On June 25, 2018, the Federal Communications Commission (“FCC” or “Commission”) released a Report and Order (“Order”) in the Promoting Telehealth in Rural America proceeding (FCC 18-82, WC Docket No. 17-310). The Order takes immediate action to address increased demand for funding of rural health care providers by raising the annual Rural Health Care Program (“RHC Program”) cap to $571 million and applying it to the current funding year to fully fund eligible requests for FY 2017. The Commission will adjust the funding cap annually to reflect inflation beginning in FY 2018 and establishes a process to carry forward unused funds for future funding years.

Raising the RHC Program Funding Cap – The Order raises the amount of annual funding for the RHC Program from $400 million to $571 million, concluding that increasing the funding cap is necessary to address current and future demand for supported services by health care providers. The Commission finds that using the gross domestic product chain-type price index (“GDP-CPI”) is the best way to calculate a new funding cap based on what it would have been if indexed annually for inflation, and the increase in the Order accounts for inflation over the past 20 years since the Program’s inception. As necessary, the Commission will assess the need for any future increase in the cap to ensure the Program is sufficiently funded. The Commission directs USAC to collect the additional funds needed to fully fund FY 2017 demand over the next two quarters in accordance with the standard process for calculating and announcing the quarterly contribution factor to reduce the impact on ratepayers.

Annual Inflation Adjustment – Beginning in FY 2018, the RHC Program funding cap will be adjusted annually for inflation using the GDP-CPI inflation index. In the event of periods of deflation, the Commission will maintain the prior-year cap to maintain predictability. To calculate the adjustment, the percentage increase from the previous year will be used and rounded to the nearest .1 percent, and then used to calculate the maximum amount of funding for the next year. The Wireline Competition Bureau will publish a Public Notice within 60 days announcing any increase in the annual funding cap. For FY 2018, the funding cap will be $581 million.

Carry-Forward Process – Beginning in FY 2018, any unused funds may be carried forward from previous years into subsequent funding years. Funds carried forward may be rolled over to multiple funding years until those funds are eventually disbursed. The Commission will require USAC to provide quarterly estimates regarding the amount of unused funds that will be available for carryover in subsequent years. Unused funds will be made available annually in the second quarter of each calendar year for use in the next full funding year, and the FCC will announce a specific amount of funds available for carryover.

The Order will become effective upon publication in the Federal Register.

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