FCC Report and Order 19-78

On August 20, 2019, the Federal Communications Commission (FCC) released a Report and Order reforming the Rural Health Care (RHC) program to promote transparency and predictability, and to further the efficient allocation of limited program resources while guarding against waste, fraud, and abuse. The Report and Order was published in the Federal Register on October 11, 2019 and effective on November 12, 2019. Read the Report and Order here.

While the Report and Order includes a number of changes to the RHC program, the overall structure of the program will remain the same.  As before, the RHC program will still have two sub-programs:  the Healthcare Connect Fund (HCF) Program and the Telecom Program. Further, applicants will still be required to seek eligibility, submit requests for funding, requests for services, and invoicing forms.

The changes initiated by the Report and Order will apply to Funding Year (FY) 2020 and beyond, and will not affect FY2019. This page captures the major changes that affect applicants and what they should be aware of when applying for FY2020 funding but, does not cover every change impacting the RHC program. We recommend reading the Report and Order in its entirety.

As the new rules are implemented in the RHC program and My Portal, the RHC program staff will communicate all changes in advance and provide training and guidance.

On December 10, 2019, the FCC Released Public Notice DA 19-1253, providing guidance on the implementation schedule for reforms set forth by FCC Report and Order 19-78. This page has been updated accordingly.


Prioritization of Support and Rurality

Tiered Rurality

The RHC program will continue to use the same definition of “rural area” under the Commission’s rules.  In the case where demand exceeds available funding, USAC will prioritize funding based on the following rurality tiers and those areas in a Medically Underserved Area/Population (MUA/P).

  • Extremely Rural: areas entirely outside of a Core Based Statistical Area.
  • Rural: areas within a Core Based Statistical Area that do not have an urban area or urban clusters with a population of 25,000 or greater.
  • Less Rural: areas in a Core Based Statistical Area that contain an urban area or urban cluster with a population of 25,000 or greater, but are within a specific census tract that itself does not contain any part of an urban cluster or urban area with a population of 25,000 or greater.
  • Non-Rural: All other non-rural areas.

What does this mean for you?

Since the rural definition has not changed, health care providers (HCPs) currently approved as “rural” will retain their rural status. The RHC program will assign your rurality tier and should funding demand exceed available funding, USAC will first fully fund all eligible requests by HCPs consistent with the FCC’s priority schedule that considers an area’s rurality and access to healthcare professional services. Rurality tiers will be established by July 1, 2020.

HCF Program Consortium Rurality

Beginning February 1, 2020 all current and new HCF Program consortia must be “majority rural.” The Report and Order eliminates the three-year grace period for consortia to become majority rural; there will also be no grandfathering of prior Pilot Program consortia or other existing consortia.  “Majority rural” means that more than 50% of participating HCPs in a consortia must be rural. For example, if a consortia has five participating HCPs, at least three of those HCPs must be in a rural area for the consortia to be deemed “majority rural.” The “majority rural” consortia percentage requirement will automatically increase by 5% for the following funding year whenever RHC program demand exceeds the funding cap (up to a maximum of 75%). Funding requests filed by consortia that are not in compliance will be denied.


Competitive Bidding and Requesting Services

Competitive Bidding Period

For FY2021 and forward, the competitive bidding period will commence on July 1 of the prior calendar year. So, for FY2021, applicants may begin the competitive bidding period on July 1, 2020.

Competitive Bidding Exemptions in the Telecom Program

Starting in FY2020, Telecom Program applicants may use the following competitive bidding exemptions currently available in the HCF Program: government master service agreements, evergreen contracts, master service agreements approved in other RHC programs, and master contracts approved in E-Rate. The HCF Program’s competitive bidding exemption when requesting less than $10,000 in undiscounted support does not extend to Telecom.

Bid Evaluation Criteria

Currently, an HCP must develop weighted evaluation criteria (i.e., scoring worksheet or matrix) that demonstrates how the HCP will choose the most cost-effective bid before submitting its request for service. Starting in FY2021, the HCP must specify on its bid evaluation worksheet and/or scoring matrix the requested services for which it seeks bids, its minimum requirements for the specified criteria, and each service provider’s proposed service levels for the specified criteria. The HCP must also specify its disqualification factors, if any, that it will use to remove bids or bidders from further consideration.

Rural and Urban Rates — Telecom Program Only

The Report and Order eliminates distance-based support, use of a cost-based study to identify the appropriate rates, and the limitation of support on satellite services.

Beginning in FY2021, USAC will determine the urban and rural rates for each eligible service in each state and include the rates in a database publicly available on its website. The first set of urban and rural rates will be posted to USAC’s website no later than July 1, 2020.

Rural Rate: The rural rate will be determined using the following tiers in which an HCP is located:

  • Extremely Rural: areas entirely outside of a Core Based Statistical Area;
  • Rural: areas within a Core Based Statistical Area that do not have an Urban Area with a population of 25,000 or greater;
  • Less Rural: areas in a Core Based Statistical Area that contains an Urban Area with a population of 25,000 or greater, but are within a specific census tract that itself does not contain any part of a Place or Urban Area with a population of greater than 25,000; and,
  • Frontier (for HCPs located in Alaska only): areas outside of a Core Based Statistical Area that are inaccessible by road as determined by the Alaska Department of Commerce, Community, and Economic Development, Division of Community and Regional Affairs.

The rural rate will be the median of all available rates for the same or functionally similar service offered within the rural tier, applicable to the HCP’s location within the state.

Urban Rate: The urban rate will be the median of all available rates identified by USAC for functionally similar services in all urbanized areas of the state where the HCP is located to the extent that urbanized area falls within the state.

What rates will you use?

  • Rural rates: HCPs must use the lower of the rural rate available in USAC’s database or the rate included in the service agreement that the HCP enters into with the service provider when requesting funding.
  • Urban rates: HCPs must use the urban rate available in USAC’s database.

For HCPs located in Alaska

On January 19, the FCC released DA 21-83, waiving the requirement for health care providers located in Alaska to use the Telecom Program Rates Database for determining rural rates. FY2021 applicants will submit their FCC Form(s) 466 using prior year Telecom Program rules for determining the rural rate e.g. (selecting Methods 1, 2, or 3). For details on how to file an FCC Form 466 using these methods, watch our FY2020 Telecom Funding Request Best Practices Webinar.

Please note, this waiver does not apply to urban rate calculations, and applicants in Alaska must still use the Rates Database to determine urban rates for health care providers.

This waiver is in place for FY2021, for which competitive bidding has already begun, and for FY2022 unless the FCC has separately addressed the pending petitions for reconsideration within the year (i.e., by January 19, 2022).


Service Delivery Deadline

The service delivery deadline for recurring and non-recurring services is currently the funding end date, no later than June 30, as indicated on an applicant’s funding commitment letter (FCL). There are instances in which USAC has issued an FCL with a funding end date prior to June 30 to coincide with a contract end date. Effective for FY2020, the service delivery deadline is June 30 of the funding year for which the program support is sought. Applicants can receive a one-year extension of the deadline for non-recurring services if they meet the following criteria:

  • applicants whose funding commitment letters are issued by USAC on or after March 1 of the funding year for which discounts are authorized;
  • applicants that receive service provider change authorizations or site and service substitution authorizations from USAC on or after March 1 of the funding year for which discounts are authorized;
  • applicants whose service providers are unable to complete implementation for reasons beyond the service provider’s control; or
  • applicants whose service providers are unwilling to complete delivery and installation because the applicant’s funding request is under review by USAC for program compliance.
Invoice Filing Deadline

Under current FCC rules, the Telecom Program has no invoice filing deadline, and the HCF Program invoice filing deadline is six months from the funding commitment end date. Effective FY2020, the invoice filing deadline will be four months (120 days) from the service delivery deadline or the date of a revised FCL approving a post-commitment request or a successful appeal of a previously denied or reduced funding request, whichever comes later, in both RHC programs.

The Order also adopts a rule, effective FY2021, permitting a single 120-day extension of the invoice filing deadline should the HCP be prevented from meeting the invoice filing deadline for any reason, if submitted prior to the original invoice filing deadline.

Site and Service Substitutions

The HCF Program currently permits site and service substitutions. Effective for FY2021 FRNs, site and services substitution procedures are allowed in the Telecom Program. Applicants will be required to submit all site and service substitution requests by the applicable service delivery deadline.

Update: On November 30, 2020, the FCC released Order DA 20-1420 amending the effective date for site and service substitutions in the Telecom program. The effective date for site and service substitutions in Telecom is moved up to cover the remainder of FY2020, 30 days after publication in the Federal Register. Under these Orders, Telecom Program applicants may request a service substitution using the same guidelines for individual applicants in the HCF Program. Learn more.

SPIN Changes

The scenarios under which SPIN changes can be requested under the HCF and Telecom Programs have now been formalized. Starting in FY2021, all SPIN changes must be requested by the service delivery deadline.


Additional Changes

HCF Program $150M Cap

In FY2020 and subsequent funding years, the $150 million cap on multi-year commitments and upfront payments in the HCF Program shall also be increased annually to take into account increases in the rate of inflation similar to the overall cap for the RHC program.

Gift Rule

Beginning February 1, 2020, RHC program applicants and their consultants, if any, are prohibited from soliciting or accepting gifts from service providers.  The new requirement, modeled after E-Rate’s gift rule, specifically prohibits an RHC program applicant and/or its consultant from directly or indirectly soliciting or accepting anything of value (including meals, tickets to sporting events or trips) from a service provider.

Consultant or Outside Expert Information (Declaration of Assistance)

If an HCP uses a consultant or outside expert, it must provide information for the consultant or outside expert in a declaration of assistance. Required information includes: the consulting firm name, street address, city, state, and zip code; consulting firm telephone number; and consulting firm email address. The HCP must also describe the nature of the relationship it has with any consultant or other outside expert identified in its declaration of assistance.

Starting in FY2021, service providers will have to include a declaration of assistance when approving invoices and describe the nature of the relationship they have with a consultant, vendor, or outside expert who aids them in the preparation of their application.