TR Daily Bureau Expands Alaska Waiver on RHC Rate Database Nationwide
Thursday, April 8, 2021

Bureau Expands Alaska Waiver on RHC Rate Database Nationwide

The FCC’s Wireline Competition Bureau has waived provisions of the FCC’s universal service rules that require health care providers and providers of covered telecom, information, and broadband services participating in the agency’s Rural Health Care (RHC) Program to use the Universal Service Administrative Co.’s database of urban and rural rates in determining subsidies and health care providers’ actual payments after subsidies.

Its action expanded a waiver previously granted for health care providers in Alaska to a nationwide waiver. The new waivers apply to the current (2021) funding year and for next year.

The bureau directed participants to use any of the three methods available before establishment of the database for calculating rural rates. It also said, as it had in the case of Alaska, that "it is in the public interest to allow the use of a rural rate that has been approved for the same service at the same facility within the past three funding years."

In its 2019 promoting telehealth in rural America report and order in WC docket 17-310, the FCC "directed USAC to create a database of urban and rural rates within each state that would be used to calculate median rural and urban rates for functionally similar services in the state within a health care provider’s applicable rurality tier beginning in funding year 2021," the bureau noted in an order adopted today in WC dockets 02-60 and 17-310.

"Section 54.605 of the Commission’s rules directs applicants to use the lower of either the rural rate in the Rates Database or the rural rate included in a service agreement between the health care provider and the service provider. Section 54.604 of the Commission’s rules requires that an applicant’s urban rate be the median of all available rates for functionally similar services in urbanized areas of the state as identified in the Rates Database," the bureau explained.

In January, the bureau waived the rates database requirement for health care providers in Alaska for funding year 2021 "due to significant anomalies in the initial rural rate calculations that ran counter to the general assumptions that the cost to provide service increases as rurality increases and that rates increase as the bandwidth provided increases. Health care providers in Alaska may now either use a rural rate that has been approved in the previous three funding years for the same service at the same facility or rely on the previous rural rate determination methods while the Rates Database waiver is in effect."

However, the problem was more widespread than Alaska, according to a petition filed by the Schools, Health & Libraries Broadband (SHLB) Coalition. "The new database yields significantly higher required copayments than had previously been approved, as well as shrinking the amount of payments service providers receive," SHLB had told the FCC.

"While the creation of the Rates Database may have been well-intentioned in theory, it appears that the actual results were not scrutinized or tested to determine whether they are economically sound, comport with reality or are consistent with the statutory objective of the RHC Telecom Program to equalize telecommunications costs between urban and rural health care providers. It is not possible to tell from the data USAC published why these results occur. Regardless, what is known is the fact that health care providers face a dramatic and frankly outrageous increase in the share they pay at a time when they can least afford it—and with very little notice," SHLB had added.

Subsequently, "Alaska Communications filed a letter seeking clarification as to whether the Bureau’s direction in the Alaska Rates Database Waiver Order that USAC could approve rural rates from the previous three funding years applied to (1) rural rates that are either the same or lower than previously approved rates for the same or similar services at the same or comparable facilities; or (2) the same or lower than previously approved rates for a lower bandwidth service at the same or comparable facilities," the bureau recalled.

Then, "[o]n March 23, 2021, GCI Communication Corp. (GCI) filed a letter supporting the clarification requests sought by Alaska Communications and further requesting that (1) if there is no comparable approved rural rate within 30% of the bandwidth requested, the Bureau allow service providers to calculate the rural rate for the requested bandwidth by applying a previously approved rural rate on a per-Mbps basis; (2) service providers may rely on funding year 2020 rural rates in certain instances; and (3) service providers will not be required to recalculate rural rates on a continuous basis based on new information."

In today’s order, the bureau said that "it would serve the public interest to waive the requirements that health care providers and service providers use the Rates Database to calculate urban and rural rates in the Telecom Program. We similarly find that waivers of the RHC Program service delivery deadline and the invoice filing deadline are justified."

"Further examination of initial median rural rate calculations in the Rates Database reveals anomalies in states beyond Alaska that could result in inadequate or inconsistent Telecom Program support. A primary rationale for adopting the Rates Database and associated rurality tiers was that, in general, the cost to provide services increases as the level of rurality increases and overall rates tend to increase (while rates per megabit per second tend to decrease) as bandwidth increases. However, initial rural rate calculations in the Rates Database revealed examples of lower median rural rates in more rural areas of a state. For example, for California, the current median rural rate for a 100 [megabits per second] dedicated data service is $3,520.73 in the Less Rural Tier and $842.00 in the Rural Tier," the bureau noted.

"In other instances, the Rates Database provides higher median rates for lower bandwidths. In Georgia, the current median rural rate in the Rural Tier for a 100 Mbps dedicated data service is $3,036, compared to $1,057 for 250 Mbps and $2,634 for 1 Gbps," it added.

The bureau agreed with SHLB’s assessment that "[t]here is no clearly identifiable cause for these rate inconsistencies based on currently available rural rate data."

It added, "The Rates Database outputs suggest that in certain circumstances cost factors other than population density and bandwidth level are significantly impacting the prices available to health care providers in rural areas. The rate inconsistencies and resulting reduction in Telecom Program support for service providers could reduce the quality and availability of telecommunications services for health care providers in some areas. These potential impacts on health care providers and service providers qualify as special circumstances meriting a nationwide waiver of the Rates Database to give the Commission time to examine the causes of the rate anomalies and make adjustments to the Rates Database model if needed."

Similarly, it waived the requirement to use the "applicable e urban rates available in the Rates Database, for all urban rates nationwide, including urban rates in Alaska, for funding years 2021 and 2022," noting that "SHLB and other stakeholders have identified examples of apparent anomalies in the urban Rates Database in some states, including some instances where urban rates for lower bandwidths exceed urban rates for higher bandwidths for the same service and examples of where urban rates for some services exceed all rural rates for those services in a given state."

While the bureau said it found the evidence submitted to be "inconclusive and not necessarily definitive evidence that the urban rates in the Rates Database fail to accurately reflect the relative cost of providing service in those areas," it said that it found "that the circumstances where the urban rate at a bandwidth in a state exceeds the urban rate at a lower bandwidth in that state, an issue that we have flagged as problematic with respect to the rural rates, merit further inquiry and investigation."

"We also recognize that the new, often higher, urban rates are being implemented at a time when health care providers, particularly those in rural areas, are experiencing significant financial hardships due to the ongoing COVID-19 pandemic and are particularly ill-prepared to absorb additional financial burdens. Due to these unique circumstances, we grant a temporary waiver of the requirement that applicants use the applicable urban rates from the Rates Database while we further investigate to ensure that the Rates Database accurately determines the urban rate for similar services. We conclude that a full waiver of section 54.604(a) is preferable to a waiver limited to specific situations. A more narrow waiver, limited for instance to only those situations where an urban rate at a lower bandwidth exceeds that of an urban rate for a higher bandwidth, could create new administrative burdens for USAC as well as create the potential for gamesmanship and uncertainty for stakeholders," the bureau added.

It concluded "that it is in the public interest to allow health care providers nationwide to use an urban rate that has been approved for the same service at the same facility within the past three funding years. To minimize potential gamesmanship, if more than one such rate has been approved, the urban rate must be the most recently approved rate for that facility/service combination. If there is no approved urban rate for a particular facility/service combination, the health care provider may use an urban rate approved for the same or similar services to a facility with the same or similar geographic characteristics. The health care provider or service provider should submit these urban rates to USAC with documentation showing that the urban rates were previously approved. If no such comparables are available, the urban rate must be established using the preexisting rule."

In response to the requests for clarification submitted by Alaska Communications and GCI, the bureau said that "for the purposes of the Alaska Rates Database Waiver Order and the waivers we issue today, service providers may submit to USAC rural rates approved within the past three years that are either (1) a rate lower than the previously approved rate for the same or similar service to the same facility or one with the same or similar geographic characteristics or (2) the same or lower rate as previously approved but for a higher bandwidth service than in previous funding years, including bandwidth that is more than 30 percent higher than in previous funding years, at the same facility or one with the same or similar geographic characteristics."

It declined Alaska Communications’ request to "allow the use of rural rates for the same service at the same facility dating back to funding year 2017."

The bureau waived competitive bidding requirements "for health care providers that have already completed the competitive bidding process for funding year 2021 using bids based on urban and rural rates generated by the Rates Database."

As for deadlines, the bureau said, "We find that good cause exists to grant a one-year extension of the service delivery deadline to June 30, 2022, to grant a 120-day extension of the invoice filing deadline for funding year 2020, and to direct USAC to grant an extension of 28 days if the applicant requests the extension for an information request before the expiration of the initial 14-day deadline for health care provides nationwide."

In a statement, SHLB Executive Director John Windhausen said, "The SHLB Coalition applauds the FCC for granting rural healthcare providers much-needed reprieve from the new and untested rates database in the Telecommunications program. The August 2019 FCC Order that created the database was well-intentioned—to ensure fiscal integrity for the program. Unfortunately, the actual rates in the database could have eliminated any funding at all for many rural healthcare providers, contrary to RHC’s very purpose. SHLB found evidence of widespread problems with the rates database, affecting 42 of the lower 48 states, that could have tripled rural healthcare providers’ average broadband costs. During a global pandemic, that’s the last thing hospitals and health clinics need. We are extremely pleased that the FCC averted disaster by postponing the database for further study." —Lynn Stanton, [email protected]

MainStory: FederalNews FCC UniversalServiceLifeline

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