Clarifying Statements from “Unfinished Business in the RHC Program” Webinar

This blog was originally published by Fletcher, Heald & Hildreth's CommLawBlog on February 21, 2020. It has been republished here with the author's permission.

By Jeffrey Mitchell, Attorney, Fletcher, Heald & Hildreth, PLC

While press coverage is always welcome, and while most trade reporters are thorough and careful in their reporting, occasionally one must address a situation where a reporter has wildly misunderstood what was said.  That is the case with the Broadband Breakfast article concerning my remarks during an open webinar put on by the Schools, Health & Libraries Broadband (SHLB) Coalition on January 29, 2020.

The webinar entitled “Unfinished Business in the RHC Program” focused on the Federal Communications Commission (FCC) Rural Health Care (RHC) program reform order from last summer. Having drafted one of the petitions for reconsideration of that order filed last fall, I am on record with certain criticisms of the Commission’s reform effort, which I recounted during the webinar. Unfortunately, those criticisms were garbled in the Broadband Breakfast account of my remarks. We contacted the reporter at Broadband Breakfast multiple times and requested corrections which included misspellings of my name.  It does not appear any corrections were made.

To set the record straight:

“Mitchel [sic] was concerned that a hospital must serve at least 51 percent of rural residents in order to be eligible funding.”

No. There are no program rules concerning the types of residents a hospital must serve.

“Mitchel [sic] expressed shock that a consortia still servicing a substantial rural population might not meet the new threshold and hence lack vital funds.”

Sort of. This issue concerns hospitals and other health care providers that form consortia to participate in the program. Non-rural health care providers in such consortia can be eligible for the RHC subsidy when the majority of eligible consortium members are located in rural areas. Over the years such consortia have been successful leveraging the resources of the larger non-rural hospitals in ways that benefit their rural members. The FCC reform order made modest changes to this “majority-rural” requirement that are not particularly concerning.

What is concerning is the new scheme to prioritize funding when the program is oversubscribed. At first glance the new mechanism may seem reasonable: non-rural program participants will be the lowest priority and so will be the first to lose funding if the program exceeds its funding cap. The problem I pointed out in the SHLB petition and during the webinar is that the only non-rural participants in the program are those that participate in consortia. That means 100% of funding cuts will be borne by consortia, at least for the first two rounds of cuts that will occur. Some existing consortia will be devastated by such funding cuts. This prioritization scheme represents a huge policy change principally affecting consortia, something the Commission failed to consider in its justification of the change.

“Mitchell also worried that if the $571 million cap is met this year, which he predicts will happen, then non-rural consortia will bear 100 percent of the cuts.”

In light of my further explanation above, this is mostly true – although consortia with non-rural participation will bear the cuts, not “non-rural consortia.” Note also, the cap for this year (funding year 2019) was $594 million, not $571.  (My webinar slides mistakenly identified the 2018 cap amount which was $581 million.)

“Other petitions on the FCC’s order include those contesting the definition of 20 people or less per square mile as ‘critically underserved,’ as well as and those [sic] by Ohio and North Carolina seeking to raise the funding cap.”

No. SHLB’s petition requested the FCC clarify that areas with populations less than 20 persons per square mile will be considered “Medically Unserved”, whether or not they have received such a designation from the Health Resources and Services Administration (HRSA). This is important because part of the new funding prioritization system for the RHC program is based on these designations. The reason very low-density areas – typically in the west – may not have the designation is because they never sought it. It is not in the public interest to de-prioritize such areas for funding, and providing this clarification would have little impact on the Commission’s overall prioritization scheme.

The petition jointly filed by the Southern Ohio Health Care Network and the North Carolina Telehealth Network did ask the Commission to reconsider its decision not to further raise the RHC funding cap. Notably, all of the concerns noted above about the impacts of the new prioritization scheme would be mitigated if the cap was raised.  In other words, if the program had enough funding – as it did between 1998 and 2015 – it would not matter what the prioritization scheme was because it would not be triggered.

The Broadband Breakfast article also incorrectly simplified the new gift rules, which were covered by Gina Spade of Broadband Legal Strategies.

Spade advised webinar participants to check with their employees to ensure that they do not offer sports tickets or loans to their healthcare provider clients. Under the new law, nothing exceeding the value of a cup of coffee and snacks can be offered to clients.

This description of the restrictions, however, omits some other items that would be considered gifts, but too narrowly describes the exceptions. In addition to sport tickets and loans, other types of gifts could also run afoul of the rules. Service providers cannot offer – and healthcare provider employees cannot solicit or accept – meals, loans, tickets or anything else of value. There are two exceptions: (1) modest refreshments and (2) items that are worth $20 or less, as long as the items do not exceed $50 per employee from any one company in a calendar year.

The article also incorrectly characterized Ms. Spade’s statements on the new definition of “similar services."

Spade also criticized the ambiguities of the FCC’s new definition of ‘similar services’ to determine fair rates for urban and rural clients, as there are many more factors at play than the FCC’s narrow fixation on broadband speed. She also took issue with the FCC for empowering the Universal Service Administrator Company to determine urban and rural rates.

The Commission made only the bandwidth portion of the new definition effective immediately, but did include other factors than speed in the definition that will presumably take effect in Funding Year 2021. Regarding the Commission’s delegation to USAC to establish the urban and rural rates, Ms. Spade was summarizing the petitions for reconsideration that were filed by various parties.