Promoting Telehealth in Rural America, 17379-17397 [2023-04991]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 88, Number 56 (Thursday, March 23, 2023)]
[Rules and Regulations]
[Pages 17379-17397]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-04991]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket No. 17-310; FCC No. 23-6; FR ID 129969]


Promoting Telehealth in Rural America

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Federal Communications Commission 
(Commission) seeks to support rural health care providers through the 
Rural Health Care (RHC) Program, with the costs of broadband and other 
communications services for patients in rural areas that may have 
limited resources, fewer doctors, and higher rates than urban areas.

DATES: Effective April 24, 2023, except for Sec. Sec.  54.604 
(amendatory instruction 2), 54.605 (amendatory instruction 3), and 
54.627 (amendatory instruction 8), which are delayed indefinitely. The 
Commission will publish a document in the Federal Register announcing 
the effective date for those rule sections.

FOR FURTHER INFORMATION CONTACT: Bryan P. Boyle [email protected], 
Wireline Competition Bureau, 202-418-7400 or TTY: 202-418-0484. 
Requests for accommodations should be made as soon as possible in order 
to allow the agency to satisfy such requests whenever possible. Send an 
email to [email protected] or call the Consumer and Governmental Affairs 
Bureau at (202) 418-0530.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's Order 
on Reconsideration, Second Report and Order, and Order (Order) in WC 
Docket No. 17-310; FCC No. 23-6, adopted on January 26, 2023 and 
released on January 27, 2023. The full text of this document is 
available for public inspection during regular business hours at 
Commission's headquarters 45 L Street NE, Washington, DC 20554 or at 
the following internet address: https://docs.fcc.gov/public/attachments/FCC-23-6A1.pdf. The Second Further Notice of Proposed 
Rulemaking (Second FNPRM) that was adopted concurrently with the Order 
on Reconsideration, Second Report and Order and Order is to be 
published elsewhere in this issue of the Federal Register.

I. Introduction

    1. In this document, the Commission continues its efforts to 
improve the Rural Health Care (RHC) Program. The RHC Program supports 
rural health care providers with the costs of broadband and other 
communications services so that they can serve patients in rural areas 
that may have limited resources, fewer doctors, and higher rates for 
broadband and communications services than urban areas. Telehealth and 
telemedicine services, which expanded considerably during the COVID-19 
pandemic, have also become essential tools for the delivery of health 
care to millions of rural Americans. These services bridge the vast 
geographic distances that separate health care facilities, enabling 
patients to receive high-quality medical care without sometimes lengthy 
or burdensome travel. The RHC Program promotes telehealth by providing 
financial support to eligible health care providers for broadband and 
telecommunications services.
    2. In the Order on Reconsideration section, the Commission 
addresses petitions for reconsideration of the 2019 Promoting 
Telehealth Report and Order, FCC 19-78 rel. August 20, 2019 (84 FR 
54952, October 11, 2019) (2019 R&O). The Commission grants petitions 
challenging the database of urban and rural rates (Rates Database) for 
the Telecommunications Program (Telecom Program) established in the 
2019 R&O, return the Telecom Program to the rate determination rules in 
place before the adoption of the Rates Database, and deny petitions for 
reconsideration of other issues from the 2019 R&O. In the Second Report 
and Order section, the Commission adopts proposals from the 2022 
Further Notice of Proposed Rulemaking, FCC 22-15 rel. February 22, 2022 
(87 FR 14421, March 15, 2022) (2022 FNPRM) to amend RHC Program 
invoicing processes and the internal cap application and prioritization 
rules to promote efficiency, reduce delays in funding commitments, and 
prioritize support for the current funding year. In the Order section, 
the Commission dismisses as moot Applications for Review of the 
Commission's guidance to the Universal Service Administrative Company 
(the Administrator) regarding the Rates Database.

II. Order on Reconsideration

    3. In the Order on Reconsideration, the Commission restores the 
mechanisms for calculating rural and urban rates that existed before 
adoption of the 2019 R&O. The Commission upholds the 2019 R&O's rule 
changes regarding what services are similar to one another. The 
Commission maintains the rurality tiers adopted in the 2019 R&O, which, 
due to the elimination of the Rates Database, now apply only to the 
prioritization of funding requests. The Commission also keeps the 
internal cap and funding prioritization systems and invoice 
certifications requirements from the 2019 R&O.
    4. Rate Determination. As an initial matter, the Commission grants 
in part petitions seeking reconsideration of the rules the Commission 
adopted in the 2019 R&O to implement the Rates Database and restore the 
three methods for calculating rural rates in the Telecom Program. The 
Commission denies petitions for reconsideration seeking review of 
clarifications and rules adopted in the 2019 R&O regarding similar 
services and site and service substitution rules and dismiss as moot 
all remaining petitions related to the rules governing the Rates 
Database.
    5. Urban and Rural Rates Determination Mechanism. The Commission 
grants in part petitions seeking reconsideration of the adoption of the 
Rates Database in the 2019 R&O. The Commission amends the current 
Sec. Sec.  54.504 and 54.505 of its rules to eliminate the use of the 
Rates Database to determine urban and rural rates and rescind the 
Commission's direction to the Administrator in the 2019 R&O to create 
the Rates Database. Based on the record, the Commission finds that 
reinstating the Commission's previous rules for calculating urban and 
rural

[[Page 17380]]

rates, effective for RHC Program funding year 2024, is the best option 
for ensuring sufficient, reasonable rural and urban rates.
    6. Section 254(h)(1)(A) of the Communications Act (Act) requires 
that Telecom Program support must be based on the difference between 
the urban rate, which must be ``reasonably comparable to the rates 
charged for similar services in urban areas in that State,'' and 
``rates for similar services provided to other customers in comparable 
rural areas,'' i.e., the rural rate. Because the Rates Database was 
deficient in its ability to set adequate rates, the Commission finds 
that restoration of the previous rural rate determination rules, which 
health care providers have continued to use to determine rural rates in 
recent funding years under the applicable Rates Database waivers, is 
the best available option pending further examination in the Second 
FNPRM published elsewhere in this issue of the Federal Register, to 
ensure that healthcare providers have adequate, predictable support.
    7. Rural rates. The Commission first finds that the rural rates 
generated by the Rates Database could result in inadequate or 
inconsistent Telecom Program support for rural health care providers 
that undermines the goals of the Telecom Program. The Commission agrees 
with the Schools, Health and Libraries Broadband Coalition (SHLB) and 
the State of Alaska's general arguments that the Rates Database would 
not accurately reflect the costs of delivering telecommunications 
services and would not provide sufficient funding for most rural health 
care providers because the Rates Database's geographic rurality tiers 
were too broad and did not accurately represent the cost of serving 
dissimilar communities. The Commission created the rurality tiers to 
prevent median rates for more rural areas of a state from being 
unfairly reduced due to the inclusion of rates for similar services in 
less rural areas. The approach to rate determination was based on ``the 
reasonable assumption that the cost to provide telecommunications 
services increases as the density of an area decreases, as rates are 
generally a function of population density.'' However, the Commission 
finds that in light of the significant anomalies in the Rates Database 
uncovered by the Wireline Competition Bureau (Bureau), including many 
situations where support amounts for more rural areas were less than 
those for less rural areas, the petitioners are correct that the 
geographic tiers used in the Rates Database do not result in rates that 
accurately reflect the cost of delivering telecommunications services 
for many rural health care providers.
    8. Under the rules, healthcare providers may use one of three 
methods for calculating the rural rates in the Telecom Program, 
depending on the circumstances: (1) the average of rates that the 
carrier actually charges to other non-health care provider commercial 
customers for the same or similar services provided in the rural area 
where the health care provider is located (Method 1); (2) if the 
carrier does not have any commercial customers in the health care 
provider's rural area, the average of tariffed and other publicly 
available rates charged by other service providers for the same or 
similar services provided over the same distance in the rural health 
care provider's area (Method 2); or (3) if there are no such rates or 
the carrier reasonably determines that those rates would be unfair, a 
cost-based rate that is approved by the Commission for interstate 
services (or the relevant state commission for intrastate services) 
(Method 3). A carrier seeking approval of a rural rate under Method 3 
will be required to provide ``a justification of the proposed rural 
rate that includes an itemization of the costs of providing the 
requested service.''
    9. The Commission reiterates the requirements previously associated 
with this methodology. Methods 1, 2, and 3 must be applied 
sequentially. Method 1 must be used to determine a rural rate unless 
the service provider selected is not actually charging non-health care 
provider customers rates for same or similar services in the rural area 
where the eligible health care provider is located. In that case, 
health care providers and service providers must attempt to calculate a 
rural rate using Method 2. If it is not possible to determine a rural 
rate because there are no tariffed or publicly available rates charged 
by other service providers for same or similar services in the rural 
area where the eligible health care provider is located, or if the 
service provider reasonably determines that the rural rate calculated 
using Method 2 is unfair, then health care providers and service 
providers may calculate a rural rate using Method 3.
    10. Reinstating these rules promotes administrative efficiency and 
protects the Fund while the Commission considers long-term solutions. 
The Commission clarifies that a rural rate approval for a service will 
be required only in the first year of an evergreen contract or another 
form of a multi-year contract unless the rural rates in the contract 
increase or other substantive terms of the contract change. The rural 
rate approval for the initial year of the multi-year contract will 
constitute approval for all subsequent years of the contract, including 
voluntary extensions so long as the duration of the contract does not 
exceed five years. Given that service providers may not be expected to 
submit additional bids for the selected service within the duration of 
the multi-year contract, the Commission believes that it is reasonable 
to eliminate rural rate approvals during that period as well. 
Therefore, previously approved rates for preexisting multi-year 
contracts do not need to be resubmitted for approval under the rate 
setting mechanisms.
    11. The Commission declines to adopt other options proposed by 
stakeholders or the Commission because they could lead to Program waste 
or pose implementation challenges. Alaska Communications and SHLB's 
suggestion to rely on competitive bidding alone to determine fair 
market rural rates could result in inflated rural rates. As the 
Commission previously explained in the 2019 R&O, only a small 
percentage of Telecom Program funding requests receive competing bids 
from multiple service providers, and in the few instances where 
carriers do compete, they are most likely to compete on non-price 
characteristics of service. Therefore, the Commission finds that 
relying on competitive bidding without any other checks on rural rates 
would give service providers unfettered discretion to set their rates. 
Additionally, the Commission finds that the implementation challenges 
associated with the options raised in the 2022 FNPRM, such as a 
regression model or a discount tier mechanism prevent us at this time 
from adopting these mechanisms.
    12. Rural rates waiver. The Commission finds that Bureau's 
temporary measure of permitting the use of previously-approved rural 
rates and urban rates for funding year 2023 is appropriate given that 
competitive bidding for funding year 2023 has already started. To 
further alleviate burdens on RHC Program participants as they prepare 
for funding years 2024 and 2025, the Commission's rules are waived to 
permit the use of previously-approved rates for any funding year 2024 
or 2025 rural rates that would otherwise require approval under Method 
3.
    13. Generally, the Commission's rules may be waived or suspended 
for good cause shown. The Commission may exercise its discretion to 
waive a rule where the particular facts make strict compliance 
inconsistent with the public

[[Page 17381]]

interest. In addition, the Commission may take into account 
considerations of hardship, equity, or more effective implementation of 
overall policy on an individual basis. Waiver of the Commission's rules 
is appropriate only if both (1) special circumstances warrant a 
deviation from the general rule, and (2) such deviation will serve the 
public interest. As noted by several commenters, potentially having 
three different sets of rules for determining cost-based rural rates 
within three or four funding years could present unnecessary 
administrative burdens. Continuing to permit the use of previously-
approved rural rates for Method 3, the most complex rural rates 
verification process, would significantly curtail those burdens. 
Furthermore, according to commenters, market conditions appear to 
indicate that it is unlikely that pricing for Telecom Program funded 
services will significantly decrease over funding years 2024 or 2025, 
so utilizing rural rates approved for funding year 2023 in funding 
years 2024 and 2025 is unlikely to cause wasteful expenditures.
    14. A waiver permitting the use of previously-approved rates for 
funding years 2024 and 2025 Method 3 cost-based rural rates would also 
serve the public interest. Although there are significant program 
integrity benefits to rural rates reviews, the Commission finds that 
two years of such benefits is outweighed for funding years 2024 and 
2025 by the administrative burdens on both program applicants and the 
Commission to prepare and approve cost studies. In addition, the 
Commission finds that it is not in the public interest to require 
service providers to absorb these burdens for funding years 2024 and 
2025 given that the Commission is considering additional changes to its 
rural rate rules for future funding years in the Second FNPRM published 
elsewhere in this issue of the Federal Register.
    15. In addition, the Commission finds that the public interest 
would not be served by extending this waiver to Method 1 and 2 rural 
rate or urban rate approvals because the administrative burden and time 
required for these justifications are considerably less than for Method 
3 justifications. Therefore the Commission finds that for Method 1 and 
2 and urban rate justifications, the program integrity benefits to 
requiring rate justifications outweigh any administrative burdens 
associated with complying with these rules for funding years 2024 and 
2025. Furthermore, the Commission finds that a waiver under Methods 1 
or 2 is not necessary because, when a service provider cannot find 
justifying rates under Methods 1 or 2, as some parties contend is 
common, the service provider has the option to rely on a previously 
approved Method 3 rate pursuant to the waiver the Commission issues 
herein.
    16. When the Method 3 waiver applies, a service provider may use a 
previously-approved rural rate from the most recent funding commitment 
for the facility/service combination at issue provided that funding 
commitment was issued in funding years 2021, 2022, or 2023. If there is 
no approved rate for a particular facility/service combination, the 
health care provider and its carrier may use a rural rate for the most 
recent funding commitment for the same or similar services to the 
facility with the same or similar geographic characteristics provided 
the funding commitment was issued in funding years 2021, 2022, or 2023. 
If no such comparable rates are available, the waiver is not applicable 
and the rural rate must be established using a Method 3 cost study 
pursuant to Sec.  54.605(b) of the Commission's rules.
    17. For these reasons, the Commission finds that restoring the 
previous rate methodology rules while considering long-term solutions 
would best serve Program participants. Program participants are already 
familiar with the requirements of these methods, which will ease 
administrative burdens on the Commission, Administrator, and Program 
participants.
    18. Although the rules that the Commission reinstates do not rely 
on a median approach to determine rural rates, as a general matter, the 
Commission disagrees with petitioners' concerns with using a median-
based approach to determine rural rates. The Rates Database's use of 
medians was a reasonable application of section 254(h)(1)(A) of the Act 
to prevent outlier prices from skewing support. Alaska Communications 
argued that, by basing support on a median rate rather than the actual 
rate charged, the Rates Database would not fulfill the requirements of 
section 254(h)(1)(A) of the Act that telecommunications carriers 
receive the difference between the urban rate paid by the healthcare 
provider and the rate ``similar services provided to other customers in 
comparable rural areas.'' Similarly, USTelecom raised several concerns 
about the sufficiency of the median rate approach. Although the 
Commission agrees with petitioners that the Rates Database and 
geographic tiers established in the 2019 R&O did not accurately reflect 
the cost of delivering telecommunications services, the Commission 
finds that a median approach to calculate rural rates can satisfy the 
requirements of section 254(h)(1)(A) of the Act because a median can 
approximate the rates charged in ``comparable rural areas in the 
state.'' The fact that section 254(h)(1)(A) of the Act describes the 
services provider's obligation to charge ``rates'' reasonably 
comparable to urban rates rather than a more restrictive standard such 
as ``the rate charged to an urban health care provider'' suggests the 
Commission could meet the requirements of section 254(h)(1)(A) of the 
Act as long as the level of support in the aggregate would make up the 
urban-rural differential.
    19. Urban rates. The Commission also grants petitions seeking 
rescission of the rules implementing the Rates Database to determine 
urban rates. Petitioners seeking reconsideration of the 2019 R&O raised 
concerns about the Administrator's ability to determine urban rates 
using the Rates Database. Furthermore, after the Rates Database 
launched, specific concerns about the urban rates it generated arose. 
In the Nationwide Rates Database Waiver Order, DA 21-394 rel. April 8, 
2021, the Bureau acknowledged urban rate anomalies in the Rates 
Database in some states, including instances where urban rates for 
lower bandwidths exceeded urban rates for higher bandwidths for the 
same service, and examples of urban rates exceeding rural rates in a 
state. The Bureau concluded that these examples did not amount to 
convincing evidence of ``pervasive nationwide anomalies with urban 
rates'' but did ``merit further inquiry and investigation'' and 
therefore waived use of the Rates Database of determining urban rates. 
In comments in response to the 2022 FNPRM, SHLB reiterated that the 
Rates Database had significant urban rate anomalies, including 
instances in many states in which the median urban rate for a service 
exceeded at least one rural rate. ADS encouraged the Commission to 
reinstate a ``safe harbor'' approach for urban rates.
    20. The Commission concludes that reinstating the previous urban 
rate determination rules is the best way to ensure consistency and 
predictability in the rate determination process while considering 
alternative options for an urban rates determination mechanism going 
forward. None of the petitions for reconsideration suggested a 
mechanism for determining urban rates to be used if the Commission was 
to eliminate the Rates Database, and none opposed returning to the pre-
2019 R&O method for determining urban rates. As with rural rates, 
health care providers and service providers are already familiar with 
the pre-2019 R&O rules for

[[Page 17382]]

determining urban rates, and introducing a completely new set of rules 
while the Commission considers additional changes could lead to 
confusion and cause an undue administrative burden. Therefore, going 
forward, the urban rate for an eligible service submitted by the 
healthcare provider on FCC Form 466 should be ``no higher than the 
highest tariffed or publicly-available rate charged to a commercial 
customer for a functionally similar service in any city with a 
population of 50,000 or more in [a] state.'' Healthcare providers must 
document the urban rate with ``tariff pages, contracts, a letter on 
company letterhead from the urban service provider, rate pricing 
information printed from the urban service provider's website or 
similar documentation showing how the urban rate was obtained.'' The 
Commission believes reinstatement of the prior urban rate setting 
methodology is the best available solution while seeking comment on 
potential revisions to the urban rate determination rules in the Second 
FNPRM published elsewhere in this issue of the Federal Register. As 
with rural rates, the Commission also affirms the Bureau's decision to 
permit the use of previously-approved urban rates for funding year 
2023.
    21. In adopting the Rates Database, the Commission identified 
several concerns with the rate-setting rules in place at the time, 
including potential issues with transparency, administrative 
efficiency, and program integrity. While the Rates Database proved to 
be an inadequate solution for provisioning sufficient support to RHC 
Program participants, the Commission remains cognizant of those 
concerns, and therefore continues the work to improve the Telecom 
Program rate determination methodology as discussed in the Second FNPRM 
published elsewhere in this issue of the Federal Register.
    22. Similar Services. Though RHC Program applicants and 
participating service providers will no longer use the Rates Database 
to calculate rural and urban rates, they will continue to need to 
identify rates for the same or similar services to support rural and 
urban rates submitted to the Administrator. The Commission therefore 
addresses petitions for reconsideration of its conclusions regarding 
similar services in the 2019 R&O. The Commission properly determined 
that similar services can include non-telecommunications services that 
deliver the same or similar functionality as the requested service and 
can include services with advertised speeds 30% above or below the 
speed of the requested service. The Commission instructs the 
Administrator to apply these requirements to its review of Method 1 and 
Method 2 submissions and urban rates going forward.
    23. Non-telecommunications services. The Commission affirms the its 
finding, to calculate the most accurate rates, the pool of rates taken 
into consideration should include rates for services that deliver the 
functionality sought by the applicant. The Commission therefore denies 
USTelecom's request to reverse the decision that non-telecommunications 
services that are functionally similar to eligible telecommunications 
services be considered similar services for purposes of calculating 
rates. The Commission reaffirms the Commission's conclusion in the 2019 
R&O that similarity of services is a ``technology-agnostic inquiry'' 
that should be viewed from the perspective of the end user experience 
as opposed to regulatory classification.
    24. The Telecom Program provides support in accordance with section 
254(h)(1)(A) of the Act based on the difference between the urban rate, 
which must be ``reasonably comparable to the rates charged for similar 
services in urban areas in that State,'' and ``rates for similar 
services provided to other customers in comparable rural areas,'' i.e., 
the rural rate. Congress did not define the term ``similar services.'' 
In 2003, the Commission interpreted similar services to mean services 
that are functionally similar from the perspective of the end user. 
This interpretation deviated from the Commission's previous policy of 
calculating support based on the difference between the urban and rural 
rates for ``technically'' similar services. Without any discussion as 
to why non-telecommunications services were not considered 
``functionally similar,'' the Commission stated that ``[e]ligible 
health care providers must purchase telecommunications services and 
compare their service to a functionally equivalent telecommunications 
service in order to receive this discount'' and created a voluntary 
``safe harbor'' for categories of services based on transmission speed 
that would be considered by the Commission functionally similar for 
purposes of calculating urban and rural rates.
    25. In the 2017 Notice of Proposed Rulemaking, FCC 17-164 rel. 
December 18, 2017 (83 FR 303, January 3, 2018) (2017 NPRM), the 
Commission sought comment on changes to the interpretation of similar 
services. The Commission specifically proposed to ``retain the concept 
of `functionally similar as viewed from the perspective of the end 
user' '' and additionally proposed to ``require healthcare providers to 
analyze similarity under specific criteria.'' In the 2019 R&O, the 
Commission ultimately retained the ``functionally similar'' standard 
for defining similar services and, after acknowledging the prior 
interpretation in 2003, made clear that because the functionally 
similar standard is technology agnostic and does not turn on regulatory 
classification, both telecommunications and non-telecommunications 
services must be considered when identifying similar services for 
calculating urban and rural rates.
    26. USTelecom argues that the Commission did not provide an 
opportunity for notice and comment, as required by the Administrative 
Procedure Act (APA), before expanding the inquiry of functionally 
similar services to include non-telecommunications services. On the 
contrary, the Commission did provide notice in the 2017 NPRM of its 
intent to consider changes to the statutory interpretation of similar 
services. And as explained in the 2019 R&O, revisiting the decision 
would inevitably involve a consideration of the types of services that 
would fall within the scope of this statutory term. The Commission 
therefore disagrees with USTelecom that the Commission violated the APA 
when it clarified the scope of similar services to include not only 
telecommunications but also non-telecommunications services.
    27. The Commission's decision to expand the inquiry of functionally 
similar services in urban and rural rate determinations was not 
arbitrary and capricious, as USTelecom separately contends. The 
Commission also disagrees with USTelecom that the fact that the Telecom 
Program does not fund information and private carriage services 
precludes consideration of rates for those services in the rate 
determination process. As to both arguments, the Commission fully 
considered these issues in the 2019 R&O and explained that the end-user 
experience, not regulatory classification, guides the analysis of 
whether services are functionally equivalent. The Commission further 
explained that including information services, which may be less 
expensive, with functionally similar telecommunications services is 
consistent with the statutory requirement that the Commission ensure 
access to telecommunications services for health care providers at 
rates that are ``reasonably comparable'' to those charged for ``similar 
services in

[[Page 17383]]

urban areas'' because including rates for such functionally similar 
information services would more accurately reflect the prices available 
in urban areas for services that deliver the same functionality to end 
users regardless of classification, and place rural health care 
providers on equal footing with their urban counterparts.
    28. 30 percent threshold. The Commission also denies SHLB's request 
that the Commission reconsiders the Commission's determination that 
services with advertised speeds 30% above or below the speed of the 
requested service be considered functionally similar to the requested 
service. SHLB argues that the approach is overbroad and will include 
services that are dissimilar in function and cost. SHLB, however, does 
not offer any examples. Comments filed after the Rates Database 
launched addressing the 30% threshold in response to the 2022 FNPRM 
were mixed. Alaska Communications described the 30% bandwidth range as 
``not unreasonable,'' but cautioned that there is too little rural rate 
data in Alaska to ``make this the basis for a complete rural rate 
methodology.'' NTCA--The Rural Broadband Association (NTCA) argues that 
the 30% threshold is too broad and urges the Commission to implement a 
smaller margin based on health care provider use cases, but also does 
not offer examples of overly broad results.
    29. Taking these arguments into account, the Commission decides not 
to deviate from the Commission's prior conclusion in the 2019 R&O that 
the 30% range allows for rate predictability while accounting for the 
rising demand for faster connectivity. Having a standard for 
determining similar services based on a range is preferable to having 
speed tiers, which would need to be frequently refreshed so they would 
not become out of date, as was the case with the speed tiers that 
existed before the 2019 R&O. Moreover, based on the record previously 
developed, a range of 30% provides a sufficiently large number of 
inputs for determining rates under Methods 1 and 2. Reducing the range 
as NTCA requests would likely mean that few services with even slight 
variations in bandwidth would be similar to one another. Additionally, 
maintaining the current threshold for similar services of advertised 
speeds being 30% above or below the speed of the requested service will 
ease program administration because health care providers are already 
familiar with this standard.
    30. The Commission also disagrees with SHLB's assertion that the 
2019 R&O fails to account for price variations based on contract term 
or volume discounts, which SHLB maintains will distort rural rate 
determinations. The 2019 R&O did account for these price variations 
when explaining that section 254(h)(1)(A) of the Act requires service 
providers to provide telecommunications services to eligible providers 
at ``rates that are reasonably comparable to rates charged for similar 
services in urban areas.''
    31. Finally, as requested by General Communication, Inc. (GCI), the 
Commission clarifies that, in the event there is no comparable rural 
rate within 30% of the speed of the requested service, the Commission 
will allow service providers to justify the requested rural rate using 
the rate for a service that is otherwise similar to the requested 
service if the requested service has a higher bandwidth than that 
service. Similarly, as requested by SHLB, the Commission clarifies that 
if there is no comparable urban rate within the 30% range available, 
the Commission will allow service providers to use the rate for a 
higher bandwidth service that falls outside the 30% range but is 
otherwise similar to the requested service. The Commission finds that 
providing this flexibility will ease administrative burdens without 
additional cost to the Universal Service Fund.
    32. Site and Service Substitution. The Commission denies Alaska 
Communications' petition for reconsideration to the extent it seeks 
clarification that ``the Commission intended to include service 
delivery dates'' in the adopted site and service substitution rule. 
Alaska Communications explains that service date or evergreen contract 
date changes are some of the most common changes requested in the RHC 
Program. Alaska Communications further explains that applicants are 
required to submit a funding request and include anticipated service 
dates at the time the request is submitted to the Administrator, but 
there may be delays for a planned transition or deployment of upgraded 
services and the anticipated service start or termination dates may 
change. In response, the Commission clarifies that under Sec.  
54.624(a) of the Commission's rules, RHC Program applicants may be able 
to substitute the requested service when there is a delay in the 
deployment of the original service and that the funding request could 
be modified to reflect the substituted service when such a delay may 
occur. Section 54.624(a) of the Commission's rules is intended to allow 
applicants flexibility to substitute requested services and to receive 
RHC Program support for substituted services when the requirements are 
met.
    33. However, the Commission denies Alaska Communications' request 
to clarify that Sec.  54.624(a) of the Commission's rules allows 
changes to service dates and evergreen contract dates as ``service 
substitution'' changes because Sec.  54.624(a) of the Commission's 
rules does not address service dates or evergreen contract dates. With 
respect to service date changes, Program participants are already 
permitted to change the dates for which services are provided. RHC 
Program participants are required to provide dates of service and 
contract dates on the Request for Funding (FCC Form 466 or FCC Form 
462) for the requested services. If there are changes to the dates for 
which services were provided or evergreen contract dates, RHC Program 
participants already modify service dates through other means unrelated 
to the service substitution process. Therefore, there is already a 
mechanism for all RHC Program participants to substitute a service if 
there is a delay in implementing the new service and modify the service 
dates for the substituted service. Contrary to Alaska Communications' 
assertion that the process creates additional administrative burdens 
due to the potential for an appeal, the process is no more 
administratively burdensome than the service substitution request 
process. Under both processes, if the Administrator denies a request, 
the health care provider could file an appeal. With respect to 
evergreen contract dates, although Sec.  54.624 of the Commission's 
rules cannot reasonably be interpreted as addressing modifications to 
evergreen contract dates, the Commission seeks comment in the Second 
FNPRM published elsewhere in this issue of the Federal Register about 
whether a mechanism to modify evergreen contract dates is appropriate 
and what such a mechanism might be. Accordingly, the Commission denies 
the request to modify Sec.  54.624 of the Commission's rules to add 
modification of service dates and evergreen contract dates as an 
allowable service substitution.
    34. Alaska Communications further requests that when the 
Administrator contacts a health care provider with questions or 
requests for additional information regarding urban or rural rates or 
the terms of the service, the Administrator also be required to 
communicate the question or information request with the relevant 
service provider. Health care providers are encouraged to work with 
their service providers to respond to

[[Page 17384]]

information requests from the Administrator regarding, for example, 
additional information on urban and rural rates and terms of service. 
Thus, service providers are allowed to provide the requested 
information needed during the funding application review process. The 
Commission declines, however, to require the Administrator to issue 
information requests to the relevant service providers. The Commission 
concludes that it would be administratively burdensome and a poor use 
of limited administrative resources to require the Administrator to 
send these requests to service providers. Applicants that would like 
assistance from service providers should reach out to providers to pose 
questions related to the Administrator's review of health care 
providers' funding applications.
    35. Remaining Requests for Reconsideration of the Rates Database. 
The Commission dismisses as moot all other challenges to the Rates 
Database raised in the petitions for reconsideration that are not 
applicable to rural rate determinations under Method 1, Method 2, or 
Method 3 or urban rate determinations. The Commission's decision to 
eliminate the use of the Rates Database to calculate urban and rural 
rates renders these challenges moot.
    36. Rurality. Next, the Commission denies requests to reconsider 
aspects of the geographically-based rurality tiers adopted in the 2019 
R&O. Though the termination of the Rates Database moots the use of 
rurality tiers for purposes of rates determination, rurality tiers are 
also used to prioritize support in the event that demand exceeds 
available support, a mechanism that is unchanged.
    37. In the 2019 R&O, the Commission established three tiers of 
rurality to determine comparable rural areas in a state or territory 
for purposes of the Rates Database: (1) Extremely Rural (areas entirely 
outside of a Core Based Statistical Area); (2) Rural (areas within a 
Core Based Statistical Area that does not have an Urban Area with a 
population of 25,000 or greater); and (3) 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). For health care providers in Alaska, the 
Commission bifurcated the Extremely Rural tier to include a Frontier 
tier for areas not accessible by road.
    38. Arguments against the rurality tiers adopted by the Commission 
in the 2019 R&O focused on their impact on rates determinations in the 
Rates Database. With the elimination of the Rates Database, the only 
remaining relevance of rurality tiers is for purposes of prioritizing 
support in the event that demand ever exceeds available funding. The 
Commission finds that the rurality tiers as adopted in the 2019 R&O are 
appropriate for purposes of prioritization of support and deny 
petitions for reconsideration to the extent they request that the 
Commission eliminate rurality tiers from the rules for all purposes. 
The rurality tiers will properly target RHC Program funding to less 
populous areas in the event that prioritization of funds is needed, and 
the record contains no alternative mechanism for better parsing 
rurality for this limited purpose.
    39. The North Carolina Telehealth Network Association and the 
Southern Ohio Health Care Network (NCTNA/SOHCN) suggest that switching 
to a method based on metropolitan and micropolitan designations would 
``allow [the Administrator] to pre-qualify sites and to demonstrate 
rurality and to determine the funding priority each site will receive'' 
and that switching from designations based on census blocks instead of 
census tracts would be more precise. However, the Administrator has 
already created a tool that allows health care providers to determine 
their priority tier based on the current rurality designations, so a 
change is not necessary to provide this administrative convenience. 
While the Commission recognizes the benefit of precision in parsing 
rurality, the Commission finds that the potential confusion and 
administrative burdens to all Program participants that would result 
from abandoning the use of the current rurality tiers, which are 
consistent with the Commission's long-held definition of ``rural,'' 
outweighs the impact this change would have on the limited number of 
health care providers whose rural status would change.
    40. Given the Commission's decision on reconsideration to eliminate 
the rules establishing the Rates Database, the Commission makes two 
ministerial changes to the rules to reflect the limited use of rurality 
tiers for prioritization purposes. First, the Commission eliminates the 
concept of Frontier Areas from the rules because it does not apply to 
prioritizing support. A ``Frontier Area'' is an area in Alaska outside 
of a Core Based Statistical Area that is inaccessible by road. The 
Commission adopted the concept for purposes of the Rates Database only. 
Second, the Commission amends the codified rules so that rurality tiers 
are addressed only in rules related to prioritization. The rurality 
tiers currently appear in two separate sections of the Commission's 
rules: Sec.  54.605(a), which addresses rural rates, and Sec.  
54.621(b), which addresses prioritization of support. The Commission 
deletes references to the rurality tiers from Sec.  54.605(a) but 
retain them in Sec.  54.621(b). The Commission also makes minor changes 
to the text of Sec.  54.621(b) so that it more closely reflects the 
text of Sec.  54.605(a).
    41. Funding Prioritization--Internal Cap on Multi-Year Commitments 
and Upfront Payments. The Commission denies NCTNA/SOHCN's petition for 
reconsideration requesting an increase to the internal cap on funding 
available to Healthcare Connect Fund (HCF) applicants seeking support 
for upfront payments and multi-year commitments. This internal cap 
limits funding for multi-year commitments and upfront payment to an 
amount adjusted annually for inflation, which is calculated at $161 
million for funding year 2022. The Commission retained the internal cap 
in the 2019 R&O after determining that the cap protected against 
possible underfunding of single-year funding requests and that an 
increase in the dollar amount of the internal cap may adversely affect 
single-year requests. The Commission did, however, adopt a rule 
adjusting the cap annually for inflation as a hedge against loss of 
purchasing power in the event of price inflation. NCTNA/SOHCN maintain 
that the decision to not further increase the internal cap is ``based 
on an incorrect reading of the purpose of [the] cap''--namely, that the 
principal purpose of establishing the cap was to guard against 
fluctuations in demands from potentially large upfront infrastructure 
projects. NCTNA/SOHCN also argue that the Commission should reconsider 
the cap ``in light of its original purpose and data accumulated since 
2013 when it was first implemented'' and therefore should remove multi-
year funding commitments from being subject to the cap.
    42. The Commission denies NCTNA/SOHCN's request. The internal cap 
on multi-year commitments and upfront payments in its current form is 
serving its stated purpose: to limit major fluctuations in demand so as 
to protect single-year funding requests. In the 2019 R&O, the 
Commission noted that the internal cap was first exceeded in funding 
year 2018 and, but for the cap, all funding requests for that year 
would have been prorated to bring the total demand for RHC Program 
support below the Program's overall funding cap. The Commission also 
finds that the record

[[Page 17385]]

does not support removing multi-year commitments from the internal cap. 
NCTNA/SOHCN point to efficiencies that are inherent to some multi-year 
funding commitments. However, Universal Service Administrative Company 
(USAC) data indicates that demand for multi-year commitments accounted 
for a significant portion of the total demand for multi-year 
commitments and upfront payments from funding year 2016 to funding year 
2021. As demonstrated by demand in recent funding years, removing 
multi-year commitments from being subject to the internal cap could 
result in costly multi-year commitment requests usurping funding from 
single-year requests. The Commission affirms the earlier decision to 
retain the internal cap on multi-year commitments and upfront payments 
and, accordingly, deny that portion of the NCTNA/SOHCN petition. In the 
Second Report and Order section, the Commission amends the rules so 
that the internal cap applies only when demand exceeds available 
funding, and when the internal cap does apply, upfront costs and the 
first year of a multi-year commitment request are prioritized over the 
second and third year of a multi-year commitment request.
    43. Prioritization System. Next, the Commission denies SHLB's 
request that the Commission reconsider the prioritization system 
adopted by the Commission in the 2019 R&O. RHC Program prioritization 
rules require that, in funding years when demand exceeds the funding 
cap, funding be prioritized based on rurality tiers and whether the 
area is a Medically Underserved Area/Population. SHLB first argues that 
the prioritization rules will result in HCF consortia, which include 
non-rural health care providers that are prioritized last when demand 
exceeds available funding, bearing the entire burden of RHC Program 
funding shortfalls initially. SHLB further argues that this impact will 
erode the consortia model and reduce the benefits of consortia for 
rural health care providers. The Commission disagrees and finds that, 
to further the goals of section 254(h) of the Act, it should prioritize 
funding based on the rurality of the health care provider's location, 
as well as on the level of medical care need in that location. This 
prioritization scheme targets support to rural areas that are less 
likely to have access to telecommunications and advanced services while 
still providing support for health care consortia that include non-
rural health care providers. Thus, while SHLB is correct in noting the 
benefits that rural health care providers receive as members of 
consortia, the Commission is not persuaded that these consortia warrant 
higher funding priority over the most rural and medically underserved 
health care providers. When the Commission adopted the rules permitting 
HCF consortia, it limited program participation in a ``fiscally 
responsible'' manner so as not to jeopardize funding for rural 
healthcare providers. The prioritization system adopted in the 2019 R&O 
aligns with this fiscally responsible approach and the Commission 
declines to reconsider it here.
    44. Medically Underserved Area and Populations. The Commission 
declines to revise our use of the Medically Underserved Areas and 
Populations (MUA/P) designation to determine funding prioritization 
based on medical need. The U.S. Department of Health and Human Services 
Health Resources and Services Administration (HRSA) designates an area 
as MUA/P when the area lacks sufficient primary care services. SHLB 
requests that the Commission revises HRSA's data by clarifying that all 
areas in counties with a population density below twenty persons per 
square mile will be considered to be MUA/P, arguing that many such 
sparsely populated areas have never sought MUA/P designation but are 
nonetheless underserved. The Commission declines to adopt SHLB's 
requested modification. As the Commission explained in the 2019 R&O, 
the MUA/P designation is well-suited for determining prioritization in 
the Telecom Program because it is objective data from another Federal 
agency that shows the areas that currently lack health care services 
and therefore would most benefit from the availability of telehealth 
services. In addition, relying on HRSA's determination is straight-
forward and easy to administer. SHLB did not provide any data that 
would enable the Commission to verify its claim that many sparsely 
populated areas have declined to seek a MUA/P designation from HRSA. 
Furthermore, the Commission declines to add administrative complexity 
to this paradigm by adding population density into the determination.
    45. Certifications. The Commission denies USTelecom's request to 
reconsider the requirement adopted in the 2019 R&O that service 
providers certify on invoices submitted to the Administrator that 
consultants or third parties hired by a service provider do not have an 
ownership interest, sales commission arrangement, or other financial 
stake in the service provider or, in the alternative, that the 
Commission clarifies that the certification applies only on a forward-
looking basis. In response to the request, the Bureau clarified that 
the prohibition on third party commission arrangements does not apply 
to competitive bidding processes completed before funding year 2020.
    46. The Commission declines, however, to eliminate the 
certification and now address the arguments that USTelecom raised in 
its petition for reconsideration. The Commission disagrees with 
USTelecom's argument that the Commission did not provide adequate 
notice for the new requirement. The Commission sought comment in the 
2017 NPRM on ``whether to require healthcare providers and service 
providers to certify that the consultants and outside experts they hire 
do not have an ownership interest, sales commission arrangement, or 
other financial stake in the vendor chosen to provide the requested 
service.'' USTelecom's argument ignores that the certification language 
adopted in the 2019 R&O stems directly from the language used in the 
2017 NPRM.
    47. Second, while USTelecom acknowledges that the use of 
consultants that have financial relationships with vendors raises 
conflict of interest concerns for RHC Program applicants, the 
Commission disagrees with USTelecom that there are no such concerns for 
commissioned consultants working for service providers. Similar 
concerns are applicable to service providers who have commissioned 
sales agreements with other third parties based on contracts awarded 
through the Program. For example, there have been previous instances 
where a service provider's sales agent apparently shared other 
carriers' confidential pricing information to provide an unfair 
competitive advantage to that service provider when it responded to a 
health care provider's request for services. In addition, commissioned 
consultants or sales agents who simultaneously represent multiple 
service providers could direct business toward the service provider 
that pays the highest commission or has the highest bid to maximize 
their earnings. Such conflicts of interest and anti-competitive conduct 
violate the Program's longstanding fair and open competitive bidding 
requirement, which the Commission codified in the 2019 R&O. The 
Commission therefore clarifies that agents compensated solely by 
commission, and not just those that are

[[Page 17386]]

compensated partly by commission are covered by the Commission's rules. 
Finally, the Commission notes that USTelecom argues that because the E-
Rate Program does not prohibit the use of commissioned consultants or 
sales agents by service providers and that the Commission has sought to 
harmonize the E-Rate and RHC Programs, the RHC Program should not 
prohibit their use. The Commission disagrees. While USTelecom is 
generally correct that the Commission has sought to harmonize 
requirements between RHC and E-Rate, the greater likelihood of RHC 
consultant misconduct justifies a different requirement in the RHC 
Program at this time. As such, the Commission affirms the certification 
rule and deny USTelecom's request to strike this requirement, which 
applies to competitive bidding practices from funding year 2020 
forward.
    48. Additionally, the Commission denies USTelecom's request to 
clarify that a service provider certification addressing ``eligible 
services'' does not include an attestation that the services for which 
the disbursement is sought are eligible for Program support. In the 
2019 R&O, the Commission adopted a requirement that service providers 
certify they have ``charged the health care provider for only eligible 
services prior to submitting the invoice form and accompanying 
documentation.'' USTelecom argues that the certification should be 
interpreted not to apply to the eligibility of the services, arguing 
that service providers are not responsible for determining the 
eligibility of services, and that requiring service providers to make 
such a certification will preclude them from including both eligible 
services and services not supported by the Program on the same bill 
submitted to the applicant. On the contrary, the new certification, one 
of several added to invoicing forms to improve the invoicing process 
and ensure compliance with Commission rules, does not create a new 
burden because service providers are already required to abide by 
Program service eligibility rules. While service providers may include 
ineligible services and eligible services on the invoices they submit 
to health care providers, it is critical that service providers engage 
in due diligence to ensure that they seek reimbursement from the 
Administrator for eligible services only. Service providers are in the 
best position to evaluate whether the services they provide are 
eligible for RHC Program support because they understand the technical 
details of the services they provide. The Commission therefore confirms 
that service providers are certifying to the eligibility of the 
services provided when they certify that they ``charged the health care 
provider for only eligible services prior to submitting the invoice 
form and accompanying documentation.'' The Commission clarifies that 
with respect to billing, service providers may include both eligible 
and ineligible services on a single bill to the health care provider 
but RHC Program reimbursement may only be sought for eligible services.
    49. Finally, the Commission makes one minor change to the Telecom 
Program certifications and issues an additional clarification as sought 
by USTelecom. First, in order to eliminate the potential for confusion, 
the Commission grants USTelecom's request to update Telecom Program 
certifications to add the word ``form'' after ``invoice'' to bring the 
certification in line with the HCF Program certifications. Second, the 
Commission clarifies, as USTelecom requests, that a service provider 
need not ensure that a health care provider is current on its payments 
before certifying that the health care provider has ``paid the 
appropriate urban rate.'' Having outstanding balances on payments owed 
to a service provider does not necessarily mean that the health care 
provider did not pay the appropriate urban rate.

III. Second Report and Order

    50. In the Second Report and Order, the Commission amends the 
Telecom Program invoicing process to harmonize the RHC invoicing 
process across the Telecom Program and the HCF Program. The Commission 
also amends the funding cap and prioritization rules to limit the 
application of the internal cap and prioritize health care providers' 
current year financial need over their future year need when the 
internal cap is exceeded. Additionally, the Commission makes minor 
changes to the text of the RHC Program rules regarding the number of 
health care provider types that are eligible in the RHC Program. These 
actions will promote efficiency, reduce delays in funding commitments, 
and minimize the possibility that some health care providers may not 
receive their current year's support in the event of prioritization to 
upfront payment and multi-year commitment requests, while strengthening 
protections against waste, fraud, and abuse.
    51. Invoicing. To closer harmonize the invoicing process across the 
Telecom Program and the HCF Program, the Commission eliminates the use 
of Health Care Provider Support Schedules (HSSs) in the Telecom Program 
and requires the participating service provider and health care 
provider to submit an invoice for service to the Administrator after 
services are provided consistent with the HCF Program effective for 
funding year 2024. In the 2022 FNPRM, the Commission proposed to fully 
harmonize the invoicing process between the Telecom Program and the HCF 
Program by having participants in both programs invoice the 
Administrator for services actually provided using the FCC Form 463 
(Invoice and Request for Disbursement Form). Additionally, the 
Commission proposed to retire the FCC Form 467 (Connection 
Certification), which is currently used for invoicing in the Telecom 
Program.
    52. The Commission adopts the proposal to eliminate HSSs in the 
Telecom Program and retire the FCC Form 467. Eliminating the use of 
HSSs in the Telecom Program will stop payments being disbursed 
automatically with minimal action from the health care provider or 
service provider. Because the FCC Form 467 is the form filed before a 
health care provider can receive an HSS, it will no longer be necessary 
and will be eliminated. However, rather than adopt the FCC Form 463 for 
the Telecom Program as proposed, the Commission instead directs the 
Administrator, upon approval from the Bureau, to adopt a new invoice 
form for the Telecom Program that will be filed after services have 
been provided, and will allow participants to indicate when services 
have started, and will more clearly identify what services RHC Program 
applicants receive during the funding year while maintaining separation 
between the HCF Program and Telecom Program invoicing processes.
    53. Creating a new Telecom Program invoicing form, which is 
distinct from, but functionally similar to, the FCC Form 463 will 
ensure that invoicing in the Telecom Program occurs after services have 
actually started, that service providers are reimbursed for actual 
costs rather than predetermined amounts established by the HSS, and 
that participants need not take action to change an HSS if the services 
are terminated or never begin. Having distinct forms for each program 
will account for the fact that there are consortium applications in the 
HCF Program but not in the Telecom Program. Additionally, the 
Commission finds that adopting the process for invoicing in the Telecom 
Program will further alleviate inefficiencies and protect against 
waste, fraud, and abuse in the RHC Program. The new process

[[Page 17387]]

for invoicing will eliminate the need for health care providers to 
file, and subsequently amend, an FCC Form 467. It will also reduce the 
likelihood of improper disbursements because disbursements will be 
based on charges for services that were actually provided rather than 
expected charges for services anticipated to be provided.
    54. Service providers will initiate the invoicing process by 
preparing the new Telecom invoicing form and service providers and 
health care providers will continue to make the same certifications on 
the new form that they have previously made on Telecom invoicing forms. 
As with HCF Program invoices, invoices in the Telecom Program can be 
submitted any time after services have been provided and the service 
provider sends an invoice to the health care provider. A service 
provider can submit an invoice form to the Administrator after each 
month of service or, if it elects to, may alternatively wait until the 
end of the funding year to submit a single invoice for all services 
provided during the funding year. All invoices for services actually 
incurred must be submitted before the invoice filing deadline, 
consistent with Commission rules.
    55. Some commenters raised concerns that adopting a system in which 
disbursements are made based on invoices filed after services are 
provided, rather than a predetermined HSS for the Telecom Program, 
would increase administrative burdens, and these burdens could be 
exacerbated by the fact that invoices in the Telecom Program can be 
submitted only on an individual basis, rather than on a consortium 
basis. Other commenters supported harmonizing the invoicing processes 
so long as there are mechanisms to reduce increased administrative 
burdens. The Commission recognizes that adopting an invoicing system 
based upon actual expenses incurred will likely require more invoice-
related filings from program participants, but the history of improper 
disbursements from the use of the HSS justifies any potential added 
burden. To mitigate any administrative burdens, the Commission directs 
the Bureau to work with the Administrator to develop a mechanism for 
filing this new form and to provide service providers the functionality 
to file invoices for multiple funding requests for multiple health care 
providers in a single filing.
    56. Internal Cap Application and Prioritization. The Commission 
adopts the changes to the RHC Program internal cap application and 
prioritization proposed in the 2022 FNPRM effective funding year 2023. 
The Commission amends RHC Program rules to limit the application of the 
internal cap on multi-year commitments and upfront payments to funding 
years for which the total demand exceeds the remaining support 
available. The Commission also prioritizes upfront payments and the 
first year of multi-year commitments, and then funds the second and 
third years of multi-year commitments with any remaining funding in a 
given funding year. Although demand has been fully satisfied in every 
funding year since the adoption of the 2019 R&O, these changes will 
ensure a smoother, fairer process in the event that prioritization is 
ever necessary.
    57. First, the Commission amends the funding cap rules to limit the 
application of the internal cap to those application filing window 
periods during which total demand exceeds total remaining support 
available for the funding year. All commenters who discussed the 
proposal supported it. If total demand during a filing window period 
does not exceed total remaining support available for the funding year, 
the internal cap will not apply. The total remaining support available 
for the first filing window period of a funding year is the sum of the 
inflation-adjusted RHC Program aggregate cap in Sec.  54.619(a) of the 
Commission's rules and the proportion of unused funding determined for 
use in the RHC Program pursuant to Sec.  54.619(a)(5) of the 
Commission's rules.
    58. The approach will preserve the internal cap's intended purpose 
of preventing multi-year and upfront payment requests from encroaching 
on the funding available for single-year requests, because the internal 
cap would only apply when the total demand exceeds the total remaining 
support available. No requests will be reduced, even if the internal 
cap is exceeded, as long as there is sufficient total funding to meet 
total demand. The approach will also ensure funding for single-year 
requests in the next funding year. Allowing upfront payment and multi-
year commitment requests to be fully funded if funding is available for 
all demand in the current funding year will also alleviate demand in 
the next funding year given that funding multi-year commitment requests 
in the current funding year eliminates demand for those services under 
the next funding year's cap.
    59. Second, the Commission amends the rules to prioritize support 
for current-year funding requests over future-year funding requests 
when the internal cap is exceeded. Specifically, the Commission amends 
Sec.  54.621 of the rules to fund eligible upfront payment requests and 
the first-year of all multi-year requests before funding the second or 
third year of any multi-year requests when the internal cap applies and 
is exceeded. Additionally, the Commission amends the rules to allow the 
underlying contracts associated with those multi-year commitment 
requests that are not fully funded to be designated as ``evergreen.''
    60. The amendment to the prioritization process adopted increases 
the chance that health care providers who requested support for upfront 
payments and multi-year commitments will have their current year's 
financial need satisfied in the event that prioritization is necessary. 
The previous prioritization process would have resulted in some health 
care providers, likely those in the lower prioritization categories, 
losing all or a portion of their requested support for the current 
funding year while other health care providers receive commitments for 
the second and third years of multi-year commitments, even though they 
could request funding for these services in subsequent funding years. 
The change mitigates such adverse impact to those health care 
providers. By prioritizing support for upfront payment requests and the 
first year of multi-year commitment requests when the internal cap 
applies and is exceeded, health care providers in the lower 
prioritization categories will more likely receive the current year's 
requested support. Additionally, the action the Commission takes will 
further promote broadband network development led by HCF consortia that 
include non-rural members by lessening the impact of prioritization to 
those non-rural health care providers and by giving preference to 
upfront costs such as network construction. The Commission recognizes 
that the amendment will inconvenience some health care providers in the 
higher prioritization categories that may have to file applications in 
future funding years for services that otherwise would fall under the 
second and third year of a multi-year commitment. The Commission 
concludes, however, that such concerns are outweighed by the benefit to 
health care providers who, without this rule change, could have their 
current year funding requests denied or prorated.
    61. To mitigate any potential adverse impact to health care 
providers whose multi-year commitment requests are affected, the 
Commission also amends the rules to allow the underlying contracts 
associated with those multi-year commitment requests that are not fully 
funded to be designated as

[[Page 17388]]

``evergreen,'' provided that the contracts satisfy the criteria set 
forth in Sec.  54.622(i)(3)(ii) of the Commission's rules. The 
evergreen designation will exempt applicants from having to complete 
the competitive bidding process for multi-year contracts that are not 
initially fully funded due to the new internal cap rules when the 
applicant subsequently files requests for support pursuant to these 
contracts. As a result, applicants can request single or multi-year 
commitments pursuant to these contracts in the next funding year 
without going through the competitive bidding process.
    62. The Commission agrees with Alaska Communications, GCI, and 
Western New York (WNY) that the internal cap prevents multi-year 
commitment requests from usurping funding available for single-year 
requests, and rejects requests by some commenters to eliminate the 
internal cap or to remove multi-year commitments from the internal cap. 
This latter group of commenters claims that eliminating the internal 
cap or removing multi-year commitments from the internal cap would 
encourage more multi-year commitments, which these commenters claim are 
more efficient for both the RHC program and individual HCPs. The 
Commission finds that retaining the current internal cap with the 
limitations instituted is more fiscally responsible than eliminating 
the internal cap or removing multi-year commitments from the internal 
cap. Eliminating the cap or removing multi-year commitments from the 
internal cap will result in less funding being made available for 
single year commitments. Multi-year requests tend to be more expensive 
and without any constraints, those requests will make it more likely 
that the overall cap is exceeded. In any event, the changes the 
Commission adopts for the internal cap will likely result in making 
more funding available for multi-year commitments because, going 
forward, the internal cap will only apply when total demand exceeds 
total support available and thus will not apply at all in funding years 
when total support available can satisfy total demand, leaving open the 
possibility for additional funding for multi-year commitments beyond 
the internal cap.
    63. The Commission also rejects some commenters' requests to 
suspend the funding prioritization system until the Commission 
addresses the allocation of shared network costs for consortia program 
participants. As an initial matter, the Commission did not seek comment 
in the 2022 FNPRM on suspending the funding prioritization scheme. The 
Commission finds, however, that a rule change is not necessary for the 
Commission to ensure that consortium members can allocate shared 
network costs when some members do not receive funding due to 
prioritization. In any event, as discussed in the Order on 
Reconsideration section, the Commission's funding prioritization 
approach remains necessary as it will target support where it is most 
needed (i.e., those more rural areas with greater medical shortages) in 
cases where available program funding is exceeded in a given funding 
year. The Commission therefore rejects the requests to suspend the 
funding prioritization system.
    64. Some commenters argued that an increase to the overall RHC 
Program cap is appropriate. The Commission finds that the current 
annually inflation-adjusted overall cap combined with the process to 
carry-forward unused funding strikes the necessary balance between 
providing sufficient funding to health care providers and minimizing 
increased burden on Universal Service Fund (USF) contributors. With the 
availability of carryover funding, demand has been fully satisfied 
since funding year 2019. While continuing to monitor overall Program 
demand, the Commission declines to increase the overall RHC Program cap 
at this time.
    65. Technical Changes to Previously Codified RHC Rules. The 
Commission also takes this opportunity to make two minor corrections to 
the text of the RHC Program rules. First, the Commission amends the 
text of Sec.  54.622(e)(1)(i) of the rules to reflect the correct 
number of health care provider types that are eligible. The Rural 
Healthcare Connectivity Act of 2016 amended the Communications Act of 
1934 to add skilled nursing facilities to the list of health care 
provider types eligible to receive RHC Program support. In response to 
the new law, in 2017, the Commission amended Sec.  54.600(a) of the 
rules to reflect that skilled nursing facilities are eligible for RHC 
support, which increased the number of eligible health care provider 
types from seven to eight. In enacting the change, the Commission did 
not amend a different rule addressing certifications on a Request for 
Services that refers to ``one of the seven categories set forth in the 
definition of health care provider.'' The Commission now corrects that 
omission by striking the word ``seven'' from Sec.  54.622(e)(1)(i) of 
the rules. Striking the word ``seven'' rather than replacing it with 
``eight'' is appropriate because quantifying the number of eligible 
health care provider types in Sec.  54.622(e)(1)(i) of the Commission's 
rules adds no substantive benefit to RHC Program participants but could 
potentially lead to confusion if there are future amendments to the 
health care provider types eligible for the RHC Program. Second, the 
Commission corrects the cross-reference in Sec.  54.622(a) rules so 
that it properly references Sec.  54.622(i). The Commission finds that 
there is good cause to make these changes without notice and comment 
because seeking comment on these technical amendments, which only serve 
to conform these references to the current requirements of the rules 
would be unnecessary.

IV. Order

    66. By the Order, the Commission dismisses the Applications for 
Review of the Bureau's guidance to the Administrator on implementation 
of the Rates Database submitted by Alaska Communications and GCI. The 
Commission's decision to eliminate the use of the Rates Database to 
calculate urban and rural rates renders these Applications for Review 
moot.

V. Procedural Matters

A. Paperwork Reduction Act

    67. This document contains modified information collection 
requirements subject to the Paperwork Reduction Act of 1995 (PRA), 
Public Law 104-13. It will be submitted to the Office of Management and 
Budget (OMB) for review under Section 3507(d) of the PRA. OMB, the 
general public, and other Federal agencies will be invited to comment 
on the modified information collection requirements contained in this 
proceeding. In addition, it is noted that pursuant to the Small 
Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 
U.S.C. 3506(c)(4), the Commission previously sought specific comment on 
how might to further reduce the information collection burden for small 
business concerns with fewer than 25 employees.
    68. In this present document, the Commission has assessed the 
effects of restoring the use of Methods 1 through 3 for rural rates 
calculations, eliminating the use of the HSS, and reducing the 
instances in which the internal cap applies. The Commission finds that 
restoring the use of Methods 1 through 3 for rural rates calculations 
might impose information collection burdens on small business, but that 
this rule change is necessary to protect the integrity of the Universal 
Service Fund, eliminating the use of the HSS will reduce information 
collection burdens and reducing the instance in which the internal cap 
applies will not impact information collection burdens.

[[Page 17389]]

B. Congressional Review Act

    69. The Commission has determined, and the Administrator of the 
Office of Information and Regulatory Affairs, Office of Management and 
Budget, concurs, that the rule is ``non-major'' under the Congressional 
Review Act, 5 U.S.C. 804(2). The Commission will send a copy of the 
Order on Reconsideration and Second Report and Order, Order, and Second 
Notice of Proposed Rulemaking to Congress and the Government 
Accountability Office pursuant to 5 U.S.C. 801(a)(1)(A).

VI. Final Regulatory Flexibility Act

    70. The Regulatory Flexibility Act of 1980, as amended (RFA), 
requires that an agency prepare a regulatory flexibility analysis for 
notice-and-comment rulemaking proceedings, unless the agency certifies 
that ``the rule will not, if promulgated, have a significant economic 
impact on a substantial number of small entities.'' Accordingly, the 
Commission has prepared a Final Regulatory Flexibility Analysis (FRFA) 
concerning rule and policy changes in the Order on Reconsideration and 
Second Report and Order. In the 2022 FNPRM, the Commission included an 
Initial Regulatory Flexibility Analysis (IRFA) of the possible 
significant economic impact on a substantial number of small entities 
by the policies and rules proposed in the 2022 FNPRM. The Commission 
sought written public comment on the proposals in the 2022 FNPRM 
including comment on the IRFA. The Commission did not receive any 
relevant comments in response to the IRFA. This FRFA conforms to the 
RFA.

A. Need for, and Objectives of, the Second Report and Order

    71. Through the Order on Reconsideration and Second Report and 
Order, the Commission seeks to further improve the Rural Health Care 
(RHC) Program's capacity to distribute telecommunications and broadband 
support to health care providers--especially small, rural healthcare 
providers (HCPs)--in the most equitable and efficient manner as 
possible. Over the years, telehealth has become an increasingly vital 
component of healthcare delivery to rural Americans. Rural healthcare 
facilities are typically limited by the equipment and supplies they 
have and the scope of services they can offer which ultimately can have 
an impact on the availability of high-quality health care. Therefore, 
the RHC Program plays a critical role in overcoming some of the 
obstacles healthcare providers face in healthcare delivery in rural 
communities. Considering the significance of RHC Program support, the 
Commission implements several measures to most effectively meet HCPs' 
needs while responsibly distributing the RHC Program's limited funds.
    72. In the Second Report and Order section, the Commission adopts 
proposals from the 2022 FNPRM to amend RHC Program administrative 
processes and internal cap application and prioritization rules to 
promote efficiency, reduce delays in funding commitments, and 
prioritize support for the current funding year as well as make a minor 
technical change to the text of the Commission's rules.

B. Summary of Significant Issues Raised by Public Comments in Response 
to the IRFA

    73. There were no comments filed that specifically address the 
rules and policies proposed in the IRFA.

C. Response to Comments by the Chief Counsel for Advocacy of the Small 
Business Administration

    74. Pursuant to the Small Business Jobs Act of 2010, which amended 
the RFA, the Commission is required to respond to any comments filed by 
the Chief Counsel of the Small Business Administration (SBA), and to 
provide a detailed statement of any change made to the proposed rule(s) 
as a result of those comments. The Chief Counsel did not file any 
comments in response to the proposed rule(s) in the proceeding.

D. Description and Estimate of the Number of Small Entities to Which 
the Rules Will Apply

    75. The RFA directs agencies to provide a description of and, where 
feasible, an estimate of the number of small entities that may be 
affected by the proposed rules, if adopted. The RFA generally defines 
the term ``small entity'' as having the same meaning as the terms 
``small business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' under the Small Business 
Act. A ``small business concern'' is one that: (1) is independently 
owned and operated; (2) is not dominant in its field of operation; and 
(3) satisfies any additional criteria established by the Small Business 
Administration (SBA).
    76. Small Businesses, Small Organizations, Small Governmental 
Jurisdictions. The Commission's actions, over time, may affect small 
entities that are not easily categorized at present. The Commission 
therefore describes here, at the outset, three broad groups of small 
entities that could be directly affected herein. First, while there are 
industry specific size standards for small businesses that are used in 
the regulatory flexibility analysis, according to data from the SBA's 
Office of Advocacy, in general a small business is an independent 
business having fewer than 500 employees. These types of small 
businesses represent 99.9 percent of all businesses in the United 
States which translates to 31.7 million businesses.
    77. Next, the type of small entity described as a ``small 
organization'' is generally ``any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field.'' 
The Internal Revenue Service (IRS) uses a revenue benchmark of $50,000 
or less to delineate its annual electronic filing requirements for 
small exempt organizations. Nationwide, for tax year 2018, there were 
approximately 571,709 small exempt organizations in the U.S. reporting 
revenues of $50,000 or less according to the registration and tax data 
for exempt organizations available from the IRS.
    78. Finally, the small entity described as a ``small governmental 
jurisdiction'' is defined generally as ``governments of cities, 
counties, towns, townships, villages, school districts, or special 
districts, with a population of less than fifty thousand.'' U.S. Census 
Bureau data from the 2017 Census of Governments indicates that there 
were 90,075 local governmental jurisdictions consisting of general 
purpose governments and special purpose governments in the United 
States. Of this number there were 39, 931 general purpose governments 
(county, municipal and town or township) with populations of less than 
50,000 and 12,040 special purpose governments (independent school 
districts) with populations of less than 50,000. Based on the 2017 U.S. 
Census Bureau data, the Commission estimates that at least 48, 971 
entities fall in the category of ``small governmental jurisdictions.''
    79. Small entities potentially affected by the action include 
eligible rural non-profit and public health care providers and the 
eligible service providers offering them services, including 
telecommunications service providers, internet Service Providers 
(ISPs), and vendors of the services and equipment used for dedicated 
broadband networks.

1. Healthcare Providers

    80. Offices of Physicians (except Mental Health Specialists). This 
U.S. industry comprises establishments of

[[Page 17390]]

health practitioners having the degree of M.D. (Doctor of Medicine) or 
D.O. (Doctor of Osteopathy) primarily engaged in the independent 
practice of general or specialized medicine (except psychiatry or 
psychoanalysis) or surgery. These practitioners operate private or 
group practices in their own offices (e.g., centers, clinics) or in the 
facilities of others, such as hospitals or health maintenance 
organization (HMO) medical centers. The SBA has created a size standard 
for this industry, which is annual receipts of $12 million or less. 
According to 2012 U.S. Economic Census, 152,468 firms operated 
throughout the entire year in this industry. Of that number, 147,718 
had annual receipts of less than $10 million, while 3,108 firms had 
annual receipts between $10 million and $24,999,999. Based on the data, 
the Commission concludes that a majority of firms operating in this 
industry are small under the applicable size standard.
    81. Offices of Dentists. This U.S. industry comprises 
establishments of health practitioners having the degree of D.M.D. 
(Doctor of Dental Medicine), D.D.S. (Doctor of Dental Surgery), or 
D.D.Sc. (Doctor of Dental Science) primarily engaged in the independent 
practice of general or specialized dentistry or dental surgery. These 
practitioners operate private or group practices in their own offices 
(e.g., centers, clinics) or in the facilities of others, such as 
hospitals or HMO medical centers. They can provide either comprehensive 
preventive, cosmetic, or emergency care, or specialize in a single 
field of dentistry. The SBA has established a size standard for that 
industry of annual receipts of $8 million or less. The 2012 U.S. 
Economic Census indicates that 115,268 firms operated in the dental 
industry throughout the entire year. Of that number 114,417 had annual 
receipts of less than $5 million, while 651 firms had annual receipts 
between $5 million and $9,999,999. Based on the data, the Commission 
concludes that a majority of business in the dental industry are small 
under the applicable standard.
    82. Offices of Chiropractors. This U.S. industry comprises 
establishments of health practitioners having the degree of DC (Doctor 
of Chiropractic) primarily engaged in the independent practice of 
chiropractic. These practitioners provide diagnostic and therapeutic 
treatment of neuromusculoskeletal and related disorders through the 
manipulation and adjustment of the spinal column and extremities, and 
operate private or group practices in their own offices (e.g., centers, 
clinics) or in the facilities of others, such as hospitals or HMO 
medical centers. The SBA has established a size standard for this 
industry, which is annual receipts of $8 million or less. The 2012 U.S. 
Economic Census statistics show that in 2012, 33,940 firms operated 
throughout the entire year. Of that number 33,910 operated with annual 
receipts of less than $5 million per year, while 26 firms had annual 
receipts between $5 million and $9,999,999. Based on the data, the 
Commission concludes that a majority of chiropractors are small.
    83. Offices of Optometrists. This U.S. industry comprises 
establishments of health practitioners having the degree of O.D. 
(Doctor of Optometry) primarily engaged in the independent practice of 
optometry. These practitioners examine, diagnose, treat, and manage 
diseases and disorders of the visual system, the eye and associated 
structures as well as diagnose related systemic conditions. Offices of 
optometrists prescribe and/or provide eyeglasses, contact lenses, low 
vision aids, and vision therapy. They operate private or group 
practices in their own offices (e.g., centers, clinics) or in the 
facilities of others, such as hospitals or HMO medical centers, and may 
also provide the same services as opticians, such as selling and 
fitting prescription eyeglasses and contact lenses. The SBA has 
established a size standard for businesses operating in this industry, 
which is annual receipts of $8 million or less. The 2012 Economic 
Census indicates that 18,050 firms operated the entire year. Of that 
number, 17,951 had annual receipts of less than $5 million, while 70 
firms had annual receipts between $5 million and $9,999,999. Based on 
the data, the Commission concludes that a majority of optometrists in 
this industry are small.
    84. Offices of Mental Health Practitioners (except Physicians). 
This U.S. industry comprises establishments of independent mental 
health practitioners (except physicians) primarily engaged in (1) the 
diagnosis and treatment of mental, emotional, and behavioral disorders 
and/or (2) the diagnosis and treatment of individual or group social 
dysfunction brought about by such causes as mental illness, alcohol and 
substance abuse, physical and emotional trauma, or stress. These 
practitioners operate private or group practices in their own offices 
(e.g., centers, clinics) or in the facilities of others, such as 
hospitals or HMO medical centers. The SBA has created a size standard 
for this industry, which is annual receipts of $8 million or less. The 
2012 U.S. Economic Census indicates that 16,058 firms operated 
throughout the entire year. Of that number, 15,894 firms received 
annual receipts of less than $5 million, while 111 firms had annual 
receipts between $5 million and $9,999,999. Based on the data, the 
Commission concludes that a majority of mental health practitioners who 
do not employ physicians are small.
    85. Offices of Physical, Occupational and Speech Therapists and 
Audiologists. This U.S. industry comprises establishments of 
independent health practitioners primarily engaged in one of the 
following: (1) providing physical therapy services to patients who have 
impairments, functional limitations, disabilities, or changes in 
physical functions and health status resulting from injury, disease or 
other causes, or who require prevention, wellness or fitness services; 
(2) planning and administering educational, recreational, and social 
activities designed to help patients or individuals with disabilities, 
regain physical or mental functioning or to adapt to their 
disabilities; and (3) diagnosing and treating speech, language, or 
hearing problems. These practitioners operate private or group 
practices in their own offices (e.g., centers, clinics) or in the 
facilities of others, such as hospitals or HMO medical centers. The SBA 
has established a size standard for this industry, which is annual 
receipts of $8 million or less. The 2012 U.S. Economic Census indicates 
that 20,567 firms in this industry operated throughout the entire year. 
Of this number, 20,047 had annual receipts of less than $5 million, 
while 270 firms had annual receipts between $5 million and $9,999,999. 
Based on the data, the Commission concludes that a majority of 
businesses in this industry are small.
    86. Offices of Podiatrists. This U.S. industry comprises 
establishments of health practitioners having the degree of D.P.M. 
(Doctor of Podiatric Medicine) primarily engaged in the independent 
practice of podiatry. These practitioners diagnose and treat diseases 
and deformities of the foot and operate private or group practices in 
their own offices (e.g., centers, clinics) or in the facilities of 
others, such as hospitals or HMO medical centers. The SBA has 
established a size standard for businesses in this industry, which is 
annual receipts of $8 million or less. The 2012 U.S. Economic Census 
indicates that 7,569 podiatry firms operated throughout the entire 
year. Of that number, 7,545 firms had annual receipts of less than $5 
million, while 22 firms had annual receipts between $5 million and 
$9,999,999. Based on the data, the Commission concludes that a

[[Page 17391]]

majority of firms in this industry are small.
    87. Offices of All Other Miscellaneous Health Practitioners. This 
U.S. industry comprises establishments of independent health 
practitioners (except physicians; dentists; chiropractors; 
optometrists; mental health specialists; physical, occupational, and 
speech therapists; audiologists; and podiatrists). These practitioners 
operate private or group practices in their own offices (e.g., centers, 
clinics) or in the facilities of others, such as hospitals or HMO 
medical centers. The SBA has established a size standard for this 
industry, which is annual receipts of $8 million or less. The 2012 U.S. 
Economic Census indicates that 11,460 firms operated throughout the 
entire year. Of that number, 11,374 firms had annual receipts of less 
than $5 million, while 48 firms had annual receipts between $5 million 
and $9,999,999. Based on the data, the Commission concludes the 
majority of firms in this industry are small.
    88. Family Planning Centers. This U.S. industry comprises 
establishments with medical staff primarily engaged in providing a 
range of family planning services on an outpatient basis, such as 
contraceptive services, genetic and prenatal counseling, voluntary 
sterilization, and therapeutic and medically induced termination of 
pregnancy. The SBA has established a size standard for this industry, 
which is annual receipts of $12 million or less. The 2012 Economic 
Census indicates that 1,286 firms in this industry operated throughout 
the entire year. Of that number 1,237 had annual receipts of less than 
$10 million, while 36 firms had annual receipts between $10 million and 
$24,999,999. Based on the data, the Commission concludes that the 
majority of firms in this industry is small.
    89. Outpatient Mental Health and Substance Abuse Centers. This U.S. 
industry comprises establishments with medical staff primarily engaged 
in providing outpatient services related to the diagnosis and treatment 
of mental health disorders and alcohol and other substance abuse. These 
establishments generally treat patients who do not require inpatient 
treatment. They may provide a counseling staff and information 
regarding a wide range of mental health and substance abuse issues and/
or refer patients to more extensive treatment programs, if necessary. 
The SBA has established a size standard for this industry, which is 
$16.5 million or less in annual receipts. The 2012 U.S. Economic Census 
indicates that 4,446 firms operated throughout the entire year. Of that 
number, 4,069 had annual receipts of less than $10 million while 286 
firms had annual receipts between $10 million and $24,999,999. Based on 
the data, the Commission concludes that a majority of firms in this 
industry are small.
    90. HMO Medical Centers. This U.S. industry comprises 
establishments with physicians and other medical staff primarily 
engaged in providing a range of outpatient medical services to the 
health maintenance organization (HMO) subscribers with a focus 
generally on primary health care. These establishments are owned by the 
HMO. Included in this industry are HMO establishments that both provide 
health care services and underwrite health and medical insurance 
policies. The SBA has established a size standard for this industry, 
which is $35 million or less in annual receipts. The 2012 U.S. Economic 
Census indicates that 14 firms in this industry operated throughout the 
entire year. Of that number, 5 firms had annual receipts of less than 
$25 million, while 1 firm had annual receipts between $25 million and 
$99,999,999. Based on the data, the Commission concludes that 
approximately one-third of the firms in this industry are small.
    91. Freestanding Ambulatory Surgical and Emergency Centers. This 
U.S. industry comprises establishments with physicians and other 
medical staff primarily engaged in (1) providing surgical services 
(e.g., orthoscopic and cataract surgery) on an outpatient basis or (2) 
providing emergency care services (e.g., setting broken bones, treating 
lacerations, or tending to patients suffering injuries as a result of 
accidents, trauma, or medical conditions necessitating immediate 
medical care) on an outpatient basis. Outpatient surgical 
establishments have specialized facilities, such as operating and 
recovery rooms, and specialized equipment, such as anesthetic or X-ray 
equipment. The SBA has established a size standard for this industry, 
which is annual receipts of $16.5 million or less. The 2012 U.S. 
Economic Census indicates that 3,595 firms in this industry operated 
throughout the entire year. Of that number, 3,222 firms had annual 
receipts of less than $10 million, while 289 firms had annual receipts 
between $10 million and $24,999,999. Based on the data, the Commission 
concludes that a majority of firms in this industry are small.
    92. All Other Outpatient Care Centers. This U.S. industry comprises 
establishments with medical staff primarily engaged in providing 
general or specialized outpatient care (except family planning centers, 
outpatient mental health and substance abuse centers, HMO medical 
centers, kidney dialysis centers, and freestanding ambulatory surgical 
and emergency centers). Centers or clinics of health practitioners with 
different degrees from more than one industry practicing within the 
same establishment (i.e., Doctor of Medicine and Doctor of Dental 
Medicine) are included in this industry. The SBA has established a size 
standard for this industry, which is annual receipts of $22 million or 
less. The 2012 U.S. Economic Census indicates that 4,903 firms operated 
in this industry throughout the entire year. Of this number, 4,269 
firms had annual receipts of less than $10 million, while 389 firms had 
annual receipts between $10 million and $24,999,999. Based on the data, 
the Commission concludes that a majority of firms in this industry are 
small.
    93. Blood and Organ Banks. This U.S. industry comprises 
establishments primarily engaged in collecting, storing, and 
distributing blood and blood products and storing and distributing body 
organs. The SBA has established a size standard for this industry, 
which is annual receipts of $35 million or less. The 2012 U.S. Economic 
Census indicates that 314 firms operated in this industry throughout 
the entire year. Of that number, 235 operated with annual receipts of 
less than $25 million, while 41 firms had annual receipts between $25 
million and $49,999,999. Based on the data, the Commission concludes 
that approximately three-quarters of firms that operate in this 
industry are small.
    94. All Other Miscellaneous Ambulatory Health Care Services. This 
U.S. industry comprises establishments primarily engaged in providing 
ambulatory health care services (except offices of physicians, 
dentists, and other health practitioners; outpatient care centers; 
medical and diagnostic laboratories; home health care providers; 
ambulances; and blood and organ banks). The SBA has established a size 
standard for this industry, which is annual receipts of $16.5 million 
or less. The 2012 U.S. Economic Census indicates that 2,429 firms 
operated in this industry throughout the entire year. Of that number, 
2,318 had annual receipts of less than $10 million, while 56 firms had 
annual receipts between $10 million and $24,999,999. Based on the data, 
the Commission concludes that a majority of the firms in this industry 
is small.
    95. Medical Laboratories. This U.S. industry comprises 
establishments known as medical laboratories primarily

[[Page 17392]]

engaged in providing analytic or diagnostic services, including body 
fluid analysis, generally to the medical profession or to the patient 
on referral from a health practitioner. The SBA has established a size 
standard for this industry, which is annual receipts of $35 million or 
less. The 2012 U.S. Economic Census indicates that 2,599 firms operated 
in this industry throughout the entire year. Of this number, 2,465 had 
annual receipts of less than $25 million, while 60 firms had annual 
receipts between $25 million and $49,999,999. Based on the data, the 
Commission concludes that a majority of firms that operate in this 
industry are small.
    96. Diagnostic Imaging Centers. This U.S. industry comprises 
establishments known as diagnostic imaging centers primarily engaged in 
producing images of the patient generally on referral from a health 
practitioner. The SBA has established size standard for this industry, 
which is annual receipts of $16.5 million or less. The 2012 U.S. 
Economic Census indicates that 4,209 firms operated in this industry 
throughout the entire year. Of that number, 3,876 firms had annual 
receipts of less than $10 million, while 228 firms had annual receipts 
between $10 million and $24,999,999. Based on the data, the Commission 
concludes that a majority of firms that operate in this industry are 
small.
    97. Home Health Care Services. This U.S. industry comprises 
establishments primarily engaged in providing skilled nursing services 
in the home, along with a range of the following: personal care 
services; homemaker and companion services; physical therapy; medical 
social services; medications; medical equipment and supplies; 
counseling; 24-hour home care; occupation and vocational therapy; 
dietary and nutritional services; speech therapy; audiology; and high-
tech care, such as intravenous therapy. The SBA has established a size 
standard for this industry, which is annual receipts of $16.5 million 
or less. The 2012 U.S. Economic Census indicates that 17,770 firms 
operated in this industry throughout the entire year. Of that number, 
16,822 had annual receipts of less than $10 million, while 590 firms 
had annual receipts between $10 million and $24,999,999. Based on the 
data, the Commission concludes that a majority of firms that operate in 
this industry are small.
    98. Ambulance Services. This U.S. industry comprises establishments 
primarily engaged in providing transportation of patients by ground or 
air, along with medical care. These services are often provided during 
a medical emergency but are not restricted to emergencies. The vehicles 
are equipped with lifesaving equipment operated by medically trained 
personnel. The SBA has established a size standard for this industry, 
which is annual receipts of $16.5 million or less. The 2012 U.S. 
Economic Census indicates that 2,984 firms operated in this industry 
throughout the entire year. Of that number, 2,926 had annual receipts 
of less than $15 million, while 133 firms had annual receipts between 
$10 million and $24,999,999. Based on the data, the Commission 
concludes that a majority of firms in this industry is small.
    99. Kidney Dialysis Centers. This U.S. industry comprises 
establishments with medical staff primarily engaged in providing 
outpatient kidney or renal dialysis services. The SBA has established 
assize standard for this industry, which is annual receipts of $41.5 
million or less. The 2012 U.S. Economic Census indicates that 396 firms 
operated in this industry throughout the entire year. Of that number, 
379 had annual receipts of less than $25 million, while 7 firms had 
annual receipts between $25 million and $49,999,999. Based on the data, 
the Commission concludes that a majority of firms in this industry are 
small.
    100. General Medical and Surgical Hospitals. This U.S. industry 
comprises establishments known and licensed as general medical and 
surgical hospitals primarily engaged in providing diagnostic and 
medical treatment (both surgical and nonsurgical) to inpatients with 
any of a wide variety of medical conditions. These establishments 
maintain inpatient beds and provide patients with food services that 
meet their nutritional requirements. These hospitals have an organized 
staff of physicians and other medical staff to provide patient care 
services. These establishments usually provide other services, such as 
outpatient services, anatomical pathology services, diagnostic X-ray 
services, clinical laboratory services, operating room services for a 
variety of procedures, and pharmacy services. The SBA has established a 
size standard for this industry, which is annual receipts of $41.5 
million or less. The 2012 U.S. Economic Census indicates that 2,800 
firms operated in this industry throughout the entire year. Of that 
number, 877 has annual receipts of less than $25 million, while 400 
firms had annual receipts between $25 million and $49,999,999. Based on 
the data, the Commission concludes that approximately one-quarter of 
firms in this industry are small.
    101. Psychiatric and Substance Abuse Hospitals. This U.S. industry 
comprises establishments known and licensed as psychiatric and 
substance abuse hospitals primarily engaged in providing diagnostic, 
medical treatment, and monitoring services for inpatients who suffer 
from mental illness or substance abuse disorders. The treatment often 
requires an extended stay in the hospital. These establishments 
maintain inpatient beds and provide patients with food services that 
meet their nutritional requirements. They have an organized staff of 
physicians and other medical staff to provide patient care services. 
Psychiatric, psychological, and social work services are available at 
the facility. These hospitals usually provide other services, such as 
outpatient services, clinical laboratory services, diagnostic X-ray 
services, and electroencephalograph services. The SBA has established a 
size standard for this industry, which is annual receipts of $41.5 
million or less. The 2012 U.S. Economic Census indicates that 404 firms 
operated in this industry throughout the entire year. Of that number, 
185 had annual receipts of less than $25 million, while 107 firms had 
annual receipts between $25 million and $49,999,999. Based on the data, 
the Commission concludes that more than one-half of the firms in this 
industry are small.
    102. Specialty (Except Psychiatric and Substance Abuse) Hospitals. 
This U.S. industry consists of establishments known and licensed as 
specialty hospitals primarily engaged in providing diagnostic, and 
medical treatment to inpatients with a specific type of disease or 
medical condition (except psychiatric or substance abuse). Hospitals 
providing long-term care for the chronically ill and hospitals 
providing rehabilitation, restorative, and adjustive services to 
physically challenged or disabled people are included in this industry. 
These establishments maintain inpatient beds and provide patients with 
food services that meet their nutritional requirements. They have an 
organized staff of physicians and other medical staff to provide 
patient care services. These hospitals may provide other services, such 
as outpatient services, diagnostic X-ray services, clinical laboratory 
services, operating room services, physical therapy services, 
educational and vocational services, and psychological and social work 
services. The SBA has established a size standard for this industry, 
which is annual

[[Page 17393]]

receipts of $41.5 million or less. The 2012 U.S. Economic Census 
indicates that 346 firms operated in this industry throughout the 
entire year. Of that number, 146 firms had annual receipts of less than 
$25 million, while 79 firms had annual receipts between $25 million and 
$49,999,999. Based on the data, the Commission concludes that more than 
one-half of the firms in this industry are small.
    103. Emergency and Other Relief Services. This industry comprises 
establishments primarily engaged in providing food, shelter, clothing, 
medical relief, resettlement, and counseling to victims of domestic or 
international disasters or conflicts (e.g., wars). The SBA has 
established a size standard for this industry which is annual receipts 
of $35 million or less. The 2012 U.S. Economic Census indicates that 
541 firms operated in this industry throughout the entire year. Of that 
number, 509 had annual receipts of less than $25 million, while 7 firms 
had annual receipts between $25 million and $49,999,999. Based on the 
data, the Commission concludes that a majority of firms in this 
industry are small.
2. Providers of Telecommunications and Other Services
    104. Telecommunications Service Providers--Incumbent Local Exchange 
Carriers (LECs). Neither the Commission nor the SBA has developed a 
small business size standard specifically for incumbent local exchange 
services. The closest applicable North American Industry Classification 
System (NAICS) Code category is Wired Telecommunications Carriers. 
Under the applicable SBA size standard, such a business is small if it 
has 1,500 or fewer employees. U.S. Census Bureau data for 2012 indicate 
that 3,117 firms operated the entire year. Of this total, 3,083 
operated with fewer than 1,000 employees. Consequently, the Commission 
estimates that most providers of incumbent local exchange service are 
small businesses that may be affected by our actions. According to 
Commission data, one thousand three hundred and seven (1,307) Incumbent 
Local Exchange Carriers reported that they were incumbent local 
exchange service providers. Of this total, an estimated 1,006 have 
1,500 or fewer employees. Thus, using the SBA's size standard the 
majority of incumbent LECs can be considered small entities.
    105. Interexchange Carriers (IXCs). Neither the Commission nor the 
SBA has developed a small business size standard specifically for 
Interexchange Carriers. The closest applicable NAICS Code category is 
Wired Telecommunications Carriers. The applicable size standard under 
SBA rules is that such a business is small if it has 1,500 or fewer 
employees. U.S. Census Bureau data for 2012 indicate that 3,117 firms 
operated for the entire year. Of that number, 3,083 operated with fewer 
than 1,000 employees. According to internally developed Commission 
data, 359 companies reported that their primary telecommunications 
service activity was the provision of interexchange services. Of this 
total, an estimated 317 have 1,500 or fewer employees. Consequently, 
the Commission estimates that the majority of interexchange service 
providers are small entities.
    106. Competitive Access Providers. Neither the Commission nor the 
SBA has developed a definition of small entities specifically 
applicable to competitive access services providers (CAPs). The closest 
applicable definition under the SBA rules is Wired Telecommunications 
Carriers and under the size standard, such a business is small if it 
has 1,500 or fewer employees. U.S. Census Bureau data for 2012 
indicates that 3,117 firms operated during that year. Of that number, 
3,083 operated with fewer than 1,000 employees. Consequently, the 
Commission estimates that most competitive access providers are small 
businesses that may be affected by our actions. According to Commission 
data the 2010 Trends in Telephone Report, rel. September 2010, 1,442 
CAPs and competitive local exchange carriers (competitive LECs) 
reported that they were engaged in the provision of competitive local 
exchange services. Of these 1,442 CAPs and competitive LECs, an 
estimated 1,256 have 1,500 or few employees and 186 have more than 
1,500 employees. Consequently, the Commission estimates that most 
providers of competitive exchange services are small businesses.
    107. Wireline Providers, Wireless Carriers and Service Providers, 
and internet Service Providers. The small entities that may be affected 
by the reforms include eligible nonprofit and public health care 
providers and the eligible service providers offering them services, 
including telecommunications service providers, internet Service 
Providers, and service providers of the services and equipment used for 
dedicated broadband networks.
    108. Vendors and Equipment Manufactures--Vendors of Infrastructure 
Development or ``Network Buildout.'' The Commission has not developed a 
small business size standard specifically directed toward manufacturers 
of network facilities. There are two applicable SBA categories in which 
manufacturers of network facilities could fall and each have different 
size standards under the SBA rules. The SBA categories are ``Radio and 
Television Broadcasting and Wireless Communications Equipment'' with a 
size standard of 1,250 employees or less and ``Other Communications 
Equipment Manufacturing'' with a size standard of 750 employees or 
less.'' U.S. Census Bureau data for 2012 shows that for Radio and 
Television Broadcasting and Wireless Communications Equipment firms 841 
establishments operated for the entire year. Of that number, 828 
establishments operated with fewer than 1,000 employees, and 7 
establishments operated with between 1,000 and 2,499 employees. For 
Other Communications Equipment Manufacturing, U.S. Census Bureau data 
for 2012, show that 383 establishments operated for the year. Of that 
number 379 operated with fewer than 500 employees and 4 had 500 to 999 
employees. Based on the data, the Commission concludes that the 
majority of Vendors of Infrastructure Development or ``Network 
Buildout'' are small.
    109. Telephone Apparatus Manufacturing. This industry comprises 
establishments primarily engaged in manufacturing wire telephone and 
data communications equipment. These products may be stand-alone or 
board-level components of a larger system. Examples of products made by 
these establishments are central office switching equipment, cordless 
and wire telephones (except cellular), private branch exchange (PBX) 
equipment, telephone answering machines, local area network (LAN) 
modems, multi-user modems, and other data communications equipment, 
such as bridges, routers, and gateways. The SBA has developed a small 
business size standard for Telephone Apparatus Manufacturing, which 
consists of all such companies having 1,250 or fewer employees. U.S. 
Census Bureau data for 2012 show that there were 266 establishments 
that operated that year. Of this total, 262 operated with fewer than 
1,000 employees. Thus, under this size standard, the majority of firms 
in this industry can be considered small.
    110. Radio and Television Broadcasting and Wireless Communications 
Equipment Manufacturing. This industry comprises establishments 
primarily engaged in manufacturing radio and television broadcast and 
wireless communications equipment. Examples of products made by these 
establishments are:

[[Page 17394]]

transmitting and receiving antennas, cable television equipment, global 
positioning system (GPS) equipment, pagers, cellular phones, mobile 
communications equipment, and radio and television studio and 
broadcasting equipment. The SBA has established a small business size 
standard for this industry of 1,250 or fewer employees. U.S. Census 
Bureau data for 2012 show that 841 establishments operated in this 
industry in that year. Of that number, 828 establishments operated with 
fewer than 1,000 employees, 7 establishments operated with between 
1,000 and 2,499 employees and 6 establishments operated with 2,500 or 
more employees. Based on the data, the Commission concludes that a 
majority of manufacturers in this industry are small.
    111. Other Communications Equipment Manufacturing. This industry 
comprises establishments primarily engaged in manufacturing 
communications equipment (except telephone apparatus, and radio and 
television broadcast, and wireless communications equipment). Examples 
of such manufacturing include fire detection and alarm systems 
manufacturing, Intercom systems and equipment manufacturing, and 
signals (e.g., highway, pedestrian, railway, traffic) manufacturing. 
The SBA has established a size standard for this industry as all such 
firms having 750 or fewer employees. U.S. Census Bureau data for 2012 
shows that 383 establishments operated in that year. Of that number, 
379 operated with fewer than 500 employees and 4 had 500 to 999 
employees. Based on the data, the Commission concludes that the 
majority of Other Communications Equipment Manufacturers are small.

E. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements for Small Entities

    112. The rules adopted in the Second Report and Order will not 
result in modified reporting, recordkeeping, or other compliance 
requirements for small or large entities.

F. Steps Taken To Minimize the Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered

    113. The RFA requires an agency to describe any significant, 
specifically small business, alternatives that it has considered in 
reaching its proposed approach, which may include the following four 
alternatives (among others): (1) the establishment of differing 
compliance or reporting requirements or timetables that take into 
account the resources available to small entities; (2) the 
clarification, consolidation, or simplification of compliance and 
reporting requirements under the rule for such small entities; (3) the 
use of performance rather than design standards; and (4) an exemption 
from coverage of the rule, or any part thereof, for such small 
entities.
    114. In the Second Report and Order section, the Commission takes 
steps to minimize the economic impact on small entities with the rule 
changes that are adopted. The Commission amends the invoicing process 
to harmonize the process across the Telecom Program and the HCF 
Program. The Commission minimizes the impact of this change on small 
entities by ensuring that there is a mechanism to allow multiple 
invoices to be filed in a single submission. The Commission also amends 
the funding cap and prioritization rules to limit the application of 
the internal cap and prioritize health care providers' current year 
financial need over their future year need when the internal cap is 
exceeded. This change will help small entities by reducing the 
instances in which the internal cap applies and prioritizing funding 
for the current funding year when it does. These actions will promote 
efficiency, reduce delays in funding commitments, and minimize the 
possibility that some health care providers may not receive their 
current year's support in the event of prioritization to upfront 
payment and multi-year commitment requests, while strengthening 
protections against waste, fraud and abuse.

G. Report to Congress

    115. The Commission will send a copy of the Order on 
Reconsideration and Second Report and Order, including the FRFA, in a 
report to be sent to Congress and the Government Accountability Office 
pursuant to the Small Business Regulatory Enforcement Fairness Act of 
1996. In addition, the Commission will send a copy of the Second Report 
and Order, including the FRFA, to the Chief Counsel for Advocacy of the 
Small Business Administration. A copy of the Second Report and Order 
and FRFA (or summaries thereof) will also be published in the Federal 
Register.
    116. Ex Parte Rules--Permit-But-Disclose. This proceeding shall be 
treated as a ``permit-but-disclose'' proceeding in accordance with the 
Commission's ex parte rules. Persons making ex parte presentations must 
file a copy of any written presentation or a memorandum summarizing any 
oral presentation within two business days after the presentation 
(unless a different deadline applicable to the Sunshine period 
applies). Persons making oral ex parte presentations are reminded that 
memoranda summarizing the presentation must (1) list all persons 
attending or otherwise participating in the meeting at which the ex 
parte presentation was made, and (2) summarize all data presented and 
arguments made during the presentation. If the presentation consisted 
in whole or in part of the presentation of data or arguments already 
reflected in the presenter's written comments, memoranda or other 
filings in the proceeding, the presenter may provide citations to such 
data or arguments in his or her prior comments, memoranda, or other 
filings (specifying the relevant page and/or paragraph numbers where 
such data or arguments can be found) in lieu of summarizing them in the 
memorandum. Documents shown or given to Commission staff during ex 
parte meetings are deemed to be written ex parte presentations and must 
be filed consistent with Commission's rule Sec.  1.1206(b). In 
proceedings governed by rule Sec.  1.49(f) of the Commission's rules or 
for which the Commission has made available a method of electronic 
filing, written ex parte presentations and memoranda summarizing oral 
ex parte presentations, and all attachments thereto, must be filed 
through the electronic comment filing system available for that 
proceeding, and must be filed in their native format (e.g., .doc, .xml, 
.ppt, searchable .pdf). Participants in this proceeding should 
familiarize themselves with the Commission's ex parte rules.

VII. Ordering Clauses

    117. Accordingly, it is ordered, pursuant to the authority 
contained in sections 1, 4(j), 214, 254, and 405 of the Communications 
Act of 1934, as amended, 47 U.S.C. 151, 154(j), 214, 254, and 405 and 
Sec. Sec.  1.115 and 1.429 of the Commission's rules, 47 CFR 1.115, 
1.429, that the Order on Reconsideration, Second Report and Order, and 
Order is adopted.
    118. It is further ordered that, pursuant to Sec.  1.429 of the 
Commission's rules, 47 CFR 1.429, the Petition for Reconsideration 
filed by Alaska Communications on November 12, 2019, is granted in 
part, denied in part, and dismissed in part to the extent described 
herein.
    119. It is further ordered that, pursuant to Sec.  1.429 of the 
Commission's rules, 47 CFR 1.429, the Petition for Reconsideration and 
Clarification filed by the Schools, Health & Libraries Broadband 
Coalition on November 12,

[[Page 17395]]

2019, is granted in part, denied in part, and dismissed in part to the 
extent described herein.
    120. It is further ordered that, pursuant to Sec.  1.429 of the 
Commission's rules, 47 CFR 1.429, the Petition for Reconsideration 
filed by State of Alaska, Office of the Governor on November 12, 2019, 
is granted in part, denied in part and dismissed in part to the extent 
described herein.
    121. It is further ordered that, pursuant to Sec.  1.429 of the 
Commission's rules, 47 CFR 1.429, the Petition for Reconsideration and 
Clarification filed by North Carolina Telehealth Network Association/
Southern Ohio Health Care Network on November 12, 2019, is denied to 
the extent described herein.
    122. It is further ordered that, pursuant to Sec.  1.429 of the 
Commission's rules, 47 CFR 1.429, the Petition for Reconsideration and 
Clarification filed by USTelecom--The Broadband Association on November 
12, 2019, is granted in part, denied in part, and dismissed in part to 
the extent described herein.
    123. It is further ordered that pursuant to the authority in 
sections 1 through 4 and 254 of the Communications Act of 1934, as 
amended, 47 U.S.C. 151-154 and 254, and pursuant to Sec.  1.3 of the 
Commission's rules, 47 CFR 1.3, that Sec.  54.605(b) of the 
Commission's rules as amended herein, 47 CFR 54.605(b) is waived to the 
extent provided herein.
    124. It is further ordered, that pursuant to Sec.  1.103 of the 
Commission's rules, the provisions of the Order on Reconsideration, 
Second Report and Order, and Order will become effective April 24, 
2023, unless indicated otherwise herein.
    125. It is further ordered, that pursuant to the authority 
contained in sections 1 through 4, 201 through 205, 254, 303(r), and 
403 of the Communications Act of 1934, as amended, 47 U.S.C. 151-154, 
201-205, 254, 303(r), and 403, and section 706 of the 
Telecommunications Act of 1996, 47 U.S.C. 1302, part 54 of the 
Commission's rules, 47 CFR part 54, is AMENDED, and such rule 
amendments in the Order on Reconsideration and Second Report and Order 
shall be effective April 24, 2023, except for Sec. Sec.  54.604, 
54.605, and 54.627, which are subject to the Paperwork Reduction Act. 
The Commission will publish a document in the Federal Register 
announcing the effective date for those rule sections after approved by 
the Office of Management and Budget as required by the Paperwork 
Reduction Act.
    126. It is further ordered that, pursuant to Sec.  1.115 of the 
Commission's rules, 47 CFR 1.115, the Application for Review filed by 
GCI Communications Corp. on July 30, 2020, is DISMISSED as moot.
    127. It is further ordered that, pursuant to Sec.  1.115 of the 
Commission's rules, 47 CFR 1.1115, the Application for Review filed by 
Alaska Communications on July 30, 2020, is dismissed as moot.

List of Subjects in 47 CFR Part 54

    Communications common carriers, Health facilities, Internet, 
Reporting and recordkeeping requirements, and Telecommunications.

Federal Communications Commission.
Marlene Dortch,
Secretary.

Final Rules

    For the reasons discussed in the preamble, the Federal 
Communications Commission amends 47 CFR part 54 to read as follows:

PART 54--UNIVERSAL SERVICE

0
1. The authority citation for part 54 continues to read as follows:

    Authority: 47 U.S.C. 151, 154(i), 155, 201, 205, 214, 219, 220, 
229, 254, 303(r), 403, 1004, 1302, 1601-1609, and 1752, unless 
otherwise noted.


0
2. Delayed indefinitely, Sec.  54.604 is revised to read as follows:


Sec.  54.604  Determining the urban rate.

    (a) Effective funding year 2024, if a rural health care provider 
requests support for an eligible service to be funded from the 
Telecommunications Program that is to be provided over a distance that 
is less than or equal to the ``standard urban distance,'' as defined in 
paragraph (c) of this section, for the state in which it is located, 
the ``urban rate'' for that service shall be a rate no higher than the 
highest tariffed or publicly-available rate charged to a commercial 
customer for a functionally similar service in any city with a 
population of 50,000 or more in that state, calculated as if it were 
provided between two points within the city.
    (b) If a rural health care provider requests an eligible service to 
be provided over a distance that is greater than the ``standard urban 
distance,'' as defined in paragraph (c) of this section, for the state 
in which it is located, the urban rate for that service shall be a rate 
no higher than the highest tariffed or publicly-available rate charged 
to a commercial customer for a functionally similar service provided 
over the standard urban distance in any city with a population of 
50,000 or more in that state, calculated as if the service were 
provided between two points within the city.
    (c) The ``standard urban distance'' for a state is the average of 
the longest diameters of all cities with a population of 50,000 or more 
within the state.
    (d) The Administrator shall calculate the ``standard urban 
distance'' and shall post the ``standard urban distance'' and the 
maximum supported distance for each state on its website.

0
3. Delayed indefinitely, Sec.  54.605 is revised to read as follows:


Sec.  54.605  Determining the rural rate.

    (a) Effective funding year 2024, the rural rate shall be the 
average of the rates actually being charged to commercial customers, 
other than health care providers, for identical or similar services 
provided by the telecommunications carrier providing the service in the 
rural area in which the health care provider is located. The rates 
included in this average shall be for services provided over the same 
distance as the eligible service. The rates averaged to calculate the 
rural rate must not include any rates reduced by universal service 
support mechanisms. The ``rural rate'' shall be used as described in 
this subpart to determine the credit or reimbursement due to a 
telecommunications carrier that provides eligible telecommunications 
services to eligible health care providers.
    (b) If the telecommunications carrier serving the health care 
provider is not providing any identical or similar services in the 
rural area, then the rural rate shall be the average of the tariffed 
and other publicly available rates, not including any rates reduced by 
universal service programs, charged for the same or similar services in 
that rural area over the same distance as the eligible service by other 
carriers. If there are no tariffed or publicly available rates for such 
services in that rural area, or if the carrier reasonably determines 
that this method for calculating the rural rate is unfair, then the 
carrier shall submit for the state commission's approval, for 
intrastate rates, or for the Commission's approval, for interstate 
rates, a cost-based rate for the provision of the service in the most 
economically efficient, reasonably available manner.
    (1) The carrier must provide, to the state commission, for 
intrastate rates, or to the Commission, for interstate rates, a 
justification of the proposed rural rate, including an itemization of 
the costs of providing the requested service.
    (2) The carrier must provide such information periodically 
thereafter as required, by the state commission for intrastate rates or 
the Commission for

[[Page 17396]]

interstate rates. In doing so, the carrier much take into account 
anticipated and actual demand for telecommunications services by all 
customers who will use the facilities over which services are being 
provided to eligible health care providers.

0
4. Amend Sec.  54.619 by revising paragraph (a) to read as follows:


Sec.  54.619  Cap.

    (a) Amount of the annual cap. The aggregate annual cap on Federal 
universal service support for health care providers shall be $571 
million per funding year. When total demand during a filing window 
period exceeds the total remaining support available for the funding 
year, an internal cap of $150 million per funding year for upfront 
payments and multi-year commitments under the Healthcare Connect Fund 
Program shall apply.
* * * * *

0
5. Amend Sec.  54.621 by revising paragraph (b) to read as follows:


Sec.  54.621  Filing window for requests and prioritization of support.

* * * * *
    (b) Prioritization of support. The Administrator shall act in 
accordance with this section when a filing window period for the 
Telecommunications Program and the Healthcare Connect Fund Program, as 
described in paragraph (a) of this section, is in effect. When a filing 
period described in paragraph (a) of this section closes, the 
Administrator shall calculate the total demand for Telecommunications 
Program and Healthcare Connect Fund Program support submitted by all 
applicants during the filing window period.
    (1) Circumstances in which prioritization applies. If the total 
demand during the filing window period exceeds the total remaining 
support available for the funding year, prioritization will apply in 
the following circumstances:
    (i) Internal cap. If the internal cap is exceeded, the 
Administrator shall determine whether demand for upfront payments and 
the first year of multi-year commitments exceeds the internal cap. If 
such demand exceeds the internal cap, the Administrator shall not fund 
the second and third year of multi-year commitment requests and then 
apply the prioritization schedule in paragraph (b)(2) of this section 
to all eligible requests for upfront payments and the first-year of 
multi-year commitments to limit the demand for upfront payments and the 
first year of multi-year commitments within the internal cap. If demand 
for upfront payments and the first year of multi-year commitments does 
not exceed the internal cap, the Administrator shall apply the 
prioritization schedule in paragraph (b)(2) of this section to the 
second and third year of all eligible requests for multi-year 
commitments until the internal cap is reached, to ensure that the 
internal cap is not exceeded.
    (ii) Overall cap. If the internal cap is not exceeded or if, after 
demand for upfront payments and multi-year commitments is limited 
within the internal cap in paragraph (b)(1)(i) of this section, the 
total remaining demand still exceeds the total remaining support 
available for the funding year, the Administrator shall apply the 
prioritization schedule in paragraph (b)(2) of this section to all 
remaining eligible funding requests.
    (2) Application of prioritization schedule. When prioritization is 
necessary under paragraph (b)(1) of this section, the Administrator 
shall fully fund all applicable eligible requests falling under the 
first prioritization category of table 1 to this paragraph (b)(2) 
before funding requests in the next lower prioritization category. The 
Administrator shall continue to process all applicable requests by 
prioritization category until there are no applicable funds remaining. 
If there is insufficient funding to fully fund all requests in a 
particular prioritization category, then the Administrator will pro-
rate the applicable remaining funding among all applicable eligible 
requests in that prioritization category only pursuant to the proration 
process described in paragraph (b)(3) of this section.

                              Table 1 to Paragraph (b)(2)--Prioritization Schedule
----------------------------------------------------------------------------------------------------------------
                                                        In a medically underserved
       Health care provider site is located in:          area/ population (MUA/P)            Not in MUA/P
----------------------------------------------------------------------------------------------------------------
Extremely Rural Tier (areas entirely outside of a      Priority 1..................  Priority 4.
 Core Based Statistical Area).
Rural Tier (areas within a Core Based Statistical      Priority 2..................  Priority 5.
 Area that does not have an urban area or urban
 cluster with a population equal to or greater than
 25,000).
Less Rural Tier (areas within a Core Based             Priority 3..................  Priority 6.
 Statistical Area with an urban area or urban cluster
 with a population equal to or greater than 25,000,
 but where the census tract does not contain any part
 of an urban area or urban cluster with population
 equal to or greater than 25,000).
Non-Rural Tier (all other non-rural areas)...........  Priority 7..................  Priority 8.
----------------------------------------------------------------------------------------------------------------

    (3) Pro-rata reductions. When proration is necessary under 
paragraph (b)(2) of this section, the Administrator shall take the 
following steps:
    (i) The Administrator shall divide the total applicable remaining 
funds available for the funding year by the applicable demand within 
the specific prioritization category to produce a pro-rata factor; and
    (ii) The Administrator shall multiply the pro-rata factor by the 
dollar amount of each applicable funding request in the prioritization 
category to obtain prorated support for each funding request.
    (4) Evergreen designations. The Administrator shall designate the 
underlying contracts associated with any multi-year commitment requests 
that are not fully funded as a result of the prioritization process in 
this section as ``evergreen'' provided that those contracts meet the 
requirements under Sec.  54.622(i)(3)(ii).

0
6. Amend Sec.  54.622 by revising paragraph (a) and (e)(1)(i) to read 
as follows:


Sec.  54.622  Competitive bidding requirements and exemptions.

    (a) Competitive bidding requirement. All applicants are required to 
engage in a competitive bidding process for supported services, 
facilities, or equipment, as applicable, consistent with the 
requirements set forth in this section and any additional applicable 
state, Tribal, local, or other procurement requirements, unless they 
qualify for an exemption listed in paragraph (i) in this section. In 
addition, applicants may engage in competitive bidding even if

[[Page 17397]]

they qualify for an exemption. Applicants who utilize a competitive 
bidding exemption may proceed directly to filing a funding request as 
described in Sec.  54.623.
* * * * *
    (e) * * *
    (1) * * *
    (i) The health care provider seeking supported services is a public 
or nonprofit entity that falls within one of the categories set forth 
in the definition of health care provider, listed in Sec.  54.600;
* * * * *


Sec.  54.627  [Amended]

0
7. Amend Sec.  54.627 by:
0
a. Removing paragraphs (c)(1) and (2);
0
b. Redesignating paragraph (c)(3) as paragraph (c)(1); and
0
c. Adding reserved paragraph (c)(2).

0
8. Delayed indefinitely, further amend Sec.  54.627 by revising newly 
redesignated paragraph (c)(1)(i)(D) to read as follows:


Sec.  54.627  Invoicing process and certifications.

* * * * *
    (c) * * *
    (1) * * *
    (i) * * *
    (D) It has examined the invoice form and supporting documentation 
and that to the best of its knowledge, information and belief, all 
statements of fact contained in the invoice form and supporting 
documentation are true;
* * * * *
[FR Doc. 2023-04991 Filed 3-22-23; 8:45 am]
BILLING CODE 6712-01-P