$400 Million in New Telecommunications Discounts for Rural Health Care

January 1998

One hundred forty Roundtable participants gathered on January 29, 1998, to hear how $400 million in telecommunications discounts will improve health care delivered in rural areas. Discussions at the forum focused on the possibilities afforded to rural medical practices and public health care by lower-cost telecommunications services.

Congressman Jim Nussle (R-IA) and Senator Kent Conrad (D-ND) kicked off the Roundtable's first forum of the year with enthusiastic praise for the Universal Services fund, approved by Congress last year and due to be implemented in early spring. Congressman Nussle lauded the rural community for securing telecommunications discounts that will diminish the inequity between rural and urban rates.

Senator Conrad urged representatives of all rural organizations to inform their membership of the availability of these discounts. Jay Sanders, M.D., president of the American Telemedicine Association and member of the Rural Health Care Corporation, touted telecommunications technology as ”an enabling technology” that ”will be an umbilical cord to health care delivery.” Moreover, he noted that these technologies will provide ”more than a T1 link...They will totally change the look of rural communities and will help to encourage reverse migration into rural America.”

The Provisions of the Universal Services Legislation
Dena Puskin, acting director of the Office of Rural Health Policy, noted that rural health care providers currently paying as much as $5,000 per month will pay closer to $200 per month for the same service. The goal is to enhance access to care by bringing affordable telecommunications service to people in rural areas who live too far away to obtain timely or adequate health care. As illustrated by Thelma McCloskey Armstrong, director of the Eastern Montana Telemedicine Network, there are times of the year in Montana in which it is not possible to travel 300 miles to the nearest physician. She described children who have to travel two, three, or even six hours to see a doctor for an ear infection A comparable trip for a Washington-area parent would be to drive to Wilmington, Delaware, for an appointment.

Telehealth technologies in her network in eastern Montana also are enhancing access to mental health care through teleconferencing between remotely located residents and the single psychiatrist in the state. Nonetheless, at a cost of $9,000 per month, these services have been affordable only  through a federal grant program. The Universal Services fund will now make it possible to continue providing health services to eastern Montana when the grant is no longer available. As stated by Kevin Hess, vice president of Federal Affairs for TDS Telecom, ”in a year from now, success in this program can serve as a model for the future growth of rural communities with improved access to health care services.”
 

Implementing the Universal Services Program
To implement the provisions of the Universal Services program, the Federal Communications Commission (FCC) has established the Rural Health Care Corpor-ation (RHCC), a nonprofit organization created to administer the telehealth program. Lee Bailey has been named CEO for the RHCC. Along with processing applications, the RHCC will help to educate providers about the availability of this money and will provide help-line services to answer questions. The RHCC will notify every major health organization about how and where to obtain applications as soon as they are ready.
 

Eligibility
The eligibility criteria are straightforward. To apply for these discounts, an institution must be a nonprofit or public health care provider. These include (1) postsecondary educational institutions offering health care instruction, teaching hospitals, and medical schools; (2) community health centers or health centers providing health care to migrants; (3) local health departments or agencies; (4) community mental health centers; (5) public or not-for-profit hospitals; (6) rural health clinics; and (7) consortia of these groups.
 

The Applications
Elliot Maxwell, deputy chief, Office of Plans and Policy of the FCC, said that the applications for these discounts are expected to be ready by April 1998. Originally slated to be in effect by January 1, the RHCC has delayed implementation of the program and the availability of applications in order to ensure that solid systems are in place to permit smooth processing of applications and the establishment of a help-line. Regardless of the delay, the total funds committed to this program remain $400 million per year, even though only $25 million per quarter will be made available during the first two quarters. The funds allocated for discounts are expected to be sufficient to cover the expected number of applications in each quarter.
 

In applying for telecommunications discounts, health care providers will be required to define their telecommunications needs. The application then must be submitted to the RHCC, which will place it on the Internet for competitive bid by the telecommunications companies. The health care provider may select the telecommunications service provider that most appropriately meets its needs. The service provider selected does not have to be the lowest bidder. The rural health care provider will receive a discounted rate that is comparable to rates received by urban health care providers for that service, regardless of distance. The discounted rate applies only to the use of the line; it does not apply to the purchase and installation of the telecommunications equipment.
 

The total funds allocated to this program each year were based on an estimate of 12,000 eligible providers using the highest-end band width (a T1 line that provides for teleconferencing capacity). Equally important, however, health care providers also may use lesser band widths that can enable transmission of x-rays, e-mail connection to specialists, transmission of patient records, or access to the Internet. Most importantly, the program gives health care providers the flexibility and authority to make decisions about what services and technology are most appropriate.
 

Source of the Telecommunications Discounts
The telecommunications discounts have been made available through contributions by the long distance carriers from a portion of their revenues. Representing US West, Annette Leal said that her company believes in the future of the Universal Service fund and plans to host educational seminars and educate health care providers on how to access funds. Leal said providers should call their telephone companies and enlist their help in determining appropriate telecommunications services. Developing telecommunications capacity is a complex endeavor that will require collaboration for effective implementation.
 

What to Do Now
Although the application forms will not be ready until April, there are many things that health care providers can do now to prepare:

• Be evangelical,  says Maxwell, in getting the word out about the availability of these discounts to health care providers.
• Determine eligibility via the FCC website (see below). Also monitor the website for updated information.
• Determine your telecommunications needs. Providers should contact their local telecommunications companies for relevant information and also seek out and share information with other providers who are using telecommunications technologies.
• Begin to compute the costs and benefits of different types of services.
• Think about how to work together with schools and libraries to aggregate demand, thereby giving the telecommunications companies increased incentive to bring T1 lines to the area. Be cautious, however, in partnering with noneligible providers and businessesÑdiscounts apply only to lines shared by eligible health care providers and/or eligible schools and libraries.

For Updates and More Information
For additional information, visit the FCC website at http://www.fcc.gov/ healthnet. If you do not have Internet access, you may call 1-888-CALL-FCC. To contact Elliot Maxwell at FCC, call  (202) 418-2030 or send e-mail to emaxwell@fcc.gov.  To contact Pam Gallant at FCC, call (202) 418-7400 or send e-mail to pjgallan@fcc.gov.

Exploring the Definition of Rural
The ORHP, Department of Health and Human Services, and the Economic Research Service (ERS), USDA, are engaged in a joint effort to develop a better approach to identifying areas within large ”metropolitan” counties that are essentially rural, and, conversely, areas within ”rural” counties that are essentially urban. The shortcomings of the current county-based definition were first recognized by ORHP in the early years of administering the Rural Services Outreach Grant program. At this time, ORHP realized that many rural areas were denied access to these funds because they were part of a very large county classified as metropolitan, such as San Bernardino County, California, and Pima County, Arizona.
 

ORHP's first efforts to rectify these intracounty discrepancies were made by identifying additional rural-type areas by census tract, a set that became known as the ”Goldsmith modifications.” The current effort between ORHP and USDA uses a more elaborate methodology also based on census tracts. However, the new methodology shows a refined view of population diversity and settlement patterns within counties and has allowed for the development of a five-level ruralÐurban continuum.
 

Preliminary results of the study1 from its application to just a few states show that the boundaries of some metropolitan areas will shrink, some will expand, and others will remain unchanged. A study by Cromartie and Morrill(1) extending this methodology to all 50 states is scheduled for publication soon. To request a copy of the new publication, please fax your request to WWAMI RHRC at (206) 616-4768,  or call (206) 685-0401.

(1) Cromartie, John B., and Swanson, Linda L. Census Tracts More Precisely Define Rural Populations and Areas. Rural Development Perspectives, vol. 11, no. 3.

Capital Area Rural Health Roundtable
Center for Health Policy Research & Ethics
George Mason University
Fairfax, Virginia
703-993-1907