FCC chairman proposes boost to rural health care funding

  • Federal Communications Commission Chairman Ajit Pai is circulating a proposal among his fellow commissioners to boost funding for the Rural Health Care program that has run out of money the past two years. (Photo/Jacquelyn Martin/AP)

Federal Communications Commission Chairman Ajit Pai announced June 6 that he has circulated a proposal to his colleagues that would take immediate action to increase funding for the Universal Service Fund Rural Health Care Program. 

The program helps rural health providers access affordable broadband services by covering the difference in rates between theirs and urban markets.

The program’s current annual funding cap is $400 million, an amount that was set in 1997 and never adjusted for inflation.

Recent demand for funding for the program has outpaced the budget in the past two years, which has created uncertainty for patients, healthcare providers, and communications companies.

The chairman’s order — which still requires a vote of the other commission members — would increase the annual cap to $571 million.  This increase represents what the funding level would be today if the cap established in 1997 (when the program originated) included an inflation adjustment, according to the news release from the FCC. 

“The order would apply the increased cap to the current funding year to immediately address a critical funding crisis and enable rural health care providers to continue offering telemedicine services,” said FCC spokesman Mark Wigfield. 

If approved, it will also give these providers better certainty over RHC funding by adjusting the cap annually for inflation and allowing unused funds from prior years to be carried forward to future years, he added.

As for when this will happen, Wigfield said that isn’t certain. The FCC met for its monthly meeting June 7, a day after Pai’s announcement, and the matter wasn’t taken up.  

“For an item to be placed for a vote, it has to be provided to the other commissioners three weeks in  advance of the agenda,” Wigfield said. “He (Pai) circulated the order last week. That was too late to be on this agenda.”

The two ways FCC commissioners issue key decisions is by either voting at meetings on agenda items or  “on circulation, an electronic vote,” Wigfield said. “They probably vote more on circulation. The chairman wants it voted on as quickly as possible, so it’s under consideration and we may hear anytime.”

Alaskans became more familiar with the program when a telecommunications provider, Alaska Communications Services, threatened to shut off the internet at the Cordova Community Health Center last month.

The difference between what the Cordova facility pays and what Alaska Communications says it is owed by the FCC is nearly $1 million for a year’s service.

Mitchell said the hospital should not be the one paying the outstanding invoice that Alaska Communications claims is due.

“The hospital doesn’t owe that money. The agreement with ACS includes the (Universal Service Administration Co.) program so the USAC would pay that,” Mitchell said. “They owe that, we don’t.”

ACS laid off employees this past December while it was paying third-party carriers for contracts such as the Cordova hospital. The unpaid RHC invoices totaled $11.8 million through most of 2017 and the end of the first quarter this year after demand for the $400 million in funding failed to cover costs across the nation.

Prior to Pai’s announcement, Alaska Communications, GCI Liberty and other telecoms were looking at receiving only 84.4 percent for its RHC invoices.

The claims by telecoms have also triggered a national rate review that includes Alaska telecoms in the program.

Under Pai’s plan, the $571 million total rural health care funding would pay “100 percent for the invoices,” Wigfield said. “Basically they are getting rid of having to cut everyone back across the board. Once they raise the cap, that will make everyone whole again.”

In the meantime, the Cordova hospital’s chief administrator, Scot Mitchell, wasn’t taking the matter of possible shutdown lightly.

Mitchell said Alaska Communications still intended to cut off services, although Pai has warned the company that would be illegal, but funding from the FCC would prevent that. In full summer swing as a major commercial fishery hub, Cordova would be at a severe loss in its medical facility if internet were cut

“They did agree they would work with us if they planned on doing that,” Mitchell said.

The three-year contract for Alaska Communications to provide the RHC services will be up in November, which means Mitchell’s task is to solicit bids from telecoms for a new contract.

“We received two other bids from other telecoms – I can’t say who yet. This is going through the process that the FCC requires for USAC funding,” he said. “They are both Alaska-based telecom companies and we should have wrapped up an agreement with one of these two. They had told us that if ACS cancels at the end of the month they could get the service live, so there would be no lapse in service.”

ACS officials were pleased at the news, calling it an important step forward out of the deadlock on funding that meant no payments for 2017 were coming to ACS for its RHC services to 40 hospitals and clinics.

“Chairman Pai has proposed to increase the Rural Health Care Program budget, apply the increased cap to the current funding year and provide long-term certainty by adjusting the cap annually, adjusting the budget for inflation and allowing unused funds from prior years to be carried forward to future years,” Heather Cavanaugh, director of corporate communications summarized.

“This is an important step forward for the Rural Health Care program, which is significant for our state. We look forward to working constructively with the FCC in ensuring robust participation from Alaska.”

GCI, which is out $5.5 million in 2017 revenue from the funding shortfall, also expressed some relief.

“Today’s announcement is welcome news for rural health care providers in Alaska and across the nation,” said Heather Handyside, GCI’s director of corporate communications. “Predictability and adequate funding are critical to the delivery of reliable connectivity for life-saving services in rural areas. GCI is committed to working with the FCC and our partners to develop a sustainable solution for the Rural Health Care Program so that our customers in rural communities can be assured of continued access to quality health care.” 

GCI Liberty and Alaska Communications, like other telecoms across the U.S., were under FCC scrutiny to justify their costs for delivering broadband to remote Alaska locations. Because the process is confidential, the FCC couldn’t relate the status of those requests for information. But both telecoms issued statements last month that they are in full compliance with answering all requests for information.

Naomi Klouda can be reached at [email protected]

Updated: 
06/15/2018 - 10:06am

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