fraud, 
and abuse.
3. Applying Lessons Learned From the HCF Program to the Telecom Program
    90. In this section, the Commission seeks comment on a number of 
proposals to bolster competitive bidding rules in the Telecom Program. 
These proposals are consistent with the Commission's goals to simplify 
the application and disbursement process for applicants and service 
providers, while also reducing the complexity of administering the 
Programs. Greater harmonization of the codified rules applying to both 
RHC Programs will also make the establishment of one set of application 
forms simpler. In some cases, this alignment of rules involves merely 
the codification of requirements that were laid out in preceding orders 
and, thus, should not be viewed as a change in applicant obligations.
a. Aligning the ``Fair and Open'' Competitive Bidding Standard
    91. To enhance RHC Program transparency and increase administrative 
efficiency, the Commission proposes to align the ``fair and open'' 
competitive bidding standard applied in each Program. Although this 
standard is codified under HCF Program rules, it is not codified under 
the Telecom Program, although numerous Commission orders state that an 
applicant must conduct a fair and open competitive bidding process 
prior to submitting a request for funding, and indeed, a process that 
is not ``fair and open'' is inherently inconsistent with ``competitive 
bidding.'' For consistency purposes, the Commission now seeks to codify 
this standard under the Telecom Program as well. Because the Commission 
is merely proposing to codify an existing requirement, RHC Program 
participants that are already complying with the Commission's 
competitive bidding rules should not be impacted. The Commission seeks 
comment on this proposal. The Commission also proposes to apply the 
``fair and open'' standard to all participants under each RHC Program, 
including applicants, service providers, and consultants, and require 
them to certify compliance with the standard. The Commission seeks 
comment on this proposal.
b. Aligning Competitive Bidding Exemptions in Both RHC Programs
    92. The Commission proposes to harmonize the Commission's rules 
that exempt certain applicants from the competitive bidding 
requirements in the Telecom and HCF Programs. Applicants qualifying for 
an exemption are not required to initiate a bidding process by 
preparing and posting an FCC Form 461 (in the HCF Program) or an FCC 
Form 465 (in the Telecom Program). Instead, qualifying applicants may 
proceed directly to filing a funding request in each respective 
Program. The Commission seeks comment on whether to apply the following 
HCF Program competitive bidding exemptions to the Telecom Program: (1) 
Applicants who are purchasing services and/or equipment from master 
services agreements (MSAs) negotiated by federal, state, Tribal, or 
local government entities on behalf of such applicants; (2) applicants 
purchasing services and/or equipment from an MSA that was subject to 
the HCF and Pilot Programs competitive bidding requirements; (3) 
applicants seeking support under a contract that was deemed 
``evergreen'' by USAC; and (4) applicants seeking support under an E-
rate contract that was competitively bid consistent with E-rate Program 
rules. With the exception of ``evergreen'' contracts, none of these 
exemptions apply in the Telecom Program. The Commission therefore seeks 
comment on whether to apply these exemptions, or variants thereof, to 
the Telecom Program. The Commission also seeks comment on whether other 
situations may warrant a competitive bidding exemption. In addition, to 
improve uniformity across both Programs, the Commission proposes to 
codify the existing ``evergreen'' contract exemption in the Telecom 
Program. The Commission seeks comment on this proposal.
c. Requiring Submission of Documentation With Requests for Services
    93. The Commission next proposes rules in the Telecom Program 
regarding the submission of competitive bidding documentation during 
the application process. Currently, after selecting a service provider 
in the Telecom Program, the applicant must submit to USAC paper copies 
of bids it received in response to its request for services (i.e., FCC 
Form 465). Under the rules applicable to the HCF Program, however, the 
applicant must submit as part of its request for services (i.e., FCC 
Form 461 or RFP, if applicable) certifications attesting to RHC Program 
compliance, bid evaluation criteria and a matrix demonstrating how it 
will choose a service provider, a declaration of assistance, and an RFP 
and network plan, if applicable. The Commission has found that 
requiring HCF Program applicants to provide this information up front 
with their requests for services makes the bid evaluation process more 
transparent for service providers seeking to bid and for USAC to 
review. Incorporating this requirement in the Telecom Program will 
likely yield similar benefits. The Commission therefore proposes to 
require Telecom Program applicants to provide, contemporaneously with 
their requests for services (i.e., FCC Forms 465 and/or RFPs), 
certifications attesting to their compliance with Telecom Program 
rules, bid evaluation criteria and worksheets demonstrating how they 
will select a service provider, and a declaration of assistance (if 
applicable). The Commission seeks comment on this proposal and whether 
requiring such information would be burdensome for applicants. For 
administrative ease, should the Commission revise the request for 
services forms in both Programs to include a scoring matrix for 
applicants to use in their vendor evaluations? Is there other 
documentation that should be included with the applicant's request for 
services to ensure that a fair and open procurement will take place?
d. Requiring Submission of Documentation With Funding Requests
    94. The Commission also proposes to change Telecom Program 
requirements regarding the types of documents that must accompany the 
applicant's funding requests. In the Telecom Program, the applicant 
must submit with its funding request (i.e., FCC Form 466) proof of the 
rural rate or cost of service, proof of the urban rate (if the 
applicant uses an urban rate other than what is posted on USAC's 
website), a copy of its signed service contract, and copies of all bids 
received in response to its request for services. Similarly, in the HCF 
Program, the applicant must submit with its funding request (i.e., FCC 
Form 462) certain certifications attesting to its compliance with HCF 
Program rules, a copy of its signed service contract, competitive 
bidding documentation, cost allocations, and other documentation for 
consortium applicants, if applicable. While this requirement is 
codified in the Commission's rules for the HCF

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Program, there is no analogous rule under the Telecom Program. 
Therefore, to improve uniformity and transparency across both Programs, 
the Commission proposes to codify the existing requirement that 
applicants provide supporting documentation with their funding requests 
in the Telecom Program. The Commission seeks comment on this proposal 
and, in particular, whether to require applicants to provide additional 
documentation contemporaneously with their funding requests. For 
example, the Commission proposes to require applicants to provide: (1) 
Certifications from applicants attesting to their compliance with 
Telecom Program rules; and, (2) competitive bidding documentation, 
including winning and losing bids, bid evaluation worksheets, memos, 
meeting minutes or similar documents related to the vendor selection, 
and copies of any correspondence with vendors prior to and during the 
bidding, evaluation, and award phases of the process. Requiring this 
documentation for both RHC Programs facilitates USAC's ability to 
determine whether the healthcare provider abided by its evaluation 
criteria in reviewing bids and ultimately selected the most cost-
effective service provider. This documentation also provides USAC with 
greater means to ensure and verify that Program participants are not 
engaging in fraudulent conduct, such as pre-bidding negotiations with 
potential service providers, or otherwise violating the Commission's 
competitive bidding rules, such as failing to comply with the 28-day 
waiting period. The Commission seeks comment on whether this 
requirement would be burdensome for applicants. Is there other 
supporting documentation that should be included with the applicant's 
request for funding to ensure that a fair and open procurement took 
place? The Commission also seeks comment on whether to require service 
providers to certify on each invoice submission that they have reviewed 
and complied with all applicable requirements for the program, 
including the applicable competitive bidding requirements.
e. Unifying Data Collection on RHC Program Support Impact
    95. As the Commission seeks to better monitor RHC Program 
effectiveness, the Commission seeks comment on whether all RHC Program 
participants should report on the telehealth applications (e.g., tele-
psychiatry, tele-stroke, transmission of EHRs, etc.) they provide over 
their supported communications services. Currently, consistent with the 
requirements in the HCF Order, only healthcare providers participating 
in HCF consortia are required to report annually about the telehealth 
applications they provide over their supported connections. 
Understanding how all RHC participants use their supported 
communications services would provide information about the role of the 
RHC Program in delivering telehealth services to rural areas. In 
addition, although USAC does currently obtain some information through 
the Telecom and HCF application process about the types of services, 
bandwidths, and prices associated with RHC Program participants, might 
it be useful to require RHC Program participants to report on this 
information in a way that more directly correlates to the telehealth 
applications for which the communications services will be used? The 
Commission seeks comment on incorporating lessons learned by the 
Connect2Health Task Force that could guide us in understanding future 
telehealth trends. Would it be useful, from a transparency perspective, 
to make this and any other information provided to USAC available to 
RHC Program participants? Moreover, would it be beneficial to see 
whether there are correlations between certain telehealth applications 
and certain communications services? Might awareness of such 
correlations, or lack thereof, facilitate decisions by this Commission 
and other policymakers in the future?
4. Managing Filing Window Periods
    96. In light of RHC Program growth and the potential for FY 2016 
demand to exceed the $400 million cap before the end of FY 2016, the 
Bureau established multiple filing window periods for FY 2016 and 
beyond, consistent with the Commission's rules. By establishing 
multiple filing window periods, the Bureau provided a mechanism for 
USAC to more efficiently administer the RHC Program and process 
requests while providing an incentive for applicants to timely submit 
their requests for funding. Additionally, the Bureau found that filing 
window periods provide a greater opportunity for healthcare providers 
to receive at least some support rather than none at all, even when 
demand exceeds the cap.
    97. The Commission proposes to continue with the filing window 
periods process established by the Bureau and USAC for administering 
RHC Program funds. The Commission believes this process furthers its 
goals of supporting health care delivery in as many parts of rural 
America as possible and provides USAC with a mechanism to more 
efficiently manage the application process. The Commission seeks 
comment on this proposal. The Commission seeks comment on any specific 
concerns regarding the current process and how to potentially adjust 
the current process to better align with applicants' business needs and 
filing schedules. The Commission also seeks comment on whether there is 
a more efficient way to manage requests for funding when the demand 
exceeds, or is likely to exceed, the funding cap. Commenters proposing 
an alternative to the current process should ensure that any 
alternative process distributes funding in a manner that is both 
equitable and administratively manageable.

III. Procedural Matters

A. Initial Regulatory Flexibility Analysis

    98. As required by the Regulatory Flexibility Act of 1980, as 
amended, the Commission has prepared an Initial Regulatory Flexibility 
Analysis (IRFA) for the Notice of Proposed Rulemaking (NPRM), of the 
possible significant economic impact on a substantial number of small 
entities by the policies and rules proposed in this NPRM. Written 
public comments are requested on this IRFA. Comments must be identified 
as responses to the IRFA and must be filed by the deadlines for 
comments on the NPRM. The Commission will send a copy of the NPRM, 
including this IRFA, to the Chief Counsel for Advocacy of the Small 
Business Administration. In addition, the NPRM and IRFA (or summaries 
thereof) will be published in the Federal Register.
1. Need for, and Objectives of, the Proposed Rules
    99. Through this NPRM, the Commission seeks to improve the Rural 
Health Care (RHC) Program's capacity to distribute telecommunications 
and broadband support to health care providers--especially small, rural 
healthcare providers (HCPs)--in the most equitable, effective, 
efficient, clear, and predictable manner as possible. Telemedicine has 
become an increasingly vital component of healthcare delivery to rural 
Americans and, in Funding Year (FY) 2016, for the first time in the RHC 
Program's twenty-year history, demand for support exceeded the $400 
million annual cap which necessitated reduced, pro rata distribution of 
support. In light of the significance and scarcity of RHC Program 
support, the Commission proposes and seeks comment on several measures 
to most effectively meet HCPs'

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needs while responsibly stewarding the RHC Program's limited funds.
2. Legal Basis
    100. The legal basis for the NPRM is contained in sections 1 
through 4, 201 through 205, 254, 303(r), and 403 of the Communications 
Act of 1934, as amended by the Telecommunications Act of 1996, 47 
U.S.C. 151 through 154, 201 through 205, 254, 303(r), and 403.
3. Description and Estimate of the Number of Small Entities to Which 
the Proposed Rules Will Apply
    101. The RFA directs agencies to provide a description of and, 
where feasible, an estimate of the number of small entities that may be 
affected by the proposed rules, if adopted. The RFA generally defines 
the term ``small entity'' as having the same meaning as the terms 
``small business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' under the Small Business 
Act. A small business concern is one that: (1) Is independently owned 
and operated; (2) is not dominant in its field of operation; and (3) 
satisfies any additional criteria established by the Small Business 
Administration (SBA).
    102. Small Businesses, Small Organizations, Small Governmental 
Jurisdictions. The Commission's actions, over time, may affect small 
entities that are not easily categorized at present. The Commission 
therefore describes here, at the outset, three broad groups of small 
entities that could be directly affected herein. First, while there are 
industry specific size standards for small businesses that are used in 
the regulatory flexibility analysis, according to data from the SBA's 
Office of Advocacy, in general a small business is an independent 
business having fewer than 500 employees. These types of small 
businesses represent 99.9 percent of all businesses in the United 
States which translates to 28.8 million businesses.
    103. Next, the type of small entity described as a ``small 
organization'' is generally ``any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field.'' 
Nationwide, as of Aug 2016, there were approximately 356,494 small 
organizations based on registration and tax data filed by nonprofits 
with the Internal Revenue Service (IRS).
    104. Finally, the small entity described as a ``small governmental 
jurisdiction'' is defined generally as ``governments of cities, 
counties, towns, townships, villages, school districts, or special 
districts, with a population of less than fifty thousand.'' U.S. Census 
Bureau data from the 2012 Census of Governments indicates that there 
were 90,056 local governmental jurisdictions consisting of general 
purpose governments and special purpose governments in the United 
States. Of this number there were 37,132 General purpose governments 
(county, municipal and town or township) with populations of less than 
50,000 and 12,184 Special purpose governments (independent school 
districts and special districts) with populations of less than 50,000. 
The 2012 U.S. Census Bureau data for most types of governments in the 
local government category shows that the majority of these governments 
have populations of less than 50,000. Based on this data the Commission 
estimates that at least 49,316 local government jurisdictions fall in 
the category of ``small governmental jurisdictions.''
    105. Small entities potentially affected by the proposals herein 
include eligible rural non-profit and public health care providers and 
the eligible service providers offering them services, including 
telecommunications service providers, internet Service Providers 
(ISPs), and vendors of the services and equipment used for dedicated 
broadband networks.
a. Healthcare Providers
    106. Offices of Physicians (except Mental Health Specialists). This 
U.S. industry comprises establishments of health practitioners having 
the degree of M.D. (Doctor of Medicine) or D.O. (Doctor of Osteopathy) 
primarily engaged in the independent practice of general or specialized 
medicine (except psychiatry or psychoanalysis) or surgery. These 
practitioners operate private or group practices in their own offices 
(e.g., centers, clinics) or in the facilities of others, such as 
hospitals or HMO medical centers. The SBA has created a size standard 
for this industry, which is annual receipts of $11 million or less. 
According to 2012 U.S. Economic Census, 152,468 firms operated 
throughout the entire year in this industry. Of that number, 147,718 
had annual receipts of less than $10 million, while 3,108 firms had 
annual receipts between $10 million and $24,999,999. Based on this 
data, the Commission concludes that a majority of firms operating in 
this industry are small under the applicable size standard.
    107. Offices of Physicians, Mental Health Specialists. This U.S. 
industry comprises establishments of health practitioners having the 
degree of M.D. (Doctor of Medicine) or D.O. (Doctor of Osteopathy) 
primarily engaged in the independent practice of psychiatry or 
psychoanalysis. These practitioners operate private or group practices 
in their own offices (e.g., centers, clinics) or in the facilities of 
others, such as hospitals or HMO medical centers. The SBA has 
established a size standard for businesses in this industry, which is 
annual receipts of $11 million dollars or less. The U.S. Economic 
Census indicates that 8,809 firms operated throughout the entire year 
in this industry. Of that number 8,791 had annual receipts of less than 
$10 million, while 13 firms had annual receipts between $10 million and 
$24,999,999. Based on this data, the Commission concludes that a 
majority of firms in this industry are small under the applicable 
standard.
    108. Offices of Dentists. This U.S. industry comprises 
establishments of health practitioners having the degree of D.M.D. 
(Doctor of Dental Medicine), D.D.S. (Doctor of Dental Surgery), or 
D.D.Sc. (Doctor of Dental Science) primarily engaged in the independent 
practice of general or specialized dentistry or dental surgery. These 
practitioners operate private or group practices in their own offices 
(e.g., centers, clinics) or in the facilities of others, such as 
hospitals or HMO medical centers. They can provide either comprehensive 
preventive, cosmetic, or emergency care, or specialize in a single 
field of dentistry. The SBA has established a size standard for that 
industry of annual receipts of $7.5 million or less. The 2012 U.S. 
Economic Census indicates that 115,268 firms operated in the dental 
industry throughout the entire year. Of that number 114,417 had annual 
receipts of less than $5 million, while 651 firms had annual receipts 
between $5 million and $9,999,999. Based on this data, the Commission 
concludes that a majority of business in the dental industry are small 
under the applicable standard.
    109. Offices of Chiropractors. This U.S. industry comprises 
establishments of health practitioners having the degree of DC (Doctor 
of Chiropractic) primarily engaged in the independent practice of 
chiropractic. These practitioners provide diagnostic and therapeutic 
treatment of neuromusculoskeletal and related disorders through the 
manipulation and adjustment of the spinal column and extremities, and 
operate private or group practices in their own offices (e.g., centers, 
clinics) or in the facilities of others, such as hospitals or HMO 
medical centers. The SBA has established a size standard for this 
industry, which is annual receipts

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of $7.5 million or less. The 2012 U.S. Economic Census statistics show 
that in 2012, 33,940 firms operated throughout the entire year. Of that 
number 33,910 operated with annual receipts of less than $5 million per 
year, while 26 firms had annual receipts between $5 million and 
$9,999,999. Based on that data, the Commission concludes that a 
majority of chiropractors are small.
    110. Offices of Optometrists. This U.S. industry comprises 
establishments of health practitioners having the degree of O.D. 
(Doctor of Optometry) primarily engaged in the independent practice of 
optometry. These practitioners examine, diagnose, treat, and manage 
diseases and disorders of the visual system, the eye and associated 
structures as well as diagnose related systemic conditions. Offices of 
optometrists prescribe and/or provide eyeglasses, contact lenses, low 
vision aids, and vision therapy. They operate private or group 
practices in their own offices (e.g., centers, clinics) or in the 
facilities of others, such as hospitals or HMO medical centers, and may 
also provide the same services as opticians, such as selling and 
fitting prescription eyeglasses and contact lenses. The SBA has 
established a size standard for businesses operating in this industry, 
which is annual receipts of $7.5 million or less. The 2012 Economic 
Census indicates that 18,050 firms operated the entire year. Of that 
number, 17,951 had annual receipts of less than $5 million, while 70 
firms had annual receipts between $5 million and $9,999,999. Based on 
this data, the Commission concludes that a majority of optometrists in 
this industry are small.
    111. Offices of Mental Health Practitioners (except Physicians). 
This U.S. industry comprises establishments of independent mental 
health practitioners (except physicians) primarily engaged in (1) the 
diagnosis and treatment of mental, emotional, and behavioral disorders 
and/or (2) the diagnosis and treatment of individual or group social 
dysfunction brought about by such causes as mental illness, alcohol and 
substance abuse, physical and emotional trauma, or stress. These 
practitioners operate private or group practices in their own offices 
(e.g., centers, clinics) or in the facilities of others, such as 
hospitals or HMO medical centers. The SBA has created a size standard 
for this industry, which is annual receipts of $7.5 million or less. 
The 2012 U.S. Economic Census indicates that 16,058 firms operated 
throughout the entire year. Of that number, 15,894 firms received 
annual receipts of less than $5 million, while 111 firms had annual 
receipts between $5 million and $9,999,999. Based on this data, the 
Commission concludes that a majority of mental health practitioners who 
do not employ physicians are small.
    112. Offices of Physical, Occupational and Speech Therapists and 
Audiologists. This U.S. industry comprises establishments of 
independent health practitioners primarily engaged in one of the 
following: (1) Providing physical therapy services to patients who have 
impairments, functional limitations, disabilities, or changes in 
physical functions and health status resulting from injury, disease or 
other causes, or who require prevention, wellness or fitness services; 
(2) planning and administering educational, recreational, and social 
activities designed to help patients or individuals with disabilities, 
regain physical or mental functioning or to adapt to their 
disabilities; and (3) diagnosing and treating speech, language, or 
hearing problems. These practitioners operate private or group 
practices in their own offices (e.g., centers, clinics) or in the 
facilities of others, such as hospitals or HMO medical centers. The SBA 
has established a size standard for this industry, which is annual 
receipts of $7.5 million or less. The 2012 U.S. Economic Census 
indicates that 20,567 firms in this industry operated throughout the 
entire year. Of this number, 20,047 had annual receipts of less than $5 
million, while 270 firms had annual receipts between $5 million and 
$9,999,999. Based on this data, the Commission concludes that a 
majority of businesses in this industry are small.
    113. Offices of Podiatrists. This U.S. industry comprises 
establishments of health practitioners having the degree of D.P.M. 
(Doctor of Podiatric Medicine) primarily engaged in the independent 
practice of podiatry. These practitioners diagnose and treat diseases 
and deformities of the foot and operate private or group practices in 
their own offices (e.g., centers, clinics) or in the facilities of 
others, such as hospitals or HMO medical centers. The SBA has 
established a size standard for businesses in this industry, which is 
annual receipts of $7.5 million or less. The 2012 U.S. Economic Census 
indicates that 7,569 podiatry firms operated throughout the entire 
year. Of that number, 7,545 firms had annual receipts of less than $5 
million, while 22 firms had annual receipts between $5 million and 
$9,999,999. Based on this data, the Commission concludes that a 
majority of firms in this industry are small.
    114. Offices of All Other Miscellaneous Health Practitioners. This 
U.S. industry comprises establishments of independent health 
practitioners (except physicians; dentists; chiropractors; 
optometrists; mental health specialists; physical, occupational, and 
speech therapists; audiologists; and podiatrists). These practitioners 
operate private or group practices in their own offices (e.g., centers, 
clinics) or in the facilities of others, such as hospitals or HMO 
medical centers. The SBA has established a size standard for this 
industry, which is annual receipts of $7.5 million or less. The 2012 
U.S. Economic Census indicates that 11,460 firms operated throughout 
the entire year. Of that number, 11,374 firms had annual receipts of 
less than $5 million, while 48 firms had annual receipts between $5 
million and $9,999,999. Based on this data, the Commission concludes 
the majority of firms in this industry are small.
    115. Family Planning Centers. This U.S. industry comprises 
establishments with medical staff primarily engaged in providing a 
range of family planning services on an outpatient basis, such as 
contraceptive services, genetic and prenatal counseling, voluntary 
sterilization, and therapeutic and medically induced termination of 
pregnancy. The SBA has established a size standard for this industry, 
which is annual receipts of $11 million or less. The 2012 Economic 
Census indicates that 1,286 firms in this industry operated throughout 
the entire year. Of that number 1,237 had annual receipts of less than 
$10 million, while 36 firms had annual receipts between $10 million and 
$24,999,999. Based on this data, the Commission concludes that the 
majority of firms in this industry are small.
    116. Outpatient Mental Health and Substance Abuse Centers. This 
U.S. industry comprises establishments with medical staff primarily 
engaged in providing outpatient services related to the diagnosis and 
treatment of mental health disorders and alcohol and other substance 
abuse. These establishments generally treat patients who do not require 
inpatient treatment. They may provide a counseling staff and 
information regarding a wide range of mental health and substance abuse 
issues and/or refer patients to more extensive treatment programs, if 
necessary. The SBA has established a size standard for this industry, 
which is $15 million or less in annual receipts. The 2012 U.S. Economic 
Census indicates that 4,446 firms operated throughout the entire year. 
Of that

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number, 4,069 had annual receipts of less than $10 million while 286 
firms had annual receipts between $10 million and $24,999,999. Based on 
this data, the Commission concludes that a majority of firms in this 
industry are small.
    117. HMO Medical Centers. This U.S. industry comprises 
establishments with physicians and other medical staff primarily 
engaged in providing a range of outpatient medical services to the 
health maintenance organization (HMO) subscribers with a focus 
generally on primary health care. These establishments are owned by the 
HMO. Included in this industry are HMO establishments that both provide 
health care services and underwrite health and medical insurance 
policies. The SBA has established a size standard for this industry, 
which is $32.5 million or less in annual receipts. The 2012 U.S. 
Economic Census indicates that 14 firms in this industry operated 
throughout the entire year. Of that number, 5 firms had annual receipts 
of less than $25 million, while 1 firm had annual receipts between $25 
million and $99,999,999. Based on this data, the Commission concludes 
that approximately one-third of the firms in this industry are small.
    118. Freestanding Ambulatory Surgical and Emergency Centers. This 
U.S. industry comprises establishments with physicians and other 
medical staff primarily engaged in (1) providing surgical services 
(e.g., orthoscopic and cataract surgery) on an outpatient basis or (2) 
providing emergency care services (e.g., setting broken bones, treating 
lacerations, or tending to patients suffering injuries as a result of 
accidents, trauma, or medical conditions necessitating immediate 
medical care) on an outpatient basis. Outpatient surgical 
establishments have specialized facilities, such as operating and 
recovery rooms, and specialized equipment, such as anesthetic or X-ray 
equipment. The SBA has established a size standard for this industry, 
which is annual receipts of $15 million or less. The 2012 U.S. Economic 
Census indicates that 3,595 firms in this industry operated throughout 
the entire year. Of that number, 3,222 firms had annual receipts of 
less than $10 million, while 289 firms had annual receipts between $10 
million and $24,999,999. Based on this data, the Commission concludes 
that a majority of firms in this industry are small.
    119. All Other Outpatient Care Centers. This U.S. industry 
comprises establishments with medical staff primarily engaged in 
providing general or specialized outpatient care (except family 
planning centers, outpatient mental health and substance abuse centers, 
HMO medical centers, kidney dialysis centers, and freestanding 
ambulatory surgical and emergency centers). Centers or clinics of 
health practitioners with different degrees from more than one industry 
practicing within the same establishment (i.e., Doctor of Medicine and 
Doctor of Dental Medicine) are included in this industry. The SBA has 
established a size standard for this industry, which is annual receipts 
of $20.5 million or less. The 2012 U.S. Economic Census indicates that 
4,903 firms operated in this industry throughout the entire year. Of 
this number, 4,269 firms had annual receipts of less than $10 million, 
while 389 firms had annual receipts between $10 million and 
$24,999,999. Based on this data, the Commission concludes that a 
majority of firms in this industry are small.
    120. Blood and Organ Banks. This U.S. industry comprises 
establishments primarily engaged in collecting, storing, and 
distributing blood and blood products and storing and distributing body 
organs. The SBA has established a size standard for this industry, 
which is annual receipts of $32.5 million or less. The 2012 U.S. 
Economic Census indicates that 314 firms operated in this industry 
throughout the entire year. Of that number, 235 operated with annual 
receipts of less than $25 million, while 41 firms had annual receipts 
between $25 million and $49,999,999. Based on this data, the Commission 
concludes that approximately three-quarters of firms that operate in 
this industry are small.
    121. All Other Miscellaneous Ambulatory Health Care Services. This 
U.S. industry comprises establishments primarily engaged in providing 
ambulatory health care services (except offices of physicians, 
dentists, and other health practitioners; outpatient care centers; 
medical and diagnostic laboratories; home health care providers; 
ambulances; and blood and organ banks). The SBA has established a size 
standard for this industry, which is annual receipts of $15 million or 
less. The 2012 U.S. Economic Census indicates that 2,429 firms operated 
in this industry throughout the entire year. Of that number, 2,318 had 
annual receipts of less than $10 million, while 56 firms had annual 
receipts between $10 million and $24,999,999. Based on this data, the 
Commission concludes that a majority of the firms in this industry are 
small.
    122. Medical Laboratories. This U.S. industry comprises 
establishments known as medical laboratories primarily engaged in 
providing analytic or diagnostic services, including body fluid 
analysis, generally to the medical profession or to the patient on 
referral from a health practitioner. The SBA has established a size 
standard for this industry, which is annual receipts of $32.5 million 
or less. The 2012 U.S. Economic Census indicates that 2,599 firms 
operated in this industry throughout the entire year. Of this number, 
2,465 had annual receipts of less than $25 million, while 60 firms had 
annual receipts between $25 million and $49,999,999. Based on this 
data, the Commission concludes that a majority of firms that operate in 
this industry are small.
    123. Diagnostic Imaging Centers. This U.S. industry comprises 
establishments known as diagnostic imaging centers primarily engaged in 
producing images of the patient generally on referral from a health 
practitioner. The SBA has established size standard for this industry, 
which is annual receipts of $15 million or less. The 2012 U.S. Economic 
Census indicates that 4,209 firms operated in this industry throughout 
the entire year. Of that number, 3,876 firms had annual receipts of 
less than $10 million, while 228 firms had annual receipts between $10 
million and $24,999,999. Based on this data, the Commission concludes 
that a majority of firms that operate in this industry are small.
    124. Home Health Care Services. This U.S. industry comprises 
establishments primarily engaged in providing skilled nursing services 
in the home, along with a range of the following: Personal care 
services; homemaker and companion services; physical therapy; medical 
social services; medications; medical equipment and supplies; 
counseling; 24-hour home care; occupation and vocational therapy; 
dietary and nutritional services; speech therapy; audiology; and high-
tech care, such as intravenous therapy. The SBA has established a size 
standard for this industry, which is annual receipts of $15 million or 
less. The 2012 U.S. Economic Census indicates that 17,770 firms 
operated in this industry throughout the entire year. Of that number, 
16,822 had annual receipts of less than $10 million, while 590 firms 
had annual receipts between $10 million and $24,999,999. Based on this 
data, the Commission concludes that a majority of firms that operate in 
this industry are small.
    125. Ambulance Services. This U.S. industry comprises 
establishments primarily engaged in providing transportation of 
patients by ground or air, along with medical care. These services are 
often provided during a

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medical emergency but are not restricted to emergencies. The vehicles 
are equipped with lifesaving equipment operated by medically trained 
personnel. The SBA has established a size standard for this industry, 
which is annual receipts of $15 million or less. The 2012 U.S. Economic 
Census indicates that 2,984 firms operated in this industry throughout 
the entire year. Of that number, 2,926 had annual receipts of less than 
$15 million, while 133 firms had annual receipts between $10 million 
and $24,999,999. Based on this data, the Commission concludes that a 
majority of firms in this industry are small.
    126. Kidney Dialysis Centers. This U.S. industry comprises 
establishments with medical staff primarily engaged in providing 
outpatient kidney or renal dialysis services. The SBA has established 
assize standard for this industry, which is annual receipts of $38.5 
million or less. The 2012 U.S. Economic Census indicates that 396 firms 
operated in this industry throughout the entire year. Of that number, 
379 had annual receipts of less than $25 million, while 7 firms had 
annual receipts between $25 million and $49,999,999 Based on this data, 
the Commission concludes that a majority of firms in this industry are 
small.
    127. General Medical and Surgical Hospitals. This U.S. industry 
comprises establishments known and licensed as general medical and 
surgical hospitals primarily engaged in providing diagnostic and 
medical treatment (both surgical and nonsurgical) to inpatients with 
any of a wide variety of medical conditions. These establishments 
maintain inpatient beds and provide patients with food services that 
meet their nutritional requirements. These hospitals have an organized 
staff of physicians and other medical staff to provide patient care 
services. These establishments usually provide other services, such as 
outpatient services, anatomical pathology services, diagnostic X-ray 
services, clinical laboratory services, operating room services for a 
variety of procedures, and pharmacy services. The SBA has established a 
size standard for this industry, which is annual receipts of $38.5 
million or less. The 2012 U.S. Economic Census indicates that 2,800 
firms operated in this industry throughout the entire year. Of that 
number, 877 has annual receipts of less than $25 million, while 400 
firms had annual receipts between $25 million and $49,999,999. Based on 
this data, the Commission concludes that approximately one-quarter of 
firms in this industry are small.
    128. Psychiatric and Substance Abuse Hospitals. This U.S. industry 
comprises establishments known and licensed as psychiatric and 
substance abuse hospitals primarily engaged in providing diagnostic, 
medical treatment, and monitoring services for inpatients who suffer 
from mental illness or substance abuse disorders. The treatment often 
requires an extended stay in the hospital. These establishments 
maintain inpatient beds and provide patients with food services that 
meet their nutritional requirements. They have an organized staff of 
physicians and other medical staff to provide patient care services. 
Psychiatric, psychological, and social work services are available at 
the facility. These hospitals usually provide other services, such as 
outpatient services, clinical laboratory services, diagnostic X-ray 
services, and electroencephalograph services. The SBA has established a 
size standard for this industry, which is annual receipts of $38.5 
million or less. The 2012 U.S. Economic Census indicates that 404 firms 
operated in this industry throughout the entire year. Of that number, 
185 had annual receipts of less than $25 million, while 107 firms had 
annual receipts between $25 million and $49,999,999. Based on this 
data, the Commission concludes that more than one-half of the firms in 
this industry are small.
    129. Specialty (Except Psychiatric and Substance Abuse) Hospitals. 
This U.S. industry consists of establishments known and licensed as 
specialty hospitals primarily engaged in providing diagnostic, and 
medical treatment to inpatients with a specific type of disease or 
medical condition (except psychiatric or substance abuse). Hospitals 
providing long-term care for the chronically ill and hospitals 
providing rehabilitation, restorative, and adjustive services to 
physically challenged or disabled people are included in this industry. 
These establishments maintain inpatient beds and provide patients with 
food services that meet their nutritional requirements. They have an 
organized staff of physicians and other medical staff to provide 
patient care services. These hospitals may provide other services, such 
as outpatient services, diagnostic X-ray services, clinical laboratory 
services, operating room services, physical therapy services, 
educational and vocational services, and psychological and social work 
services. The SBA has established a size standard for this industry, 
which is annual receipts of $38.5 million or less. The 2012 U.S. 
Economic Census indicates that 346 firms operated in this industry 
throughout the entire year. Of that number, 146 firms had annual 
receipts of less than $25 million, while 79 firms had annual receipts 
between $25 million and $49,999,999. Based on this data, the Commission 
concludes that more than one-half of the firms in this industry are 
small.
    130. Emergency and Other Relief Services. This industry comprises 
establishments primarily engaged in providing food, shelter, clothing, 
medical relief, resettlement, and counseling to victims of domestic or 
international disasters or conflicts (e.g., wars). The SBA has 
established a size standard for this industry which is annual receipts 
of $32.5 million or less. The 2012 U.S. Economic Census indicates that 
541 firms operated in this industry throughout the entire year. Of that 
number, 509 had annual receipts of less than $25 million, while 7 firms 
had annual receipts between $25 million and $49,999,999. Based on this 
data, the Commission concludes that a majority of firms in this 
industry are small
b. Providers of Telecommunications and Other Services
(i) Telecommunications Service Providers
    131. Incumbent Local Exchange Carriers (LECs). Neither the 
Commission nor the SBA has developed a small business size standard 
specifically for incumbent local exchange services. The closest 
applicable NAICS Code category is Wired Telecommunications Carriers and 
under the SBA size standard, such a business is small if it has 1,500 
or fewer employees. U.S. Census Bureau data for 2012 indicates that 
3,117 firms operated during that year. Of this total, 3,083 operated 
with fewer than 1,000 employees. Consequently, the Commission estimates 
that most providers of incumbent local exchange service are small 
businesses that may be affected by its actions. According to Commission 
data, one thousand three hundred and seven (1,307) Incumbent Local 
Exchange Carriers reported that they were incumbent local exchange 
service providers. Of this total, an estimated 1,006 have 1,500 or 
fewer employees. Thus using the SBA's size standard the majority of 
Incumbent LECs can be considered small entities.
    132. Interexchange Carriers (IXCs). Neither the Commission nor the 
SBA has developed a definition of small entities specifically 
applicable to providers of interexchange services (IXCs). The closest 
NAICS Code category is Wired Telecommunications

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Carriers and the applicable size standard under SBA rules consists of 
all such companies having 1,500 or fewer employees. U.S. Census Bureau 
data for 2012 indicates that 3,117 firms operated during that year. Of 
that number, 3,083 operated with fewer than 1,000 employees. According 
to internally developed Commission data, 359 companies reported that 
their primary telecommunications service activity was the provision of 
interexchange services. Of this total, an estimated 317 have 1,500 or 
fewer employees. Consequently, the Commission estimates that the 
majority of interexchange service providers that may be affected are 
small entities.
    133. Competitive Access Providers. Neither the Commission nor the 
SBA has developed a definition of small entities specifically 
applicable to competitive access services providers (CAPs). The closest 
applicable definition under the SBA rules is Wired Telecommunications 
Carriers and under the size standard, such a business is small if it 
has 1,500 or fewer employees. U.S. Census Bureau data for 2012 
indicates that 3,117 firms operated during that year. Of that number, 
3,083 operated with fewer than 1,000 employees. Consequently, the 
Commission estimates that most competitive access providers are small 
businesses that may be affected by its actions. According to Commission 
data the 2010 Trends in Telephone Report (rel. September 30, 2010), 
1,442 CAPs and competitive local exchange carriers (competitive LECs) 
reported that they were engaged in the provision of competitive local 
exchange services. Of these 1,442 CAPs and competitive LECs, an 
estimated 1,256 have 1,500 or few employees and 186 have more than 
1,500 employees. Consequently, the Commission estimates that most 
providers of competitive exchange services are small businesses.
    134. Wired Telecommunications Carriers. The U.S. Census Bureau 
defines this industry as ``establishments primarily engaged in 
operating and/or providing access to transmission facilities and 
infrastructure that they own and/or lease for the transmission of 
voice, data, text, sound, and video using wired communications 
networks. Transmission facilities may be based on a single technology 
or a combination of technologies. Establishments in this industry use 
the wired telecommunications network facilities that they operate to 
provide a variety of services, such as wired telephony services, 
including VoIP services, wired (cable) audio and video programming 
distribution, and wired broadband internet services. By exception, 
establishments providing satellite television distribution services 
using facilities and infrastructure that they operate are included in 
this industry.'' The SBA has developed a small business size standard 
for Wired Telecommunications Carriers, which consists of all such 
companies having 1,500 or fewer employees. U.S. Census data for 2012 
shows that there were 3,117 firms that operated that year. Of this 
total, 3,083 operated with fewer than 1,000 employees. Thus, under this 
size standard, the majority of firms in this industry can be considered 
small.
    135. Wireless Telecommunications Carriers (except Satellite). This 
industry comprises establishments engaged in operating and maintaining 
switching and transmission facilities to provide communications via the 
airwaves. Establishments in this industry have spectrum licenses and 
provide services using that spectrum, such as cellular services, paging 
services, wireless internet access, and wireless video services. The 
appropriate size standard under SBA rules is that such a business is 
small if it has 1,500 or fewer employees. For this industry, U.S. 
Census Bureau data for 2012 shows that there were 967 firms that 
operated for the entire year. Of this total, 955 firms had employment 
of 999 or fewer employees and 12 had employment of 1000 employees or 
more. Thus under this category and the associated size standard, the 
Commission estimates that the majority of wireless telecommunications 
carriers (except satellite) are small entities.
    136. The Commission's own data--available in its Universal 
Licensing System--indicate that, as of October 25, 2016, there are 280 
Cellular licensees that will be affected by the Commissions actions. 
The Commission does not know how many of these licensees are small, as 
the Commission does not collect that information for these types of 
entities. Similarly, according to internally developed Commission data, 
413 carriers reported that they were engaged in the provision of 
wireless telephony, including cellular service, Personal Communications 
Service (PCS), and Specialized Mobile Radio (SMR) Telephony services. 
Of this total, an estimated 261 have 1,500 or fewer employees, and 152 
have more than 1,500 employees. Thus, using available data, the 
Commission estimates that the majority of wireless firms can be 
considered small.
    137. Wireless Telephony. Wireless telephony includes cellular, 
personal communications services, and specialized mobile radio 
telephony carriers. The closest applicable SBA category is Wireless 
Telecommunications Carriers (except Satellite) and the appropriate size 
standard for this category under the SBA rules is that such a business 
is small if it has 1,500 or fewer employees. For this industry, U.S. 
Census Bureau data for 2012 shows that there were 967 firms that 
operated for the entire year. Of this total, 955 firms had fewer than 
1,000 employees and 12 firms has 1000 employees or more. Thus under 
this category and the associated size standard, the Commission 
estimates that a majority of these entities can be considered small. 
According to Commission data, 413 carriers reported that they were 
engaged in wireless telephony. Of these, an estimated 261 have 1,500 or 
fewer employees and 152 have more than 1,500 employees. Therefore, more 
than half of these entities can be considered small.
    138. Satellite Telecommunications. This category comprises firms 
``primarily engaged in providing telecommunications services to other 
establishments in the telecommunications and broadcasting industries by 
forwarding and receiving communications signals via a system of 
satellites or reselling satellite telecommunications.'' Satellite 
telecommunications service providers include satellite and earth 
station operators. The category has a small business size standard of 
$32.5 million or less in average annual receipts, under SBA rules. For 
this category, U.S. Census Bureau data for 2012 shows that there were a 
total of 333 firms that operated for the entire year. Of this total, 
299 firms had annual receipts of less than $25 million. Consequently, 
the Commission estimates that the majority of satellite 
telecommunications providers are small entities.
    139. All Other Telecommunications. The ``All Other 
Telecommunications'' category is comprised of establishments that are 
primarily engaged in providing specialized telecommunications services, 
such as satellite tracking, communications telemetry, and radar station 
operation. This industry also includes establishments primarily engaged 
in providing satellite terminal stations and associated facilities 
connected with one or more terrestrial systems and capable of 
transmitting telecommunications to, and receiving telecommunications 
from, satellite systems. Establishments providing internet services or 
voice over internet protocol (VoIP) services via client-supplied 
telecommunications connections are also included in this industry. The 
SBA has developed a

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small business size standard for ``All Other Telecommunications,'' 
which consists of all such firms with gross annual receipts of $32.5 
million or less. For this category, U.S. Census Bureau data for 2012 
shows that there were 1,442 firms that operated for the entire year. Of 
these firms, a total of 1,400 had gross annual receipts of less than 
$25 million and 42 firms had gross annual receipts of $25 million to 
$49, 999,999. Thus, the Commission estimates that a majority of ``All 
Other Telecommunications'' firms potentially affected by its action can 
be considered small.
(ii) Internet Service Providers
    140. Internet Service Providers (Broadband). Broadband internet 
service providers include wired (e.g., cable, DSL) and VoIP service 
providers using their own operated wired telecommunications 
infrastructure fall in the category of Wired Telecommunication 
Carriers. Wired Telecommunications Carriers are comprised of 
establishments primarily engaged in operating and/or providing access 
to transmission facilities and infrastructure that they own and/or 
lease for the transmission of voice, data, text, sound, and video using 
wired telecommunications networks. Transmission facilities may be based 
on a single technology or a combination of technologies. The SBA size 
standard for this category classifies a business as small if it has 
1,500 or fewer employees. U.S. Census Bureau data for 2012 shows that 
there were 3,117 firms that operated that year. Of this total, 3,083 
operated with fewer than 1,000 employees. Consequently, under this size 
standard the majority of firms in this industry can be considered 
small.
    141. Internet Service Providers (Non-Broadband). Internet access 
service providers such as Dial-up internet service providers, VoIP 
service providers using client-supplied telecommunications connections 
and internet service providers using client-supplied telecommunications 
connections (e.g., dial-up ISPs) fall in the category of All Other 
Telecommunications. The SBA has developed a small business size 
standard for All Other Telecommunications which consists of all such 
firms with gross annual receipts of $32.5 million or less. For this 
category, U.S. Census Bureau data for 2012 shows that there were 1,442 
firms that operated for the entire year. Of these firms, a total of 
1,400 had gross annual receipts of less than $25 million. Consequently, 
under this size standard a majority of firms in this industry can be 
considered small.
c. Vendors and Equipment Manufacturers
    142. Vendors of Infrastructure Development or ``Network Buildout.'' 
The Commission has not developed a small business size standard 
specifically directed toward manufacturers of network facilities. There 
are two applicable SBA categories in which manufacturers of network 
facilities could fall and each have different size standards under the 
SBA rules. The SBA categories are ``Radio and Television Broadcasting 
and Wireless Communications Equipment'' with a size standard of 1,250 
employees or less and ``Other Communications Equipment Manufacturing'' 
with a size standard of 750 employees or less.'' U.S. Census Bureau 
data for 2012 shows that for Radio and Television Broadcasting and 
Wireless Communications Equipment firms 841 establishments operated for 
the entire year. Of that number, 828 establishments operated with fewer 
than 1,000 employees, 7 establishments operated with between 1,000 and 
2,499 employees and 6 establishments operated with 2,500 or more 
employees. For Other Communications Equipment Manufacturing, U.S. 
Census Bureau data for 2012 shows that 383 establishments operated for 
the year. Of that number 379 firms operated with fewer than 500 
employees and 4 had 500 to 999 employees. Based on this data, the 
Commission concludes that the majority of Vendors of Infrastructure 
Development or ``Network Buildout'' are small.
    143. Telephone Apparatus Manufacturing. This industry comprises 
establishments primarily engaged in manufacturing wire telephone and 
data communications equipment. These products may be standalone or 
board-level components of a larger system. Examples of products made by 
these establishments are central office switching equipment, cordless 
telephones (except cellular), PBX equipment, telephones, telephone 
answering machines, LAN modems, multi-user modems, and other data 
communications equipment, such as bridges, routers, and gateways.'' The 
SBA size standard for Telephone Apparatus Manufacturing is all such 
firms having 1,250 or fewer employees. According to U.S. Census Bureau 
data for 2012, there were a total of 266 establishments in this 
category that operated for the entire year. Of this total, 262 had 
employment of under 1,000, and an additional 4 had employment of 1,000 
to 2,499. Thus, under this size standard, the majority of firms can be 
considered small.
    144. Radio and Television Broadcasting and Wireless Communications 
Equipment Manufacturing. This industry comprises establishments 
primarily engaged in manufacturing radio and television broadcast and 
wireless communications equipment. Examples of products made by these 
establishments are: Transmitting and receiving antennas, cable 
television equipment, GPS equipment, pagers, cellular phones, mobile 
communications equipment, and radio and television studio and 
broadcasting equipment. The SBA has established a small business size 
standard for this industry of 1,250 employees or less. U.S. Census 
Bureau data for 2012 shows that 841 establishments operated in this 
industry in that year. Of that number, 828 establishments operated with 
fewer than 1,000 employees, 7 establishments operated with between 
1,000 and 2,499 employees and 6 establishments operated with 2,500 or 
more employees. Based on this data, the Commission concludes that a 
majority of manufacturers in this industry are small.
    145. Other Communications Equipment Manufacturing. This industry 
comprises establishments primarily engaged in manufacturing 
communications equipment (except telephone apparatus, and radio and 
television broadcast, and wireless communications equipment). Examples 
of such manufacturing include fire detection and alarm systems 
manufacturing, Intercom systems and equipment manufacturing, and 
signals (e.g., highway, pedestrian, railway, traffic) manufacturing. 
The SBA has established a size for this industry as all such firms 
having 750 or fewer employees. U.S. Census Bureau data for 2012 shows 
that 383 establishments operated in that year. Of that number 379 
operated with fewer than 500 employees and 4 had 500 to 999 employees. 
Based on this data, the Commission concludes that the majority of Other 
Communications Equipment Manufacturers are small.
4. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements for Small Entities
    146. The reporting, recordkeeping, and other compliance 
requirements proposed in this NPRM likely would positively and 
negatively financially impact both large and small entities, including 
healthcare providers and service providers, and any resulting financial 
burdens may

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disproportionately impact small entities given their typically more 
limited resources. In weighing the likely financial benefits and 
burdens of the Commission's proposed requirements, however, the 
determination that its proposed changes would result in more equitable, 
effective, efficient, clear, and predictable distribution of RHC 
support, far outweighing any resultant financial burdens on small 
entity participants.
    147. Provision of Rate Information in the Telecom Program. Because 
the service provider can most easily access rate information, the 
Commission proposes that both the rural and urban rates used in the 
discount calculation be provided by the service provider to the HCP and 
submitted by the HCP in its application.
    148. Application Documentation. The Commission proposes to require 
Telecom Program applicants to provide, contemporaneously with their 
requests for services (i.e., FCC Form 465 and/or RFPs), certifications 
attesting to their compliance with Telecom Program rules; bid 
evaluation criteria and worksheets demonstrating how they will select a 
service provider; and a declaration of assistance (if applicable). The 
Commission seeks comment on this proposal and whether requiring such 
information would be burdensome for applicants.
    149. Consultant and Invoicing Requirements. To harmonize the 
Commission's rules under the Telecom and HCF Programs, and to ensure 
sufficient program oversight, efficiency, and certainty, the Commission 
proposes a new rule in the Telecom Program containing a ``declaration 
of assistance'' requirement similar to that in the HCF Program. The 
Commission also proposes a new rule establishing the same six-month 
invoicing deadline for the Telecom Program as that applicable in the 
HCF Program.
    150. Unifying Data Collection on RHC Program Support Impact. As the 
Commission seeks to better monitor RHC Program effectiveness, the 
Commission seeks comment on whether all RHC Program participants should 
report on the telehealth applications (e.g., tele-psychiatry, tele-
stroke, transmission of EHRs, etc.) they provide over the supported 
communications services. Currently, only healthcare providers 
participating in HCF consortia are required to report annually about 
the telehealth applications they provide over their supported 
connections.
5. Steps Taken To Minimize the Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered
    151. The RFA requires an agency to describe any significant, 
specifically small business, alternatives that it has considered in 
reaching its proposed approach, which may include the following four 
alternatives (among others): ``(1) The establishment of differing 
compliance or reporting requirements or timetables that take into 
account the resources available to small entities; (2) the 
clarification, consolidation, or simplification of compliance and 
reporting requirements under the rule for such small entities; (3) the 
use of performance rather than design standards; and (4) an exemption 
from coverage of the rule, or any part thereof, for such small 
entities.''
    152. As indicated above, in this NPRM, while the Commission 
proposes several changes that could increase the economic burden on 
small entities, the Commission also proposes many changes that would 
streamline and simplify the application process; maximize efficient and 
fair distribution of support; and increase support for small entities 
relative to their larger counterparts, thereby decreasing the net 
economic burden on small entities. In the instances in which a proposed 
change would increase the financial burden on small entities, the 
Commission has determined that the net financial and other benefits 
from such changes would outweigh the increased burdens on small 
entities.
    153. Addressing RHC Program Funding Levels. To increase RHC program 
support, and thereby increase support available for rural, mostly 
small, healthcare providers, the Commission seeks comment on several 
measures, including whether to: (1) Prospectively increase the $400 
million annual RHC Program support cap, such as via an inflation 
adjustment or some other method; (2) retroactively increase the FY 2017 
RHC Program support cap; and (3) ``roll over'' unused funds committed 
in one funding year into a subsequent funding year.
    154. Prioritizing Funding if Demand Reaches the Cap. To more 
appropriately target RHC support if demand exceeds the $400 million 
annual cap, the Commission seeks comment on whether to prioritize 
funding requests from HCPs based on: Rurality or remoteness of the area 
served; which Program (Telecom or HCF); type of services requested; 
economic need of the population served; and/or health care professional 
shortage area status.
    155. Targeting Support to Rural and Tribal HCPs. Recognizing that 
the primary emphasis of the RHC Program is to defray the cost of 
supported services for rural HCPs, which most often are small HCPs, the 
Commission seeks comment on increasing the HCF Program consortia 
``majority rural'' HCP requirement from a ``more than 50 percent rural 
HCPs'' threshold to some higher percentage. The Commission also seeks 
comment on eliminating the three-year grace period during which HCF 
consortia may come into compliance with the ``majority rural'' 
requirement. Additionally, the Commission seeks comment on requiring a 
direct healthcare-related relationship between a consortium's non-rural 
and rural healthcare providers. And, the Commission seeks comment from 
Tribal governments in particular on whether these proposals would 
impact Tribal populations, and what other measures would help ensure 
that adequate Telecom and HCF Program support is directed toward rural 
HCPs on Tribal lands.
    156. Controlling Outlier Costs. To ensure efficient and equitable 
funding distribution, the Commission seeks comment on establishing 
objective benchmarks to identify and scrutinize particularly high 
funding requests in the Telecom Program, using information already 
provided by participants to USAC. As an alternative to this proposed 
enhanced review, the Commission seeks comment on capping high-support 
funding requests in the Telecom Program to enable funding distribution 
to more HCPs.
    157. Rate Calculations. To minimize potential rate variances and 
manipulations, the Commission seeks comment on establishing more 
detailed requirements about how the urban and rural rates are 
determined in the Telecom Program. The Commission also proposes to 
eliminate the Telecom Program's distance-based support calculation 
approach in light of its limited use and the administrative benefits 
for HCPs and service providers that would result from using one 
standardized support calculation methodology.
    158. Defining ``Cost Effective.'' To improve Program uniformity and 
safeguard against wasteful or abusive spending, the Commission seeks 
comment on defining ``cost-effectiveness'' in both Programs as the 
``lowest-price service that meets the minimum requirements for the 
products and services that are essential to satisfy the communications 
needs of the applicant.''

[[Page 324]]

    159. Clarification of Gift Prohibition. To provide clarity to RHC 
Program participants and ensure a fair competitive bidding process, the 
Commission proposes to codify a gift rule similar to the E-rate Program 
rule, which, consistent with the gift rules applicable to federal 
agencies, permits only certain de minimis gifts from service providers 
to applicants. While gifts from service providers to RHC Program 
applicants already are considered to be violations of the Commission's 
competitive bidding rules, the Commission believes that codifying the 
existing gift prohibition will provide applicants and service providers 
with enhanced clarity and understanding of this safeguard on program 
integrity.
    160. Streamlining and Harmonizing the Application Process. To 
streamline the application process and reduce the administrative burden 
upon applicants, the Commission proposes that applicants use 
consolidated forms for both the Telecom and HCP Programs (Eligibility, 
Request for Services, Request for Funding, and Invoicing/Funding 
Disbursement), instead of the current requirement that separate forms 
be used for each program. To harmonize the Commission's Telecom and HCF 
Program rules and to ensure sufficient program oversight, efficiency, 
and certainty, the Commission proposes a new rule in the Telecom 
Program containing a ``declaration of assistance'' requirement similar 
to that in the HCF Program. The Commission also proposes a new rule 
establishing the same six-month invoicing deadline for the Telecom 
Program as that applicable in the HCF Program.
    161. Competitive Bidding Requirements. To enhance RHC Program 
transparency and increase administrative efficiency, the Commission 
proposes to align the ``fair and open'' competitive bidding standard 
applied in each program by codifying this standard in the Telecom 
Program. While this standard is codified in HCF Program rules, it is 
not yet codified in Telecom Program rules, although numerous Commission 
orders clearly state that a Telecom Program applicant must conduct a 
fair and open competitive bidding process prior to submitting a funding 
request.
    162. Competitive Bidding Exemptions. The Commission proposes to 
harmonize the Commission's rules that exempt certain applicants from 
the competitive bidding requirements in the Telecom and HCF Programs. 
Currently, there are five exemptions to the HCF Program's competitive 
bidding requirements: (1) Applicants purchasing services and/or 
equipment from master services agreements (MSAs) negotiated by federal, 
state, Tribal, or local government entities on behalf of such 
applicants; (2) applicants purchasing services and/or equipment from an 
MSA that was subject to the HCF and Pilot Program competitive bidding 
requirements; (3) applicants seeking support under a contract deemed 
``evergreen'' by USAC; and (4) applicants seeking support under an E-
rate contract that was competitively bid consistent with E-rate Program 
rules. With the exception of ``evergreen'' contracts, none of these 
exemptions apply in the Telecom Program. The Commission therefore seeks 
comment on whether to apply these exemptions, or variants thereof, to 
the Telecom Program, and ask whether other situations may warrant 
competitive bidding exemptions. In addition, to improve uniformity 
across both Programs, the Commission proposes to codify the existing 
``evergreen'' contract exemption in the Telecom Program.
    163. Competitive Bidding Documentation. To harmonize the Telecom 
Program's competitive bidding documentation requirements with those in 
the HCF Program, which should simplify the application process for HCPs 
and service providers, the Commission proposes to require Telecom 
Program applicants to provide, contemporaneously with their requests 
for services (i.e., FCC Forms 465 and/or RFPs), certifications 
attesting to their compliance with Telecom Program rules; bid 
evaluation criteria and worksheets demonstrating how they will select a 
service provider; and a declaration of assistance (if applicable). The 
Commission seeks comment on this proposal and whether requiring such 
information would be burdensome for applicants.
    164. Funding Request Supporting Documentation. To improve 
uniformity and transparency across both Programs, the Commission 
proposes to codify the existing requirement that applicants provide 
supporting documentation with their funding requests in the Telecom 
Program. While this requirement is codified in the Commission's rules 
for the HCF Program, there is not yet an analogous rule under the 
Telecom Program.
    165. Funding Request Filing Windows. In light of RHC Program growth 
and the potential for FY 2016 demand to exceed the $400 million cap 
before the end of FY 2016, the Wireline Competition Bureau (Bureau) 
established multiple filing window periods for FY 2016 and beyond, 
consistent with the Commission's rules. By establishing multiple filing 
window periods, the Bureau provided a mechanism for USAC to more 
efficiently administer the Program and process requests while providing 
an incentive for applicants to timely submit their funding requests. 
Additionally, the Bureau found that filing window periods provide a 
greater opportunity for HCPs to receive at least some support rather 
than none at all, even when demand exceeds the cap. The Commission 
proposes to continue the filing-window process and believe that it 
furthers its goals of supporting health care delivery in as many parts 
of rural America as possible and more efficiently managing the 
application process.
    166. Companion Order to Carry Forward Unused Support and Allow 
Voluntary Price Reductions. In addition to the NPRM's proposed changes 
that, if adopted, would minimize the net economic burden on small 
entities, the Commission also takes targeted, immediate action to 
mitigate the potential negative impact of the existing RHC Program 
annual support cap on rural, usually small, healthcare providers in FY 
2017. Specifically, in the event of a proration of FY 2017 RHC support, 
the Commission directs USAC to carry forward for use in FY 2017 any 
available RHC Program funds from prior funding years and, on a one-time 
basis, commit these funds to rural, typically small, healthcare 
providers participating in the RHC Program in FY 2017. In the event of 
FY 2017 support proration, service providers to reduce their service 
prices charged to participating healthcare providers and thereby 
further minimize the negative financial impact of a FY 2017 proration 
on participating healthcare providers.
6. Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rules
    167. None.

B. Initial Paperwork Reduction Act Analysis

    168. The NPRM seeks comment on a potential new or revised 
information collection requirement. If the Commission adopts any new or 
revised information collection requirement, the Commission will publish 
a separate notice in the Federal Register inviting the public to 
comment on the requirement, as required by the Paperwork Reduction Act 
of 1995, Public Law 104-13 (44 U.S.C. 3501-3520). In addition, pursuant 
to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, 
44 U.S.C. 3506(c)(4), the Commission seeks specific comment on how it 
might

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``further reduce the information collection burden for small business 
concerns with fewer than 25 employees.''

C. Ex Parte Rules

    169. Permit-But-Disclose. The proceeding shall be treated as a 
``permit-but-disclose'' proceeding in accordance with the Commission's 
ex parte rules. Persons making ex parte presentations must file a copy 
of any written presentation or a memorandum summarizing any oral 
presentation within two business days after the presentation (unless a 
different deadline applicable to the Sunshine period applies). Persons 
making oral ex parte presentations are reminded that memoranda 
summarizing the presentation must (1) list all persons attending or 
otherwise participating in the meeting at which the ex parte 
presentation was made, and (2) summarize all data presented and 
arguments made during the presentation. If the presentation consisted 
in whole or in part of the presentation of data or arguments already 
reflected in the presenter's written comments, memoranda or other 
filings in the proceeding, the presenter may provide citations to such 
data or arguments in his or her prior comments, memoranda, or other 
filings (specifying the relevant page and/or paragraph numbers where 
such data or arguments can be found) in lieu of summarizing them in the 
memorandum. Documents shown or given to Commission staff during ex 
parte meetings are deemed to be written ex parte presentations and must 
be filed consistent with rule Sec.  1.1206(b) of the rules. In 
proceedings governed by rule Sec.  1.49(f) or for which the Commission 
has made available a method of electronic filing, written ex parte 
presentations and memoranda summarizing oral ex parte presentations, 
and all attachments thereto, must be filed through the electronic 
comment filing system available for that proceeding, and must be filed 
in their native format (e.g., .doc, .xml, .ppt, searchable .pdf). 
Participants in this proceeding should familiarize themselves with the 
Commission's ex parte rules.

D. Comment Filing Procedures

    170. Comments and Replies. The Commission invites comment on the 
issues and questions set forth in the NPRM and IRFA contained herein. 
Pursuant to Sec. Sec.  1.415 and 1.419 of the Commission's rules, 47 
CFR 1.415, 1.419, interested parties may file comments and reply 
comments on or before the dates indicated on the first page of this 
document. Comments may be filed using the Commission's Electronic 
Comment Filing System (ECFS). See Electronic Filing of Documents in 
Rulemaking Proceedings, 63 FR 24121 (1998).
     Electronic Filers: Comments may be filed electronically 
using the internet by accessing the ECFS: http://apps.fcc.gov/ecfs/.
     Paper Filers: Parties who choose to file by paper must 
file an original and one copy of each filing. If more than one docket 
or rulemaking number appears in the caption of this proceeding, filers 
must submit two additional copies for each additional docket or 
rulemaking number. Filings can be sent by hand or messenger delivery, 
by commercial overnight courier, or by first-class or overnight U.S. 
Postal Service mail. All filings must be addressed to the Commission's 
Secretary, Office of the Secretary, Federal Communications Commission.
     All hand-delivered or messenger-delivered paper filings 
for the Commission's Secretary must be delivered to FCC Headquarters at 
445 12th St. SW, Room TW-A325, Washington, DC 20554. The filing hours 
are 8:00 a.m. to 7:00 p.m. All hand deliveries must be held together 
with rubber bands or fasteners. Any envelopes and boxes must be 
disposed of before entering the building.
     Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9050 Junction Drive, 
Annapolis Junction, MD 20701.
     U.S. Postal Service first-class, Express, and Priority 
mail must be addressed to 445 12th Street SW, Washington, DC 20554.
    171. People with Disabilities: To request materials in accessible 
formats for people with disabilities (braille, large print, electronic 
files, audio format), send an email to [email protected] or call the 
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-
418-0432 (tty).
    172. In addition, one copy of each paper filing must be sent to 
each of the following: (1) The Commission's duplicating contractor, 
Best Copy and Printing, Inc., 445 12th Street SW, Room CY-B402, 
Washington, DC 20554; website: www.bcpiweb.com; phone: (800) 378-3160; 
(2) Radhika Karmarkar, Telecommunications Access Policy Division, 
Wireline Competition Bureau, 445 12th Street SW, Room 5-A317, 
Washington, DC 20554; email: [email protected] and (3) Charles 
Tyler, Telecommunications Access Policy Division, Wireline Competition 
Bureau, 445 12th Street SW, Room 5-A452, Washington, DC 20554; email: 
[email protected].
    173. Filing and comments are also available for public inspection 
and copying during regular business hours at the FCC Reference 
Information Center, Portals II, 445 12th Street SW, Room CY-A257, 
Washington, DC 20554. Copies may also be purchased from the 
Commission's duplicating contractor, BCPI, 445 12th Street SW, Room CY-
B402, Washington, DC 20554. Customers may contact BCPI through its 
website: www.bcpi.com, by email at [email protected], by telephone at 
(202) 488-5300 or (800) 378-3160 or by facsimile at (202) 488-5563.
    174. Comments and reply comments must include a short and concise 
summary of the substantive arguments raised in the pleading. Comments 
and reply comments must also comply with Sec.  1.49 and all other 
applicable sections of the Commission's rules. The Commission directs 
all interested parties to include the name of the filing party and the 
date of the filing on each page of their comments and reply comments. 
All parties are encouraged to utilize a table of contents, regardless 
of the length of their submission. The Commission also strongly 
encourages parties to track the organization set forth in the NPRM in 
order to facilitate its internal review process.
    175. For additional information on this proceeding, contact Radhika 
Karmarkar (202) 418-1523 in the Telecommunications Access Policy 
Division, Wireline Competition Bureau.

V. Ordering Clauses

    176. Accordingly, it is ordered that, pursuant to the authority 
contained in sections 1 through 4, 201-205, 254, 303(r), and 403 of the 
Communications Act of 1934, as amended by the Telecommunications Act of 
1996, 47 U.S.C. 151 through 154, 201 through 205, 254, 303(r), and 403, 
this Notice of Proposed Rulemaking is adopted.
    177. It is further ordered that, pursuant to applicable procedures 
set forth in Sec. Sec.  1.415 and 1.419 of the Commission's rules, 47 
CFR 1.415, 1.419, interested parties may file comments on this Notice 
of Proposed Rulemaking on or before February 2, 2018, and reply 
comments on or before March 5, 2018.
    178. It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of this Notice of Proposed Rulemaking, including the Initial 
Regulatory Flexibility Analysis, to the Chief

[[Page 326]]

 Counsel for Advocacy of the Small Business Administration.



List of Subjects in 47 CFR Part 54

    Communications common carriers, Reporting and record keeping 
requirements, Telecommunications, Telephone.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.

Proposed Rules

    For the reasons discussed in the preamble, the Federal 
Communications Commission proposes to amend 47 CFR part 54 as follows:

PART 54--UNIVERSAL SERVICE

0
1. The authority citation for part 54 continues to read as follows:

    Authority:  47 U.S.C. 151, 154(i), 155, 201, 205, 214, 219, 220, 
254, 303(r), 403, and 1302 unless otherwise noted.

0
2. Revise Sec.  54.603 to read as follows:


Sec.  54.603  Competitive bidding and certification requirements and 
exemptions.

    (a) Competitive bidding requirement. All applicants are required to 
engage in a competitive bidding process for services eligible for 
universal service support under the Telecommunications Program 
consistent with the requirements set forth in this subpart, unless they 
qualify for an exemption in paragraph (i) of this section. Applicants 
may engage in competitive bidding even if they qualify for an 
exemption. Applicants who utilize a competitive bidding exemption may 
proceed directly to filing a funding request as described in Sec.  
54.610.
    (b) Fair and open process. (1) All entities participating in the 
Telecommunications Program, including vendors, must conduct a fair and 
open competitive bidding process, consistent with all applicable 
requirements.
    (2) Vendors who intend to bid to provide supported services to a 
health care provider may not simultaneously help the health care 
provider choose a winning bid. Any vendor who submits a bid, and any 
individual or entity that has a financial interest in such a vendor, is 
prohibited from:
    (i) Preparing, signing or submitting an applicant's request for 
services or supporting documentation;
    (ii) Serving as the point of contact on behalf of the applicant;
    (iii) Being involved in setting bid evaluation criteria; or
    (iv) Participating in the bid evaluation or vendor selection 
process (except in their role as potential vendors).
    (3) All potential bidders must have access to the same information 
and must be treated in the same manner.
    (4) An applicant may not have a relationship, financial interest, 
or ownership interest with a service provider that would unfairly 
influence the outcome of a competition or furnish the service provider 
with inside information.
    (5) An applicant may not turn over its responsibility for ensuring 
a fair and open competitive bidding process to a service provider or 
anyone working on behalf of a service provider.
    (6) An employee or board member of the applicant may not serve on 
any board of any type of service provider that participates in the RHC 
Programs.
    (7) An applicant may not accept or solicit, and a service provider 
may not offer or provide, any gift or other thing of value to employees 
or board members of the applicant, or anyone acting on the applicant's 
behalf.
    (8) All applicants and vendors must comply with any applicable 
state, Tribal, or local competitive bidding requirements. The 
competitive bidding requirements in this section apply in addition to 
state, Tribal, and local competitive bidding requirements and are not 
intended to preempt such state, Tribal, or local requirements.
    (c) Cost-effective. For purposes of the Telecommunications Program, 
``cost-effectiveness'' is defined as the lowest-price service that 
meets the minimum requirements for the products and services that are 
essential to satisfy the communications needs of the applicant.
    (d) Bid evaluation criteria. Applicants must develop evaluation 
criteria and demonstrate how the applicant will choose the most cost-
effective bid before submitting a Request for Services. The applicant 
must specify on its bid evaluation worksheet and/or scoring matrix what 
its minimum requirements are for each of those criteria. The applicant 
must record on the bid evaluation worksheet or matrix each service 
provider's proposed service levels for the established criteria. After 
reviewing the bid submissions and identifying the bids that satisfy the 
applicant's minimum requirements, the applicant must then select the 
service provider that costs the least.
    (e) Request for services. Applicants must submit the following 
documents to the Administrator in order to initiate competitive 
bidding.
    (1) Form 465, including certifications. The applicant must provide 
the Form 465 and the following certifications as part of the request 
for services:
    (i) The requester is a public or nonprofit entity that falls within 
one of the seven categories set forth in the definition of health care 
provider, listed in Sec.  54.600(a);
    (ii) The requester is physically located in a rural area;
    (iii) The person signing the application is authorized to submit 
the application on behalf of the applicant and has examined the form 
and all attachments, and to the best of his or her knowledge, 
information, and belief, all statements contained therein are true;
    (iv) The applicant has followed any applicable state, Tribal, or 
local procurement rules;
    (v) All Telecommunications Program support will be used solely for 
purposes reasonably related to the provision of health care service or 
instruction that the health care provider is legally authorized to 
provide under the law of the state in which the services are provided 
and will not be sold, resold, or transferred in consideration for money 
or any other thing of value;
    (vi) If the service or services are being purchased as part of an 
aggregated purchase with other entities or individuals, the full 
details of any such arrangement, including the identities of all co-
purchasers and the portion of the service or services being purchased 
by the health care provider;
    (vii) The applicant satisfies all of the requirements under section 
254 of the Act and applicable Commission rules; and
    (viii) The applicant has reviewed all applicable requirements for 
the Telecommunications Program and will comply with those requirements.
    (2) Bid evaluation criteria. Requirements for bid evaluation 
criteria are described in paragraph (d) of this section and must be 
included with the applicant's Request for Services.
    (3) Declaration of Assistance. All applicants must submit a 
``Declaration of Assistance'' with their Request for Services. In the 
Declaration of Assistance, applicants must identify each and every 
consultant, vendor, and other outside expert, whether paid or unpaid, 
who aided in the preparation of their applications. Applicants must 
also describe the nature of the relationship they have with the 
consultant, vendor, or other outside expert providing the assistance.
    (f) Public posting by the Administrator. The Administrator shall 
post the applicant's Form 465 and bid evaluation criteria on its 
website.
    (g) 28-day waiting period. After posting the documents described in

[[Page 327]]

paragraph (f) of this section on its website, the Administrator shall 
send confirmation of the posting to the applicant. The applicant shall 
wait at least 28 days from the date on which its competitive bidding 
documents are posted on the website before selecting and committing to 
a vendor.
    (1) Selection of the most ``cost-effective'' bid and contract 
negotiation. Each applicant is required to certify to the Administrator 
that the selected bid is, to the best of the applicant's knowledge, the 
most cost-effective option available. Applicants are required to submit 
the documentation listed in Sec.  54.610 to support their 
certifications.
    (2) Applicants who plan to request evergreen status under this 
section must enter into a contract that identifies both parties, is 
signed and dated by the health care provider after the 28-day waiting 
period expires, and specifies the type, term, and cost of service.
    (h) Gift restrictions. (1) Subject to paragraphs (h)(3) and (4) of 
this section, an eligible health care provider or consortium that 
includes eligible health care providers and/or other eligible entities, 
may not directly or indirectly solicit or accept any gift, gratuity, 
favor, entertainment, loan, or any other thing of value from a service 
provider participating in or seeking to participate in the rural health 
care universal service program. No such service provider shall offer or 
provide any such gift, gratuity, favor, entertainment, loan, or other 
thing of value except as otherwise provided herein. Modest refreshments 
not offered as part of a meal, items with little intrinsic value 
intended solely for presentation, and items worth $20 or less, 
including meals, may be offered or provided, and accepted by any 
individuals or entities subject to this rule, if the value of these 
items received by any individual does not exceed $50 from any one 
service provider per funding year. The $50 amount for any service 
provider shall be calculated as the aggregate value of all gifts 
provided during a funding year by the individuals specified in 
paragraph (h)(2)(ii) of this section.
    (2) For purposes of this paragraph:
    (i) The terms ``health care provider'' or ``consortium'' shall 
include all individuals who are on the governing boards of such 
entities and all employees, officers, representatives, agents, 
consultants or independent contractors of such entities involved on 
behalf of such health care provider or consortium with the Rural Health 
Care Program, including individuals who prepare, approve, sign or 
submit RHC Program applications, or other forms related to the RHC 
Program, or who prepare bids, communicate or work with RHC Program 
service providers, consultants, or with USAC, as well as any staff of 
such entities responsible for monitoring compliance with the RHC 
Program; and
    (ii) The term ``service provider'' includes all individuals who are 
on the governing boards of such an entity (such as members of the board 
of directors), and all employees, officers, representatives, agents, or 
independent contractors of such entities.
    (3) The restrictions set forth in this paragraph shall not be 
applicable to the provision of any gift, gratuity, favor, 
entertainment, loan, or any other thing of value, to the extent given 
to a family member or a friend working for an eligible health care 
provider or consortium that includes eligible health care providers, 
provided that such transactions:
    (i) Are motivated solely by a personal relationship;
    (ii) Are not rooted in any service provider business activities or 
any other business relationship with any such eligible health care 
provider; and
    (iii) Are provided using only the donor's personal funds that will 
not be reimbursed through any employment or business relationship.
    (4) Any service provider may make charitable donations to an 
eligible health care provider or consortium that includes eligible 
health care providers in the support of its programs as long as such 
contributions are not directly or indirectly related to RHC Program 
procurement activities or decisions and are not given by service 
providers to circumvent competitive bidding and other RHC Program 
rules.
    (i) Exemptions to competitive bidding requirements. (1) Government 
Master Service Agreement (MSA). Eligible health care providers that 
seek support for services and equipment purchased from MSAs negotiated 
by federal, state, Tribal, or local government entities on behalf of 
such health care providers and others, if such MSAs were awarded 
pursuant to applicable federal, state, Tribal, or local competitive 
bidding requirements, are exempt from the competitive bidding 
requirements under this section.
    (2) Master Service Agreements approved under the Pilot Program or 
Healthcare Connect Fund. An eligible health care provider site may opt 
into an existing MSA approved under the Pilot Program or Healthcare 
Connect Fund and seek support for services and equipment purchased from 
the MSA without triggering the competitive bidding requirements under 
this section, if the MSA was developed and negotiated in response to an 
RFP that specifically solicited proposals that included a mechanism for 
adding additional sites to the MSA.
    (3) Evergreen contracts. (i) The Administrator may designate a 
multi-year contract as ``evergreen,'' which means that the service(s) 
covered by the contract need not be re-bid during the contract term.
    (ii) A contract entered into by a health care provider or 
consortium as a result of competitive bidding may be designated as 
evergreen if it meets all of the following requirements:
    (A) Is signed by the individual health care provider or consortium 
lead entity;
    (B) Specifies the service type, bandwidth, and quantity;
    (C) Specifies the term of the contract;
    (D) Specifies the cost of services to be provided; and
    (E) Includes the physical location or other identifying information 
of the health care provider sites purchasing from the contract.
    (iii) Participants may exercise voluntary options to extend an 
evergreen contract without undergoing additional competitive bidding 
if:
    (A) The voluntary extension(s) is memorialized in the evergreen 
contract;
    (B) The decision to extend the contract occurs before the 
participant files its funding request for the funding year when the 
contract would otherwise expire; and
    (C) The voluntary extension(s) do not exceed five years in the 
aggregate.
0
3. Add Sec.  54.610 to read as follows:


Sec.  54.610  Funding commitments.

    (a) Once a vendor is selected, applicants must submit a ``Funding 
Request'' (and supporting documentation) to provide information about 
the services selected and certify that the services selected are the 
most cost-effective option of the offers received. The following 
information should be submitted to the Administrator with the Funding 
Request.
    (1) Request for funding. The applicant shall submit a Request for 
Funding (Form 466) to identify the service; urban and rural rates; 
vendor(s); and date(s) of vendor selection.
    (2) Certifications. The applicant must provide the following 
certifications as part of the Request for Funding:
    (i) The person signing the application is authorized to submit the 
application on behalf of the applicant and has examined the form and 
all attachments, and to the best of his or her knowledge, information, 
and belief, all statements of fact contained therein are true;

[[Page 328]]

    (ii) Each vendor selected is, to the best of the applicant's 
knowledge, information and belief, the most cost-effective vendor 
available, as defined in Sec.  54.603;
    (iii) All Telecommunications Program support will be used only for 
eligible health care purposes;
    (iv) The applicant is not requesting support for the same service 
from both the Telecommunications Program and the Healthcare Connect 
Fund;
    (v) The applicant satisfies all of the requirements under section 
254 of the Act and applicable Commission rules, and understands that 
any letter from the Administrator that erroneously commits funds for 
the benefit of the applicant may be subject to rescission;
    (vi) The applicant has reviewed all applicable requirements for the 
program and complied with those requirements;
    (vii) The applicant will maintain complete billing records for the 
service for five years; and
    (viii) The applicant conducted a fair and open competitive bidding 
process, as described in Sec.  54.603.
    (3) Contracts or other documentation. All applicants must submit a 
contract or other documentation that clearly identifies the vendor(s) 
selected and the health care provider(s) who will receive the services:
    (i) Proof of the urban and rural rates;
    (ii) Costs for which support is being requested; and
    (iii) The term of the service agreement(s) if applicable (i.e., if 
services are not being provided on a month-to-month basis). For 
services provided under contract, the applicant must submit a copy of 
the contract signed and dated (after the Allowable Contract Selection 
Date) by the individual health care provider or Consortium Leader. If 
the services are not being provided under contract, the applicant must 
submit a bill, service offer, letter, or similar document from the 
vendor that provides the required information.
    (4) Competitive bidding documents. Applicants must submit 
documentation to support their certifications that they have selected 
the most cost-effective option, including a copy of each bid received 
(winning, losing, and disqualified), the bid evaluation criteria, and 
the following documents (as applicable):
    (i) Completed bid evaluation worksheets or matrices;
    (ii) Explanation for any disqualified bids;
    (iii) A list of people who evaluated bids (along with their title/
role/relationship to the applicant organization);
    (iv) Memos, board minutes, or similar documents related to the 
vendor selection/award;
    (v) Copies of notices to winners; and
    (vi) Any correspondence with vendors prior to and during the 
bidding, evaluation, and award phase of the process. Applicants who 
claim a competitive bidding exemption must submit relevant 
documentation to allow the Administrator to verify that the applicant 
is eligible for the claimed exemption.
0
4. Add Sec.  54.611 to read as follows:


Sec.  54.611  Payment process.

    (a) The applicant must submit Form 467 to the Administrator 
confirming the service start date, the service end or disconnect date, 
or whether the service was never turned on.
    (b) Upon receipt of the form, the Administrator shall generate a 
health care support schedule, which the service provider shall use to 
determine how much credit the applicant will receive for the services. 
The service provider must apply the credit to the applicant's bill 
during the next possible billing cycle and submit an online invoice to 
the Administrator. The service provider must certify on the invoice 
that it has reviewed all applicable requirements for the program, 
including the competitive bidding requirements described in Sec.  
54.603, and has complied with those requirements.
    (c) Before the Administrator may process and pay an invoice, it 
must receive a completed Form 467 from the health care provider and an 
invoice from the service provider. All invoices must be received by the 
Administrator within six months (180 days) of the end date of the time 
period covered by the funding commitment.
0
5. Amend Sec.  54.642 by:
0
a. Revising paragraphs (b)(1), (2), and (4).
0
b. Adding paragraph (b)(5) through (8).
0
c. Revising paragraphs (c) and (d).
0
d. Revising paragraphs (e)(1), (2), and (3).
0
e. Revising paragraph (g)(1).
0
f. Adding paragraph (i).
    The revisions and additions read as follows:


Sec.  54.642  Competitive bidding and certification requirements.

* * * * *
    (b)(1) All entities participating in the Healthcare Connect Fund 
Program, including vendors, must conduct a fair and open competitive 
bidding process, consistent with all applicable requirements.
    (2) Vendors who intend to bid to provide supported services to a 
health care provider may not simultaneously help the health care 
provider choose a winning bid. Any vendor who submits a bid, and any 
individual or entity that has a financial interest in such a vendor, is 
prohibited from: Preparing, signing or submitting an applicant's 
request for services or supporting documentation; serving as the point 
of contact on behalf of the applicant; being involved in setting bid 
evaluation criteria; or participating in the bid evaluation or vendor 
selection process (except in their role as potential vendors).
* * * * *
    (4) An applicant may not have a relationship, financial interest, 
or ownership interest with a service provider that would unfairly 
influence the outcome of a competition or furnish the service provider 
with inside information.
    (5) An applicant may not turn over its responsibility for ensuring 
a fair and open competitive bidding process to a service provider or 
anyone working on behalf of a service provider.
    (6) An employee or board member of the applicant may not serve on 
any board of any type of service provider that participates in the RHC 
Programs.
    (7) An applicant may not accept or solicit, and a service provider 
may not offer or provide, any gift or other thing of value to employees 
or board members of the applicant, or anyone working on the applicant's 
behalf.
    (8) All applicants and vendors must comply with any applicable 
state, Tribal, or local competitive bidding requirements. The 
competitive bidding requirements in this section apply in addition to 
state, Tribal, and local competitive bidding requirements and are not 
intended to preempt such state, Tribal, or local requirements.
    (c) Cost-effective. For purposes of the Healthcare Connect Fund 
Program, ``cost-effectiveness'' is defined as the lowest-price service 
that meets the minimum requirements for the products and services that 
are essential to satisfy the communications needs of the applicant.
    (d) Bid evaluation criteria. Applicants must develop evaluation 
criteria and demonstrate how the applicant will choose the most cost-
effective bid before submitting a request for services. The applicant 
must specify on its bid evaluation worksheet and/or scoring matrix what 
its minimum requirements are for each of those criteria. The applicant 
must record on the bid evaluation worksheet or matrix each service 
provider's proposed service

[[Page 329]]

levels for the established criteria. After reviewing the bid 
submissions and identifying the bids that satisfy the applicant's 
minimum requirements, the applicant must then select the service 
provider that costs the least.
    (e) * * *
    (1) * * *
    (i) The requester is a public or nonprofit entity that falls within 
one of the seven categories set forth in the definition of health care 
provider, listed in Sec.  54.600(a).
    (ii) The requester is physically located in a rural area.
    (iii) The person signing the application is authorized to submit 
the application on behalf of the applicant and has examined the form 
and all attachments, and to the best of his or her knowledge, 
information, and belief, all statements contained therein are true.
    (iv) The applicant has followed any applicable state, Tribal, or 
local procurement rules.
    (v) All Healthcare Connect Fund Program support will be used solely 
for purposes reasonably related to the provision of health care service 
or instruction that the healthcare provider is legally authorized to 
provide under the law of the state in which the services are provided 
and will not be sold, resold, or transferred in consideration for money 
or any other thing of value.
    (vi) If the service or services are being purchased as part of an 
aggregated purchase with other entities or individuals, the full 
details of any such arrangement, including the identities of all co-
purchasers and the portion of the service or services being purchased 
by the healthcare provider.
    (vii) The applicant satisfies all of the requirements under section 
254 of the Act and applicable Commission rules.
    (viii) The applicant has reviewed all applicable requirements for 
the Healthcare Connect Fund Program and will comply with those 
requirements.
    (2) Bid Evaluation Criteria. Requirements for bid evaluation 
criteria are described in paragraph (d) of this section and must be 
included with the applicant's Request for Services.
    (3) Declaration of Assistance. All applicants must submit a 
``Declaration of Assistance'' with their Request for Services. In the 
Declaration of Assistance, applicants must identify each and every 
consultant, vendor, and other outside expert, whether paid or unpaid, 
who aided in the preparation of their applications. Applicants must 
also describe the nature of the relationship they have with the 
consultant, vendor, or other outside expert providing the assistance.
* * * * *
    (g) * * *
    (1) Selection of the most ``cost-effective'' bid and contract 
negotiation. Each applicant is required to certify to the Administrator 
that the selected bid is, to the best of the applicant's knowledge, the 
most cost-effective option available. Applicants are required to submit 
the documentation listed in Sec.  54.643 to support their 
certifications.
* * * * *
    (i) Gift restrictions. (1) Subject to paragraphs (i)(3) and (4) of 
this section, an eligible health care provider or consortium that 
includes eligible health care providers and/or other eligible entities 
may not directly or indirectly solicit or accept any gift, gratuity, 
favor, entertainment, loan, or any other thing of value from a service 
provider participating in or seeking to participate in the rural health 
care universal service program. No such service provider shall offer or 
provide any such gift, gratuity, favor, entertainment, loan, or other 
thing of value except as otherwise provided herein. Modest refreshments 
not offered as part of a meal, items with little intrinsic value 
intended solely for presentation, and items worth $20 or less, 
including meals, may be offered or provided, and accepted by any 
individuals or entities subject to this rule, if the value of these 
items received by any individual does not exceed $50 from any one 
service provider per funding year. The $50 amount for any service 
provider shall be calculated as the aggregate value of all gifts 
provided during a funding year by the individuals specified in 
paragraph (i)(2)(ii) of this section.
    (2) For purposes of this paragraph:
    (i) The terms ``health care provider or consortium'' shall include 
all individuals who are on the governing boards of such entities and 
all employees, officers, representatives, agents, consultants or 
independent contractors of such entities involved on behalf of such 
health care provider or consortium with the Rural Health Care Program, 
including individuals who prepare, approve, sign or submit RHC Program 
applications, or other forms related to the RHC Program, or who prepare 
bids, communicate or work with RHC Program service providers, 
consultants, or with USAC, as well as any staff of such entities 
responsible for monitoring compliance with the RHC Program; and
    (ii) The term ``service provider'' includes all individuals who are 
on the governing boards of such an entity (such as members of the board 
of directors), and all employees, officers, representatives, agents, or 
independent contractors of such entities.
    (3) The restrictions set forth in this paragraph shall not be 
applicable to the provision of any gift, gratuity, favor, 
entertainment, loan, or any other thing of value, to the extent given 
to a family member or a friend working for an eligible health care 
provider or consortium that includes eligible health care providers, 
provided that such transactions:
    (i) Are motivated solely by a personal relationship;
    (ii) Are not rooted in any service provider business activities or 
any other business relationship with any such eligible health care 
provider; and
    (iii) Are provided using only the donor's personal funds that will 
not be reimbursed through any employment or business relationship.
    (4) Any service provider may make charitable donations to an 
eligible health care provider or consortium that includes eligible 
health care providers in the support of its programs as long as such 
contributions are not directly or indirectly related to RHC Program 
procurement activities or decisions and are not given by service 
providers to circumvent competitive bidding and other RHC Program 
rules, including those in Sec.  54.633, requiring health care providers 
to contribute 35 percent of the total cost of all eligible expenses.
0
6. Amend Sec.  54.643 by adding paragraph (a)(2)(viii), and by revising 
paragraph (a)(4) to read as follows:


Sec.  54.643  Funding Commitments.

    (a) * * *
    (2) * * *
    (viii) The applicant conducted a fair and open competitive bidding 
process, as described in Sec.  54.642.
* * * * *
    (4) Competitive bidding documents. Applicants must submit 
documentation to support their certifications that they have selected 
the most cost-effective option, including a copy of each bid received 
(winning, losing, and disqualified), the bid evaluation criteria, and 
the following documents (as applicable): Completed bid evaluation 
worksheets or matrices; explanation for any disqualified bids; a list 
of people who evaluated bids (along with their title/role/relationship 
to the applicant organization); memos, board minutes, or similar 
documents related to the vendor selection/award; copies of notices to 
winners; and any correspondence with vendors prior to and during the 
bidding, evaluation, and award phase of the

[[Page 330]]

process. Applicants who claim a competitive bidding exemption must 
submit relevant documentation to allow the Administrator to verify that 
the applicant is eligible for the claimed exemption.
* * * * *
0
7. Amend Sec.  54.645 by revising paragraph (b) to read as follows:


Sec.  54.645  Payment Process.

* * * * *
    (b) Before the Administrator may process and pay an invoice, both 
the Consortium Leader (or health care provider, if participating 
individually) and the vendor must certify that they have reviewed the 
document and that it is accurate. The service provider must certify on 
the invoice that it has reviewed all applicable requirements for the 
program, including the competitive bidding requirements described in 
Sec.  54.642, and has complied with those requirements. All invoices 
must be received by the Administrator within six months (180 days) of 
the end date of the time period covered by the funding commitment.

[FR Doc. 2017-27746 Filed 1-2-18; 8:45 am]
 BILLING CODE 6712-01-P


Current View
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionProposed Rules
ActionProposed rule.
DatesComments are due February 2, 2018, and reply comments are due on or before February 20, 2018. If you anticipate that you will be submitting comments, but find it difficult to do so within the period of time allowed by this document, you should advise the contact listed below as soon as possible.
ContactRadhika Karmarkar, Wireline Competition Bureau, (202) 418-7400 or TTY: (202) 418-0484.
FR Citation83 FR 303 
CFR AssociatedCommunications Common Carriers; Reporting and Record Keeping Requirements; Telecommunications and Telephone

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