1 Paloma Costa: Welcome to our first Healthcare Connect Fund webinar. Our presenters are Linda Oliver and Chin Yu from the FCC who will be providing an overview of the new program. Linda Oliver: This is Linda Oliver and I ll be talking first and then Chin can jump in a little bit later. We re very much interested in getting the word out to as many people as possible about the Healthcare Connect Fund. We think it s a terrific program of course. We
2 think it provides a lot of benefits to a lot of people and the more the word gets out there about it, the better and we re also very eager to have people understand how the new program works as soon as possible and to be able to answer everybody's questions. One thing that we're going to be working on is a list of frequently asked questions FAQs to put on our website and also USAC may be doing the same thing, so we re very interested in your questions both now on the call and anything subsequently. It helps us figure out more quickly what people understand and still need more clarification on.
3 The next two slides identify the most important features of the new Healthcare Connect Fund and before I say anything more I want to clear up something that has been a point of confusion for some people and that s to emphasize that the existing telecommunications program which some people refer to as the primary program, it s sort of the long-standing rural healthcare program at the FCC will continue even after the Healthcare Connect Fund gets underway. So, the fund is not intended to replace that telecommunications program. Instead, it s a different kind of program and is intended to supplement that. We expect that many participants in the current
4 program will switch over to the Healthcare Connect Fund. But we wanted to emphasize that. The Internet access program, which is a fairly small piece of the traditional program where participants get a 25% discount on Internet access, that will be folded into the new program where you get a better discount anyway. So I wanted to make that really clear right up front. In looking at these key features of the program, some of these make this new program very different from the existing telecommunications program and I am going to note where those features are different. We are going to be talking about a number of the points on these first two pages as we go through the presentation, so I m just going to talk on them, but at a high level. First, the purpose of the program is to provide support for broadband, both connectivity and to support networks of healthcare providers that are linked by broadband and that s because broadband is the key to so many healthcare applications right now that are improving the quality and reducing the cost of healthcare. So that is a goal of this program. Second, it s available both for consortium applicants and for individual healthcare providers. We have tried to make applying as an individual healthcare provider as easy as possible in this program, but we also have designed the program to work very well for consortium applicants who can apply with one application and include a large number of healthcare provider sites in that single application similar to the pilot program. There is a uniform 35% healthcare provider contribution required regardless of the type of cost your trying to get support for whether it is equipment, services, or infrastructure. And regardless of what kind of healthcare provider you are. That makes the program simple too. And, as you may know in the telecom program it is the difference between the urban and rural rate that is supported, and that can get complicated to calculate. Next, the timing of the funding. Funding will begin to flow beginning January 1, So in a year from now although the competitive bidding process will start in late summer, and, as many of you know, that's the beginning of the process that leads up to actually getting service and getting funding and support. For pilot projects, because they're already in existence and can use existing forms, we are going to have them be able to get support starting on July 1, And, that gives them an easy transition for their pilot project sites that may be running out of funds on that date.
5 The Healthcare Connect Fund covers both broadband services and healthcare provider-owned infrastructure. It s a hybrid approach. If you re familiar with the initial proposal that the FCC put out there they proposed two different programs. One for services and one for infrastructure, and, we have combined those in a single program, which we will talk about little bit later. We do expect that most healthcare providers are going to want just broadband services and not choose to own their own infrastructure but if owning their own infrastructure is more cost-effective, that option is available to them.
6 And then, non-rural healthcare providers can participate if they are members of consortia and if the consortium in that they belong to is majority rural. So, over 50% of the healthcare providers in the consortium have to be rural and under the Commission's traditional definition of rural. But this is the difference from the telecommunication program, the existing program, which only permits rural healthcare providers to participate. And this is something that reflects our experience in the pilot program where we did have non-rural healthcare providers participate and they made a very important contribution there. We are going to make multiyear funding commitments available to consortia applicants. And again, that s the difference in the telecom program that it makes is simpler to apply and you don t have to apply every year and you are ensured of the funding for I think it s a three-year period. Finally the Commission s order makes connections to healthcare provider off-site administrative offices or data centers eligible, those connections are eligible not the sites; but the connections.
7 So just a little background for those of you who need this. These are the current FCC rural healthcare programs and how they are going to be related to the new Healthcare Connect Fund. First, the telecommunications program that s what I have already discussed which funds the urban rural rate differential for telecommunication services only and only for rural healthcare providers and that s going to remain in place after the Healthcare
8 Connect Fund is implemented. Second, the Internet access program which I already also mentioned, that will end as of June 30, 2014, which gives current participants time to transition to the Healthcare Connect Fund. And, then the third program is the current program is the rural healthcare pilot program, which is still under way but no one has been able to apply for that for a few years because the applications were selected in That supports 50 statewide and regional broadband healthcare provider networks with both rural and non-rural members and that has been a big success; and, the FCC issued a staff report on that program this past summer and a lot of the features of the Healthcare Connect Fund are based on the experience of that program and what we found to be successful. We will talk a little bit more about that later. Participants in the pilot program can transition to the Healthcare Connect Fund as their pilot funds are exhausted; or, if they choose, they can go to the telecom program, the traditional program.
9 These goals of the Healthcare Connect Fund are in the Commission s order and we are also going to be measuring progress for those goals by collecting data from participants, so these goals include, first, increasing access to broadband for healthcare providers and especially focused on those serving rural areas. Second, to foster the development and deployment of broadband healthcare networks, which have a tremendous amount of benefit.
10 And, third to maximize a cost effectiveness of the program through simplifying the administrative process and through promoting lower rates for service through both buying and competitive bidding process. When we collect data to measure progress toward these goals, we are going to be very mindful of trying to minimize the burden on healthcare providers and to collect as much as we can of that information just through the application process.
11 The benefits of the consortium approach to our rural healthcare program these are the ones that we saw in the pilot program: creation and growth of broadband networks, we like to think that our funding of the broadband connectivity encourages healthcare provider networks to develop and grow and we hope that the Healthcare Connect Fund will promote that for existing pilot projects and also for new networks.
12 Second, lowering administrative costs and that is partly facilitated by enabling healthcare providers to participate as part of a consortium so that they don t have to fill out their own application and figure out everything else that goes into the process. Obviously, sharing the medical administrative and technical expertise that is often found in larger healthcare providers, in particular, urban hospital and medical centers sharing that with as many people as possible especially rural healthcare providers. We found in the pilot that the consortium approach led to lower prices, higher bandwidth, and better quality connections and we hope that will happen here too. The healthcare benefits of being part of a broadband network obviously access to medical specialists through telemedicine, something the American Telemedicine Association is well acquainted with, enhanced exchange of electronic health records, coordinated patient care, being able to train medical personnel in rural areas and just in general making the quality of healthcare and access to healthcare better and the cost lower.
13 Eligibility to participate is the same as in the traditional program with a couple of exceptions. So the first bullet talks about who can be eligible and I ll read it off for those who don t have the slides. You have to be public or non-profit healthcare provider and be in one of the statutory categories for eligibility. Hospitals, rural health clinics, community health centers serving migrants, community mental health centers, local health departments or agencies, post-secondary educational institutions, teaching hospitals or medical schools or a consortium of the above.
14 In addition, in this program unlike the telecom program non-rural healthcare providers can participate as I said before if they are in a consortium of the majority rural healthcare providers and even the largest healthcare providers are eligible to participate, but those with 400 or more patient beds are eligible but they have a cap on the support they can obtain its $30,000 annually in recurring charges and $70,000 in nonrecurring charges over a period of five years. I m going to turn this over to Chin Yu for a little bit more of the nuts and bolts.
15 Thanks Linda. Before we go into the details of the order for those of you who have looked at it, you know the order is long and there s a reason for that. When we started our rural healthcare pilot program in 2007 one of the feedback items we got was that we weren t very clear about what was funded and what procedures we were using. So, we ve really tried to rectify that with this new Healthcare Connect
16 Fund. Part of the trade-off is that the order is longer than it would have been otherwise but we ve tried very hard to be clear and specific. So we hope you'll go and take a look at the order. Today, I m only going to be able to give you sort of the high-level highlights. In terms of what we are going to be funding through the Healthcare Connect Fund, I want to give you a couple of cheat sheets. First of all page 51 of the order has a summary chart of what s funded and what section of the order discusses that further. In terms of what we don't fund, that s discussed in section 5C of the order, and if you look at page 202, rule , it has a brief list of examples of things that will not be eligible for funding, and that is in the section of the order that talks about all this is pages in section 5. So what is supported? There is a group of services and costs that are going to be supported for both individual and consortium applicants and by consortium we basically mean any application that includes more than one site. There are certain other charges that will be funded for consortia only because we are trying to encourage the formation of networks for the reasons that Linda discussed earlier. So what s important for all applicants? Well the big thing is broadband services, and what does that mean? We have a very broad definition of broadband services in the order. We have tried to future proof it so that you're not prevented from upgrading to higher bandwidth services as they come online. But basically the focus is on high speed connections. So, for example T1, T3, Ethernet services, MPLS, business Internet those type of services. And we do again have a broad definition so that you re not limited to point-to-point or to certain types of FCC regulatory categories like you are in the telecommunications program. We re also going to support reasonable and customary installation charges up to $5,000 which means that the 65% of that will be up to $3,250 in support from the Healthcare Connect Fund. We also have a number of other expenses that are not currently funded in the telecommunications program which will be available only through the Healthcare Connect Fund. The first item is network equipment that you need to use with the connection to make it work. For example, if you want to upgrade to a higher speed line, you may need a new router or an upgraded router at the facility; so that s what we mean by equipment. The second item is we will be funding connections to and between off-site administrative offices and feeder centers. This is discussed in section 5A5 of the order and also on page 200 in new rule Offsite administrative offices and data centers are not considered to be healthcare providers under the definition that applies under the Communications Act. However, we do recognize that these connections to these facilities can be an important part of healthcare broadband networks. So we will support such connections subject to a few restrictions, for example, the connection has
17 to be purchased by an eligible healthcare provider. It must be used for healthcare purposes, and if the connection also carries traffic for ineligible sites, we have to cost allocate. Finally, we are also going to be supporting broadband services that are connections to research and education networks. So, for example, we will be supporting membership fees to Internet 2 and National LambdaRail. However, unlike the pilot program, we will require that applicants competitively bid for those services first.
18 Going on to consortia, consortium applicants have some additional perks that they can receive support for. For example, equipment necessary to form a network, servers that have, for example, servers at network operations centers. We will also be providing support for consortia only for upfront charges for new or upgraded facilities. That basically means construction charges to build out, for example, fiber lines to premises and of course, this includes dark fiber.
19 Finally, we will also allow consortia applicants to construct and own their own networks, if that's shown to be most cost-effective option, after the competitive bidding process.
20 Moving on to the application process, for this, the cheat sheet is in appendix A of the order. That s pages 152 to 154. The section of the main text that discusses this is section 6 which is pages 90 through 132; and, I would also strongly encourage you to review section 7 which talks about recordkeeping requirements. We do hope to be putting out more or better guidance s through USAC, so you should stay tuned.
21 But basically there are four main phases to the process. The first step is to get organized before you submit anything to us; and, so to do that, you need to assess what the technical requirements are, get your network organized if you are a consortium. You can also get an eligibility determination from USAC at this point for your healthcare provider site; and, you should also start thinking about how you're going to pay the 35%. The first formal step in the application process is competitive bidding. All rural healthcare programs require applicants to undergo a competitive bidding process for the services that are supported; and that is done by providing information to USAC which USAC will then post on its website. And again USAC is the administrator for the fund. They are a separate entity from the FCC but they work closely with us; and they re the entity that sort of works day-to-day with the healthcare providers. In the competitive bidding process for large projects, and I'm generalizing here but for large project we will require submission of an RFP. We do not have strict formal requirements for the RFP. There are certain things that should go in it that are discussed in the order; but it does not have to be incredibly lengthy. It should be commensurate to the project that is being proposed. The broad outlines are that all applicants are required to conduct a fair and open competitive bidding process. The order talks, more in detail about what that means, and then applicants must select the most cost-effective fit. Now, for healthcare providers, most cost-effective doesn't mean that you have to select the bid that costs the least without considering any other factors. The price has to be a primary factor but other factors can also be considered, for example what you healthcare needs are. And, I would strongly encourage you to especially read the competitive bidding section of the order carefully. This is something that s taken very seriously by the Commission, and failure to meet these rules can result in your funding request being denied. So then once you have gone to the competitive bidding process and selected the most cost effective bid, the next step is to submit a request for a funding commitment to USAC; and, we will allow for funding commitment for multiple years, up to three. In that step 3 is to start receiving services, the healthcare provider will pay at 35% and submit an invoice to USAC for the remaining 65%; and again the order of section 6 goes into excruciating detail so please feel free to refer to that and also contact us or USAC with any questions you have.
22 I want to talk a little bit about competitive bidding exemptions. We recognize that preparing these documents and going through the process takes a lot of time and effort, so we have five exemptions. If you qualify for any of these, you do not have to undergo competitive bidding, you can just go straight to requesting funding from USAC. So the first exemption is really for small funding requests that request services that cost $10,000 or less annually.
23 The other requests are for contracts that have already been bid competitively in some context; so, the first exemption is for government MSA. If you are entitled to use a contract that has been competitively bid through a federal or state governmental entity, you do not then again have to go through the process with USAC. You will be required to submit documentation so that USAC can verify that you qualify and what the terms of the contract are. On the next exemption are MSAs that have already been approved through rural healthcare, for example, a group or rural healthcare pilot project or in the future if for consortia in the Healthcare Connect Fund that wants to simply add new members. The next exemption is what s called an Evergreen contract under sort of our USAC parlance, that means you have to reapply for funding every year but USAC has approved the overall multiyear contract; and if you have an Evergreen contract that was approved by USAC and you're currently using for example for the telecom program you can simply transition that over to the new Healthcare Connect Fund without going back through competitive bidding. The next exemption are contracts that have been negotiated and competitively bid under the School and Libraries program what we call E-rate ; and, if you are a healthcare provider that it's part of the consortium with schools and libraries who has an E-rate approved contract you can opt into that contract and receive funding without going back through the competitive bidding process. However all of the other Healthcare Connect Fund rules do apply if you apply for support. Finally, as I mentioned previously, in the pilot program we had a competitive bidding exemption for Internet 2 and National LambdaRail and we re going to continue supporting membership fees for connection to these networks but we will require such services to be competitively bid.
24 Then going back to the timeline, Linda touched on this a little bit earlier. Here again I want to kind of give you the cheat sheet. It is on page 142 of the order; and, there s sort of a picture of what the timeline is. In terms of the pilot project; and, again this is going back to the 2007 pilot program, not the new one that we adopted in this order, but some of the projects from that pilot program have funding that runs out as of June 30th of this year; so, funding for this project will be available starting on July 1st. And the projects can add new sites so that is another way of opting in to the Healthcare Connect Fund early.
25 For new applicants, funding will start flowing as of January 1, 2014; however, especially if you're planning to apply as a new consortium, you should start getting organized now. In our experience it took the pilot project consortia at least six months to a year before they were ready to start getting money from USAC and as Linda mentioned earlier the competitive bidding process which is a prerequisite will start in the late summer so we strongly recommend that you start looking at section 6 of the order and start thinking about what you need to do to get your consortium together; so that, you can put up your RFP and other competitive bidding documents in the late summer of this year.
26 Thanks Chin. One thing I wanted to add about the timeline is that what Chin was saying about the timing is if you want to start receiving funds on January 1, 2014, if it takes you longer to get a consortium organized, then obviously you can apply any time. It's not that the funds will be gone and it s not a competitive process if you're eligible you'll be given the money, as long as we haven t hit the cap, which we
27 don t expect to for quite a while, so I just want to make that clear. It s great if you can get it in and get money starting January 1st and also you can continue to add sites as the process goes forward. You can start small and expand the size of your consortium. One other thing I want to add too with respect to the requirement that the consortium have a majority of rural participation for the non-rural healthcare providers to be eligible. That s a requirement that we provide three years to consortia to reach so three years from the date of your first funding request you have to have a majority rural composition in your consortium. It could be that it's easier to get the non-rural sites up and running sooner so you don't worry if it takes a little longer to get the rural sites up and running as long as you ve done what you need to do within three years. The Commission also in this order created a new pilot program very different from the one we ve already talked about. This is aimed at skilled nursing facilities. The purpose of this pilot program is to test how to support broadband connections for skilled nursing facilities which aren t currently considered eligible healthcare provider sites. The pilot will get underway, we expect in 2014 and the funding allocated to this program is $50 million total over up to a three-year period for participants. The Commission will be soliciting input about how to design the pilot program; and, if you are interested in this; or, have thoughts about how we can make this program work as well as possible, we are going to be very interested in your input. Finally, we are going to require participants in this pilot program to collect data and submit reports so that we can learn as much as possible from the pilot program just as we did from the rural healthcare pilot program that funded the 50 broadband networks.
28 Going on to funding caps, many of you may know that the Commission has long had a cap in place for rural healthcare funding of $400 million annually but has not come close to that cap ever and the Commission in its order retained that $400 million annual cap for all of its rural healthcare program all put together: so, the Healthcare Connect Fund, the telecom program, and the skilled facilities nursing pilot. But in its order, the Commission said that it believes it s unlikely that the combined healthcare support mechanism will approach the annual $400 million cap any time soon.
29 The Commission is also requiring USAC to post on its website the total of funds requested and funds committed so that people can understand what the progress is toward that cap. Also, the Commission imposed a cap on total upfront payments in the Healthcare Connect Fund at $150 million annually, to make sure that there are enough funds available for recurring charges for others.
30 Next regarding the program administration, obviously as I said at the beginning the details of this program and the rules are all set forth in the Commission's order. That order was adopted on December 12, you may have seen news reports about it, the text was released December 21; and, on the next page I believe we have a link to that order so that you can find it easily; and, as Chin said there are specific sections you go to figure out what you need to know.
31 One thing to know about this order is that we believe, anyway, it has a really good table of contents at the beginning. We tried to be really clear in the way we organized it so if it seems daunting, just go to the table of contents and I think you'll be able to find out what you need there without having to wade through the whole order all at once. Then as Chin said, the Universal Service Administrative Company, USAC, is going to be the administrator of the Healthcare Connect Fund as it does with other FCC rural healthcare programs, and it s the one that will process the applications. Their website is going to have a lot of the forms and other materials which will help you apply; of course, USAC is just now thinking about how to do that and to do it well; and, that they traditionally have done a good job of reaching out to participants and also giving them guidance about how to apply and to work through the process and we are going to try to make that as simple as possible; and, the applications will be done online which we've heard a lot of people prefer doing it that way; so, we will try to keep it simple; and USAC also does a lot of training sessions for prospective applicants and it s going to be doing that for this program as well. So, we recommend that you take advantage of that.
32 Linda Oliver: Here are some links to places that you can find more information. We want to emphasize that for the FCC website and the USAC website, this will be a work in progress and sort of continually updating those sites with additional information, FAQs, and other kinds of useful information; so, if you look at it now or even in a month and it doesn't have everything you need don t assume that it will look that way a month after that. Because, we are going to continue to work on keeping them up-to-date and in particular the FCC we are going to be working on FAQ s, which is often, a good way for people to figure out how a program works. That s our
33 quick high-level summary of this order. Thanks for letting us make this presentation. We are very happy to do it. Paloma Costa: Thanks Linda and Chin, this concludes the webinar. If you have any questions, please send an to RHC
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