Rural Health Care Pilot Program

The FCC has initiated a pilot funding program to facilitate the creation of a nationwide broadband network dedicated to health care, connecting public and private non-profit health care providers in rural and urban locations. Set forth below is information about this pilot program, including:

1) FCC Orders and News Releases about the pilot program;

2) An overview of the program in PDF slide presentation format;

3) Applications;

4) Frequently Asked Questions and Answers (FAQs);

5) Universal Service Administrative Company Pilot Program Website

6) U.S. Department of Health and Human Services Health Information Technology Website

Please Note: The overview of the pilot program and the FAQs are provided for general informational purposes only, and should not be considered official summaries of the FCC order adopting the program. Both the overview of the program and the FAQs may be updated periodically. Interested parties may wish to check this web page accordingly.

Notices & Press Releases

5/06/09
Comment Sought On Request To Merge Pennsylvania Rural Health Care Pilot Program Projects.
Public Notice: Word | Acrobat

4/16/09
FCC Update on Rural Health Care Pilot Program Inititative.
News Release: Word | Acrobat

04/16/09
WCB Grants a Merger Request from Two Participants in the Rural Health Care Pilot Program, Texas Healthcare Network and Texas Health Information Network Collaborative.
Order: Word | Acrobat

03/13/09
Comment Sought on Request to Merge Texas Rural Health Care Pilot Program Projects.
Public Notice: Word | Acrobat

12/05/08
WCB grants a merger request from two participants in the Rural Health Care Pilot Program, Southern Ohio Health Care Network and Holzer Consolidated Health Systems.
Order: Acrobat

12/05/08
WCB grants a merger request from two participants in the Rural Health Care Pilot Program, As One Together for Health and the University of Mississippi Medical Center.
Order: Acrobat

10/24/08
WCB Letter to USAC on Rural Health Care Pilot Program Eligible Costs, Restrictions on Resale, and Sustainability.
Acrobat

10/01/08
Holzer Consolidated Health Systems (HCHS) and Southern Ohio Health Care Network (SOHCN): Wireline Competition Bureau seeks comment on a request by HCHS and SOHC to merge their Rural Health Care Pilot Program projects in Ohio into one project, with SOHC as the successor of the HCHS project. Comments are due October 8, 2008, and reply comments are due October 15, 2008.
Public Notice: Word | Acrobat

09/19/08
Comment Sought On Request To Merge Mississippi Rural Health Care Pilot Program Projects. (9/19/08)
Public Notice: Word | Acrobat

07/28/08
Rural Health Care Pilot Program Participants' Quarterly Reports Due July 30, 2008.
Public Notice: Word | PDF

01/22/08
Office of Management and Budget Approves Rural Health Care Pilot Program Information Collection Requirements.
Public Notice: Word | PDF | Text

01/17/08
WCB Letter to USAC on Rural Health Care Pilot Program Carry-Over of Funds.
Letter: Acrobat

12/20/07
WCB Sends Letter Congratulating RHC Pilot Program Selected Participants and Reminding Them of the Program’s Competitive Bid Requirements.
Letter: Acrobat | Text

11/13/07
Chairman Martin Discusses Benefits of Deploying Broadband Telehealth Networks in Rural and Underserved Communities.
News Release: Word | PDF
Speech: Word | PDF
Slides: PDF

08/17/07
U.S. Department of Health and Human Services Office of the National Coordinator for Health Information Technology Letter to FCC Identifying Ways the Pilot Program Can Advance the Goals of the National Health Information Network Initiative.
Letter: PDF

03/09/07
FCC Announces May 7, 2007 Deadline for Pilot Program Applications.
Public Notice: Word | PDF

02/06/07
FCC Expands Eligibility for Backbone Connections in Rural Health Pilot.
News Release: Word | PDF
Order: Word | PDF

11/21/06
FCC Launches "Rural Health Care Pilot Program" Website.
News Release: Word | PDF

11/06/06
WCB Seeks Comment on the Petition for Reconsideration or in the Alternative, Clarification Filed by National LambdaRail, Inc. On October 30, 2006, National LambdaRail, Inc. filed a petition for reconsideration or, in the alternative, clarification of the Commission's Order establishing a rural health care pilot program to encourage the provision of telehealth and telemedicine services throughout the nation. Comment Date: 11/21/06; Reply Comment Date: 11/28/06. WC Docket No. 02-60.
Public Notice: Word | PDF

Frequently Asked Questions and Answers

Rural Health Care Pilot Program
In the Matter of Rural Health Care Support Mechanism,
WC Docket No. 02-60

Program Scope, Selection, and Denials

1. What is the FCC's Rural Health Care Pilot Program?

2. How does the Pilot Program differ from the existing Rural Health Care Program?

3. What are the benefits of the Pilot Program?

4. Who is able to receive funding under the Pilot Program?

5. Are data centers eligible for funding under the Pilot Program?

6. May health care providers (either those that did not apply for the Pilot Program or those that applied but were not selected to participate in the Pilot Program) now participate in the Pilot Program?

7. How will the Pilot Program help public safety and health care officials coordinate during emergencies?

Pilot Program Administration and Audits

8. Who will administer the program?

9. What is the administrative/implementation process for reimbursement of selected Participants?

10. What types of costs are eligible for Pilot Program funding?

11. What types of costs are ineligible?

12. Does Pilot Program funding covering network design studies include costs associated with consultant services, personnel costs, or program administration?

13. May a Participant use Pilot Program universal service support to deploy its network and then later lease or sell parts of its network facilities or network capacity?

14. Does the program limit funding to any specific technology?

15. Are there restrictions on from where selected Participants may derive their 15 percent (or more) contribution?

16. May Pilot Program participants use broadband grant or loan funding authorized by the American Recovery and Reinvestment Act of 2009 (ARRA) for their Pilot Program networks?

17. May an applicant modify its proposed network once selected?

18. How do Participants choose their vendors?

19. May Pilot Program participants be allowed to “self-provision” components of their projects, such as network design studies and modeling?

20. Does a Participant need to submit letters of agency with its forms and materials when it only seeks bids for a network design study?

21. What steps has the Commission taken to ensure that Pilot Program funds will be used for their intended purposes?

22. How will Pilot Program funds be disbursed?

23. How will the FCC ensure selected Participants do not game the system?

24. What types of information should be included in a participant’s sustainability plan?

25. How will the Commission evaluate the success of the Pilot Program?

26. Can discounts under the existing Rural Health Care (RHC) support mechanism be a part of a RHC Pilot Program participant's self-sustainability plan?

27. In selecting a vendor, may a participant consider the vendor’s commitment to provide excess capacity for community use?

Program Scope, Selection, and Denials

1. What is the FCC's Rural Health Care Pilot Program?

On November 19, 2007, the Federal Communications Commission (Commission) released the Rural Health Care Pilot Program Selection Order selecting 69 participants covering 42 states and three U.S. territories to be eligible to receive funding for up to 85 percent of the costs associated with: (1) the construction of a state or regional broadband network and the advanced telecommunications and information services provided over that network; (2) connecting to Internet 2 or National LambdaRail (NLR); and (3) connecting to the public Internet.
The Universal Service Administrative Company (USAC) will administer the program under the oversight of the Commission. USAC is an independent, not-for-profit corporation created by the Commission and designated as the administrator of the Universal Service Fund (USF). USAC administers USF programs for high cost companies serving rural areas, low-income consumers, schools and libraries, as well as for rural health care providers. Information concerning USAC can be found on its website at www.USAC.org.
Total maximum funding for the 69 selected participants will be approximately $417 million over three years (Funding Years 2007 to 2009 of the existing Rural Health Care support mechanism) (or $139 million per funding year). Selected participants’ network build-outs must be completed within five years of receiving an initial funding commitment letter from USAC.
The Commission intends to use the information gathered from funding Participants in the Pilot Program to develop a more complete and practical understanding of how to modify the pre-existing universal service Rural Health Care mechanism long-term in order to support the deployment of a broadband nationwide health care network, focusing on the rural areas of the country where support is needed the most.

2. How does the Pilot Program differ from the existing Rural Health Care Program?

The existing Rural Health Care funding mechanism is designed to ensure that rural health care providers pay no more than their urban counterparts for their telecommunications and Internet access needs in providing health care services. In contrast, the Pilot Program is broader in scope and will fund up to 85 percent of the costs of the actual infrastructure design and construction of broadband networks for health care purposes. If requested, the Pilot Program will also provide funding to support up to 85 percent of the cost of connecting the state or regional networks to Internet2 or National LambdaRail, which are both dedicated nationwide backbones, as well as to the public Internet. In addition, unlike the existing program, the Pilot Program will fund connecting eligible health care providers in rural areas to those in urban areas. This will promote telehealth and telemedicine access for rural health care providers to medical hubs, which are often located in urban areas.

3. What are the benefits of the Pilot Program?

The benefits of telehealth and telemedicine applications that ride over broadband facilities are enormous, and a broadband network that connects multiple health care providers, including a significant number in rural areas, would bring those benefits to those areas of the country where the need for those benefits is most acute. For example:
- Telehealth applications allow patients to access critically needed medical specialists in a variety of practices, including cardiology, pediatrics, and radiology, without leaving their homes or communities.
- Linking statewide and regional networks to a nationwide backbone would connect a number of government research institutions, as well as academic, public, and private health care institutions that are repositories of medical expertise and information.
- Intensive care doctors and nurses can monitor critically ill patients at multiple locations around the clock.
- Health care providers would benefit from advanced applications in continuing education and research.
- A nationwide health care network would enhance health care communities’ abilities to provide a rapid and coordinated response in the event of a public health crisis and provide vital links for disaster preparedness and emergency response.

4. Who is able to receive funding under the Pilot Program?

Public and not-for-profit health care providers are eligible to receive funding. For purposes of the Pilot Program, the definition of “Health Care Provider” is the same as that of Section 254(h)(7)(B) of the Communications Act and the FCC’s rules for the existing Rural Health Care program. Eligible health care providers include:
- Post-secondary educational institutions offering health care instruction, teaching hospitals, or medical schools;
- Community health centers or health centers providing health care to migrants;
- Local health departments or agencies including dedicated emergency departments of rural for-profit hospitals;
- Community mental health centers;
- Not-for-profit hospitals;
- Rural health clinics, including mobile clinics;
- Consortia of health care providers consisting of one or more of the above entities; and
- Part-time eligible entities located in otherwise ineligible facilities.
- Although emergency medical service facilities themselves are not eligible providers for purposes of the RHC Pilot Program, Pilot Program funds may be used to support costs of connecting an emergency medical service facility to eligible health care providers to the extent that the emergency medical services facility is part of the eligible health care provider.
Non-eligible health care providers include any for-profit institutions (except as noted above), or any other types of entities not listed above. Examples of non-eligible providers include:
- Private physician offices or clinics;
- Nursing homes or other long-term care facilities (e.g. assisted living facilities);
- Emergency medical service facilities;
- Residential substance abuse treatment facilities;
- Hospices;
- For-profit hospitals;
- Home health agencies;
- Blood banks;
- Social service agencies; and
- Community centers, vocational rehabilitation centers, youth centers.

5. Are data centers eligible for funding under the Pilot Program?

If a data center is connected (e.g., transmits data to and receives data from) to an eligible health care provider, the data center may qualify for funding as an eligible network component. For example, the Rural Wisconsin Health Cooperative Consortium is appropriately using Pilot Program funding for an electronic healthcare records (EHRs) data center connected to numerous eligible health care providers. Rural Wisconsin’s Pilot Program application, which explains its shared EHR system, may be accessed at:
http://fjallfoss.fcc.gov/prod/ecfs/retrieve.cgi?native_or_pdf=pdf&id_document=6519409890
Data centers, however, do not qualify as eligible health care providers under section 254(h)(7)(B) of the Communications Act and FCC rules. Examples of eligible health care providers are included in the answer to FAQ # 4 above. Accordingly, a stand-alone data center (not connected to an eligible health care provider) is not eligible for Pilot Program funding.
If a product or service contains both eligible ad ineligible components, costs should be allocated to the extent that a clear delineation can be made between the eligible and ineligible components. See 2007 RHC PP Selection Order, para 76. Thus, costs associated with data centers that are unique and specific to the Pilot Program projects may be reimbursed with Pilot Program funds, whereas data centers that handle traffic for eligible health care providers as well as traffic for other entities could receive funding for a portion of the use of such data center (i.e., the portion that relates to eligible use).

The Pilot Program is limited to Participants that were selected in the Rural Health Care Pilot Program Selection Order. However, eligible health care providers not represented in the selected Participants’ applications may pursue ways to be included in their networks which are eligible for Pilot Program funding. Eligible health care providers not participating in the Pilot Program also are encouraged to contact USAC to discuss their possible participation in the existing Rural Health Care support mechanism which, among other things, provides discounts on installation and monthly charges for telecommunications and Internet access service. Information on the existing program and USAC contact information is available on USAC’s website at www.usac.org/rhc/. In addition, after three years, the Commission intends to revisit its rules and determine how to improve the current program, and encourages all eligible health care providers to participate in any subsequent proceedings.

7. How will the Pilot Program help public safety and health care officials coordinate during emergencies?

In 2004, the President issued an Executive Order calling for the development and implementation of a national interoperable health information technology infrastructure. To further this goal, funded Participants, where feasible, must: (1) use health information technology (IT) systems and products that meet interoperability standards recognized by the Secretary of the United States Department of Health and Human Services (HHS); (2) use health IT products certified by the Certification Commission for Healthcare Information Technology; (3) support the Nationwide Health Information Network (NHIN) architecture by coordinating activities with the organizations performing NHIN trial implementations; (4) use resources available at HHS’s Agency for Healthcare Research and Quality National Resource Center for Health Information Technology; (5) educate themselves concerning the Pandemic and All Hazards Preparedness Act and coordinate with the HHS Assistant Secretary for Public Response as a resource for telehealth inventory and for the implementation of other preparedness and response initiatives; and (6) use resources available through HHS’s Centers for Disease Control and Prevention (CDC) Public Health Information Network to facilitate interoperability with public health and emergency organizations
Pilot Program Participants must coordinate in the use of their health care networks with HHS and, in particular, with the CDC in instances of national, regional, or local public health emergencies (e.g., pandemics, bioterrorism). In such instances, where feasible, selected Participants shall provide access to their supported networks to HHS, including CDC, and other public health officials.

Pilot Program Administration and Audits

8. Who will administer the program?

The Universal Service Administrative Company (USAC) will administer the program under the oversight of the Commission. USAC is an independent, not-for-profit corporation created by the Commission and designated as the administrator of the Universal Service Fund (USF). USAC administers USF programs for high cost companies serving rural areas, low-income consumers, schools and libraries, as well as for rural health care providers. Information concerning USAC can be found on its website at www.USAC.org.
USAC will also conduct a targeted outreach program to educate and inform Participants on the Pilot Program administrative process, including various filing requirements and deadlines, in order to minimize the possibility of selected Participants making inadvertent ministerial or clerical errors in completing the required forms.

9. What is the administrative/implementation process for reimbursement of selected Participants?

Selected Participants must file FCC Form 465 with USAC to make a bona fide request for supported services. The FCC Form 465 is the means by which a selected Participant requests bids for supported services and certifies to USAC that it is eligible to benefit from the Rural Health Care support mechanism. USAC posts the completed FCC Form 465 on its website and a selected Participant must wait at least 28 days from the date on which its FCC Form 465 is posted on USAC’s website before selecting a service provider(s).
Next, after the selected Participants choose their service provider(s), they must submit to USAC FCC Form 466-A to indicate the type(s) of service ordered, the cost of the ordered service, information about the service provider(s), and the terms of the service agreement(s). Each selected Participant must certify on the FCC Form 466-A that the Participant has selected the most cost-effective method of providing the selected service(s). Along with its FCC Form 466-A, a selected Participant must submit to USAC a copy of the contracts or service agreements with the selected service provider(s) and must include a detailed line-item network costs worksheet that includes a breakdown of total network costs (both eligible and ineligible costs). Selected Participants’ network costs worksheet submissions must demonstrate how ineligible (e.g., for-profit) Participants will pay their fair share of network costs.
FCC Form 467 is then used by the selected Participant to notify USAC that the service provider has begun providing the supported service and is also used to notify USAC when the applicant has discontinued the service or if the service was or will not be turned on during the funding year.
USAC will disburse Pilot Program funds based on monthly submissions (i.e., invoices) from service providers of actual incurred eligible expenses. Service providers are only permitted to invoice USAC for eligible services apportioned to eligible health care provider network Participants.

10. What types of costs are eligible for Pilot Program funding?

Initial network design studies;
Construction and network deployment;
Transmission facilities;
Recurring and non-recurring costs of advanced telecommunications and information services, such as connection to the public Internet; and
If requested, costs of connecting the regional or state networks to Internet2 or National LambdaRail, which are both dedicated nationwide backbones.

11. What types of costs are ineligible?

Personnel costs (including salaries and fringe benefits), except for those personnel directly engaged in designing, engineering, installing, constructing, and managing the dedicated broadband network. Ineligible costs of this category include, for example, personnel to perform program management and coordination, program administration, and marketing.
Travel costs.
Legal costs.
Training, except for basic training or instruction directly related to and required for broadband network installation and associated network operations. For example, costs for end-user training, e.g., training of health care provider personnel in the use of telemedicine applications, are ineligible.
Program administration or technical coordination that involves anything other than the design, engineering, operations, installation, or construction of the network.
Inside wiring or networking equipment (e.g., video/Web conferencing equipment and wireless user devices) on health care provider premises except for equipment that terminates a carrier’s or other provider’s transmission facility and any router/switch that is directly connected to either the facility or the terminating equipment.
Computers, including servers, and related hardware (e.g., printers, scanners, laptops) unless used exclusively for network management.
Helpdesk equipment and related software, or services.
Software, unless used for network management, maintenance, or other network operations; software development (excluding development of software that supports network management, maintenance, and other network operations); Web server hosting; and Website/Portal development.
Telemedicine applications and software; clinical or medical equipment.
Electronic records management and expenses.
Connections to ineligible network participants or sites (e.g., for-profit health care providers) and network costs apportioned to ineligible network participants.
Administration and marketing costs (e.g., administrative costs; supplies and materials (except as part of network installation/construction); marketing studies, marketing activities, or outreach efforts; evaluation and feedback studies).

12. Does Pilot Program funding covering network design studies include costs associated with consultant services, personnel costs, or program administration?

Yes. As specified in the 2007 Rural Health Care Pilot Program Selection Order, for purposes of the Pilot Program, funding covers all costs to set up a network design study, costs to analyze both technical and non-technical requirements of the network design; and all costs to develop a feasible network design based on network design analyses. Personnel costs (including salaries and fringe benefits) for personnel directly engaged in designing a Participant’s broadband network are also covered by the Pilot Program. In addition, Pilot Program funding may be used for costs associated with program administration or technical coordination that involve design of the network. See 2007 RHC PP Selection Order, paras. 74-75, n. 238.

13. May a Participant use Pilot Program universal service support to deploy its network and then later lease or sell parts of its network facilities or network capacity?

No. A Pilot Program Participant may not sell, lease, or transfer its network facilities or network capacity supported by Pilot Program universal service funding to another entity. See 47 U.S.C. § 254(h)(3); 47 C.F.R. § 54.617(a); 2007 RHC PP Selection Order, paras. 105-108.
Pilot Program funds must be used to support the costs of constructing dedicated telehealth broadband networks that connect health care providers in a state or region, and connect such state and regional networks to the public Internet, as well as, Internet2, or National LambdaRail. In doing so, Pilot Program funding is available only for network components eligible for support. See 2007 RHC PP Selection Order, para. 74; 2006 Pilot Program Order, paras. 10, 14, 74-76.
Section 254(h)(3) of the 1996 Act provides that “[t]elecommunications services and network capacity provided to a public institutional telecommunications user under this section may not be sold, resold, or otherwise transferred by such user in consideration for money or any other thing of value.” Consistent with this statute, section 54.617 of the Commission’s rules states, “services purchased pursuant to universal service support mechanisms under this subpart shall not be sold, resold, or transferred in consideration for money or another thing of value.” See 47 U.S.C. § 254(h)(3); 47 C.F.R. § 54.617(a); 2007 RHC PP Selection Order, paras. 105-108.
A Participant, however, may share excess network capacity with an ineligible entity so long as the ineligible entity pays its fair share of network costs attributable to the portion of the network capacity used, and the Participant has not received program funding for such portion. See 2007 RHC PP Selection Order, para. 107.

14. Does the program limit funding to any specific technology?

No. Consistent with section 254(h)(2)(A) of the 1996 Act, the program is “competitively neutral,” which means that universal service support mechanisms and rules neither unfairly advantage nor disadvantage one provider over another, and neither unfairly favor nor disfavor one technology over another. Provided they comply with the administrative and other requirements of the Pilot Program Selection Order and Commission rules, eligible health care providers may choose any technology and provider of the broadband infrastructure and connectivity needed to provide telehealth, including telemedicine services. Consistent with section 254(h)(2)(A) of the 1996 Act, the ultimate selection of a vendor is subject to competitive bidding requirements.

15. Are there restrictions on from where selected Participants may derive their 15 percent (or more) contribution?

Yes. Only funds from an eligible source will apply towards selected Participants’ required 15 percent minimum contribution. Eligible sources include the applicant or eligible health care provider Participants; state grants, funding, or appropriations; federal funding, grants, loans, or appropriations except for Rural Health Care funding; and other grant funding, including private grants. Ineligible sources include in-kind or implied contributions; a local exchange carrier (LEC) or other telecom carrier, utility, contractor, or other service provider; and for-profit participants. Moreover, selected Participants may not obtain any portion of their 15 percent contribution from the existing Rural Health Care support mechanism.

16. May Pilot Program participants use broadband grant or loan funding authorized by the American Recovery and Reinvestment Act of 2009 (ARRA) for their Pilot Program networks?

Yes. As discussed in the 2007 Rural Health Care Pilot Program Selection Order, Pilot Program participants may utilize federal grants and loans to pay for their minimum 15 percent contribution. See 2007 RHC PP Selection Order, para. 77. Accordingly, Pilot Program participants may seek ARRA funding for their 15 percent match provided that this use of funding is consistent with all requirements of the ARRA.
The FCC does not have jurisdiction over the broadband grants and loans authorized by the ARRA. The U.S. Department of Commerce’s National Telecommunications and Information Administration (NTIA) and the U.S. Department of Agriculture’s Rural Utilities Service (RUS) are responsible for administering the grants and loans authorized by the ARRA. Detailed information about NTIA’s and RUS’s broadband grant and loan programs can be found at the following websites:
http://www.ntia.doc.gov/broadbandgrants/
http://www.usda.gov/rus/telecom/index.htm

17. May an applicant modify its proposed network once selected?

Yes, if a selected Participant wishes to upgrade, replace technology, or add eligible health care providers to its proposed network prior to commencing and completing the competitive bidding process, it may receive support to do so as long as that support does not exceed the maximum available support amount listed in the Pilot Program Selection Order and the support is used for eligible expenses. However, each funding commitment letter (FCL) caps the Participant’s support for the services covered by the FCL and the last FCL issued to the Participant in a Funding Year caps the support available for that Funding Year. The difference between the total amount committed under all FCLs for the Participant for the Funding Year and the maximum support amount for the Participant for the Funding Year – the “cap carry over” amount – will then be applied to the next Funding Year in addition to the Participant’s maximum support amount for the next Funding Year.

18. How do Participants choose their vendors?

The Pilot Program operates under the Commission’s existing universal service rules, including the competitive bidding requirements. The Commission, however, provided for a limited exception to the competitive bidding rules allowing applicants to pre-select the use of Internet2 or National LambdaRail (NLR) as a nationwide backbone provider in their applications filed in May 2007 to participate in the Pilot Program. Other than existing pre-selections covered by this approved, limited exception, all funding requests are subject to the competitive bidding rules.
The competitive bidding rules ensure that health care providers are aware of cost-effective alternatives and ensure that universal service support is used wisely and efficiently.
The competitive bidding rules also ensure that universal service support does not disadvantage one provider over another, or unfairly favor or disfavor one technology over another.

19. May Pilot Program participants be allowed to “self-provision” components of their projects, such as network design studies and modeling?

Yes. A participant may ultimately select itself to “self-provision” components of its project – but only after participating in a competitive bidding process in which the participant determines that it is the most cost-effective provider. After selecting a vendor, whether itself or another provider, a participant must certify that it selected the most cost-effective method of providing service. See 2007 RHC PP Selection Order, para. 100.
As explained in the answer to FAQ # 18 above, the competitive bidding rules ensure that Pilot Program participants are aware of cost-effective alternatives, and that universal service support is used wisely and efficiently.

20. Does a Participant need to submit letters of agency with its forms and materials when it only seeks bids for a network design study?

Yes. Consistent with the 2007 Rural Health Care Pilot Program Selection Order, each Participant is to include with its FCC Form 465 a Letter of Agency (LOA) from each participating health care facility to authorize the lead project coordinator to act on its behalf, to demonstrate that each health care provider has agreed to participate in the selected participant’s network, and to avoid improper duplicate support for health care providers participating in multiple networks. See 2007 RHC PP Selection Order, para. 87.

21. What steps has the Commission taken to ensure that Pilot Program funds will be used for their intended purposes?

In order to receive universal service support, selected Participants must submit, in addition to the required USAC Forms, detailed worksheets concerning their proposed network costs (both eligible and ineligible), certifications demonstrating universal service support will be used for its intended purposes, letters of agency from each participating health care provider, and detailed invoices showing actual incurred costs of project build-out, among others.
In addition, all Pilot Program Participants (health care facilities and service providers) are subject to being audited by the Office of the Inspector General.

22. How will Pilot Program funds be disbursed?

USAC will disburse Pilot Program funds based on monthly submissions (i.e., invoices) of actual incurred eligible expenses, and will respond to service provider invoices in accordance with its current bi-monthly invoicing payment plan. This invoice process will permit disbursement of funds to ensure that the selected Participants’ network projects proceed, while allowing USAC and the Commission to monitor expenditures in order to ensure compliance with the Pilot Program and prevent waste, fraud, and abuse.

23. How will the FCC ensure selected Participants do not game the system?

The Commission will ensure waste, fraud, and abuse does not occur by requiring all Participants to comply with the competitive bidding requirements. In addition, USAC will conduct random site visits to selected Participants to ensure support is being used for its intended purposes, and as necessary and appropriate based on USAC’s review of the selected Participants’ data submissions.
Each Pilot Program Participant and service provider shall be subject to audit by the Commission’s Office of the Inspector General (OIG) and, if necessary, investigated by the OIG, to determine compliance with the Pilot Program, Commission rules and orders, as well as section 254 of the 1996 Act. To further prevent against waste, fraud, and abuse, selected Participants are required to identify any consultants, service providers, or any other outside experts, whether paid or unpaid, who aided in the preparation of their Pilot Program applications.

24. What types of information should be included in a participant’s sustainability plan?

In order to ensure the long-term success of broadband health care networks and to prevent wasteful allocation of limited universal service funds, RHC Pilot Program participants are required to provide assurances that their proposed networks will be self-sustaining once established.

Although each project’s sustainability plan will be reviewed on a case by case basis, generally, a sustainability plan should discuss the following points:
- Minimum 15% Funding Match: Discuss status of obtaining minimum 15% match for the project. If such project funding is dependent on appropriations or other special conditions, such conditions should be discussed.
- Projected sustainability period: Indicate the sustainability period and how it compares to the initial investment. Although a sustainability period of 10 years is generally appropriate, the period of sustainability should be commensurate with the investments made with Pilot Program funds.
- Principal factors: Discuss each of the principal factors that were considered by the participant to demonstrate sustainability. These factors should be discussed in narrative, and (if appropriate) shown in proposed budgets.
- Terms of Membership in the Network:
  - Describe generally any agreements made (or to be entered into) by network members (e.g., participation agreements, memoranda of understanding, usage agreements, or other documents).
  - Describe financial and/or time commitments made by proposed members of the network.
  - If the project includes excess bandwidth for growth of the network, describe how such excess bandwidth will be financed.
  - If the network will include eligible health care providers and other network members, describe how fees for joining and using the network will be assessed.
- Excess Capacity: If the project includes excess capacity to be used for any purpose other than the dedicated health care network, explain the funding for such excess capacity. In doing so: (i) indicate how users of such excess capacity are paying their fair share; and (ii) describe generally agreements made between the health care network portion of the project and the excess capacity portion of the project (e.g., cost allocation, sharing agreements, maintenance and access, ownership).
- Ownership Structure: Explain who will own each material element of the network, and arrangements made to ensure continued use of such elements by the network members for the duration of the sustainability period.
- Sources of Future Support: If sustainability is dependent on . . .
  - fees to be paid by eligible health care providers – then, describe generally the health care providers’ commitments and ability to pay such fees;
  - fees to be paid by other network members – then, describe generally the likelihood of demand to use the network by such entities;
  - revenues from excess capacity – then, describe generally the likelihood of demand for such excess capacity.
- Management: Describe the management structure for the network for the duration of the sustainability period, and how management costs will be funded.

25. How will the Commission evaluate the success of the Pilot Program?

Selected Participants will be required to submit to USAC and to the Commission quarterly reports containing certain data specified in the Pilot Program Selection Order. These data will serve as a guide for further Commission action by informing the Commission’s understanding of cost-effectiveness and efficacy of the different state and regional networks funded. These data will also enable the Commission to ensure Rural Health Care program funds are being used in a manner consistent with section 254 of the 1996 Act, the Pilot Program Selection Order, and the Commission’s rules and orders. In particular, the Commission has determined collection of this data is critical to the goal of preventing waste, fraud, and abuse by ensuring that funding is flowing through to its intended purpose.

26. Can discounts under the existing Rural Health Care (RHC) support mechanism be a part of a RHC Pilot Program participant's self-sustainability plan?

Yes. RHC Pilot Program participants are required to provide assurances that their proposed networks will be self-sustaining once established. Any reliance on the existing RHC support mechanism to demonstrate network self-sustainability under the Pilot Program must be supported by a showing that facilities and services are currently receiving or would be eligible to receive discounts under the existing RHC support mechanism. Participants may make this showing in their quarterly reports.

27. In selecting a vendor, may a participant consider the vendor’s commitment to provide excess capacity for community use?

Yes, as long as USF funds are not used to pay for the excess capacity and there is no increase in the cost for the dedicated network facilities.
The Pilot Program will fund up to 85% of the costs incurred to deploy a state or regional dedicated broadband health care network. Only eligible health care providers and consortia that include eligible health care providers may apply for and receive funding. Ineligible entities are prohibited from receiving any funding from the Pilot Program. A selected participant is not restricted from sharing a network with ineligible entities, but the ineligible entities must pay their fair share of network costs attributable to the portion of network capacity used. See 2007 RHC PP Selection Order, paras. 16-19, 47, 73, 107. For these reasons, a participant must be able to demonstrate that a vendor’s provision of excess capacity for community use will not increase the cost of the dedicated broadband health care network.
As part of the competitive bidding requirements, participants must certify to USAC that the vendor it chooses is, to the best of the participant’s knowledge, the most cost-effective service or facility provider available. The Commission has defined “cost-effective” as “the method that costs the least after consideration of the features, quality of transmission, reliability, and other factors that the health care provider deems relevant to . . . choosing a method of providing the required health care services.” While participants must make price a primary factor it does not have to be the sole primary factor. As detailed in paragraphs 78 and 79 of the 2007 RHC PP Selection Order, participants are required to consider non-cost evaluation factors. Accordingly, if a participant is either required under its applicable procurement rules or chooses to consider factors or assign points related to a vendor’s commitment to provide excess capacity for community use, it may do so, as long as the selected vendor is the most cost-effective.
If a vendor only pays the incremental costs for excess capacity facilities built on the vendors own initiative or at the request of the participant, ownership of such facilities must be retained by participant and eligible HCP entities (because the bulk of the costs are USF funded). In contrast, if the vendor pays fair share for the excess capacity facilities, it may retain ownership and/or sell the excess capacity to future customers.
The following must be considered when including excess capacity for community use as a factor in selecting a vendor:
- Participant must demonstrate that USF funds will not be used to pay for such excess capacity.
- The vendor must show that the costs for such excess capacity did not increase the eligible costs for the dedicated health care network.
- Participants must receive sufficient cost information to be able to determine costs for the excess capacity apart from the costs for the dedicated health care network, and should seek assurances from vendors that the bid cost and quality of service for dedicated broadband health care network is the same whether the excess capacity for community use is included or not.
- Participants should clarify in their RFPs that responses to the RFP that do not have commitments for excess capacity for community use, will also be considered.

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