TR Daily FCC Adjusts Rural Health Care Budget for Inflation
Monday, June 25, 2018

FCC Adjusts Rural Health Care Budget for Inflation

The FCC today released the report and order raising the annual cap on the rural health care (RHC), or telemedicine, program from $400 million to $571 million, which Chairman Ajit Pai had announced he was circulating earlier this month (TR Daily, June 6) and which the Commission announced more than a week ago had received affirmative votes from the agency’s three Republican Commissioners.

The report and order in WC docket 17-310, which was adopted last Tuesday but not released until today, applies “to the current funding year to fully fund eligible funding requests for FY 2017,” it says.

The new cap reflects inflation since the adoption of the $400 million cap in 1997. The order provides for ongoing annual adjustments to the cap to reflect inflation and establishes “a process to carry-forward unused funds from past funding years for use in future funding years.

“At the same time, we are mindful of the need to guard against Program waste, fraud, and abuse to ensure that this funding is being spent appropriately. We remain committed to this goal and for that reason, have proposed and sought comment in this proceeding on measures to ensure compliance and to reduce waste, fraud, and abuse in the RHC Program,” the order adds, citing a notice of proposed rulemaking adopted last year (TR Daily, Dec. 14, 2017).

In his separate statement, Chairman Pai said, “The end result of these reforms will be profound: Healthier Americans make for a better America. And these reforms come none too soon. As [former FCC] Chairman [Newton] Minow and I argued [in a May 21 ‘Boston Globe’ op ed], ‘[i]t’s time we integrated communications technology into our health care system just as fully as we have in other parts of our lives.’ Our decision today brings us closer to that goal.”

Commissioner Mike O’Rielly said that he views the order as “a first step in a much-needed process to revamp the program to ensure that it is operated in a predictable, sustainable, and accountable manner. Due to inattentiveness on the part of prior Commissions, the program grew rapidly with no reasonable measures in place to ensure that the funding was well targeted or would be prioritized rationally when demand exceeded available funding — an outcome I predicted years ago and urged the previous Chairman to address. Moreover, insufficient oversight of the program and the Universal Service Administrative Company (USAC) has led to confusion and lengthy funding delays, creating unpredictability for communications providers, healthcare participants, and rural communities that have benefitted from the program. Therefore, while this order may temporarily resolve a current funding shortfall, there is much more to do to put the program on long-term solid footing, including implementing appropriate changes to USAC. I appreciate that Chairman Pai is willing to tackle such fundamental reforms to the program.”

Commissioner O’Rielly continued, “Generally, this order highlights the need for an overall cap on the universal service fund (USF). I have heard the argument that, as long as each program is capped, there is no need for an overarching spending limit across the four USF programs. However, as each program has reached its budget, the Commission has historically increased each one, as we do today, without much consideration given to total spending and its impact on the consumers and businesses who pay extra fees on their phone bills to support it. That is not acceptable.”

He added, “On a side note, it is past time that the Commission work with other federal government departments and agencies to determine how our rather narrow telemedicine program works within the larger health care system. Currently, telecommunications consumers are paying higher rates than necessary in order to fund our Rural Health Care Program and this has a positive impact on overall health care costs. To put it succinctly, if our program were to end tomorrow, total U.S. health care expenditures would increase by some factor, likely many multiples compared to the program’s investment. Unfortunately, we are not credited, nor do consumers experience, any of the benefit enjoyed by other health care agencies. I intend to discuss this point further in the future to ensure greater coordination and cohesion regarding this dynamic.”

Commissioner Brendan Carr said that “the Rural Health Care Program is running into a funding shortfall, which is creating uncertainty for participating providers and patients alike. So I am glad to support this item, which would address the shortfall and provide longer-term certainty by adjusting the annual funding cap for inflation. This will make sure that health care providers can continue their important work of providing telehealth services to rural communities across the country.”

Commissioner Jessica Rosenworcel said, “While injecting more funding into the program is the right call, we need to acknowledge our actions here are no more than a short-term band-aid. If we want this program to truly thrive, it is going to require more long-term care and attention than we provide today. I look forward to doing so because I believe strengthening the reach and power of telemedicine is a vital part of ensuring that the future of our rural communities can be bright.” —Lynn Stanton, [email protected]


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