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Fax 608Љ872Љ8893 Home Page: http://www.universalservice.org 2120 L Street, N.W., Suite 600 Washington, D.C. 20037 Phone 202Љ776Љ0200 ? 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и0ˆр8ш@˜!№#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџаав€2222122221€вкњ  ь ьб#XPє\  PŽ8QXP#бб#єCє\  PŽ9QєP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ xа( € и0ˆр8ш@˜!№#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџаалfooterлХХааааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ 0@˜!№#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ Аџџааб#;ф2МPБ:QP#бггггллааааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшјз#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ Аџџааб#єCє\  PŽ;QєP#бУ УMarch 5, 1999СЪјј&СƒС`ЄЄCСлfooterлггггб#єCє\  PŽ<QєP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ xа( € и0ˆр8ш@˜!№#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааХХƒаалллpage numberлггггллУУииФФл"page number"лггггллФ Фггггб#XPє\  PŽ=QXP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџXА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџаааањкб#;ф2МPБ>QP#бёелheading 6лХХааб#Мgф2МPБAQМP#бггггУ УллззTable of ContentsззФ Ф л heading 6 лггггб#єCє\  PŽBQєP#бХХааллб#XPє\  PŽCQXP#б лtoc 2лааб#єCє\  PŽFQєP#бггггУУллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшАч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ`АџџааТАААТУ У з  зФ Фб#єJф2МPБGQєP#бг??гTable of Contentsб#єCє\  PŽHQєP#бСpФ#№#LСiй d йƒ лtoc 2лФФггггб#XPє\  PŽIQXP#баалллToc 1лааб#єCє\  PŽLQєP#бггггУ УУУллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааSECTION IСpœ#№#KС1Ф Фƒ лToc 1лФФггггб#XPє\  PŽMQXP#баалллtoc 2лааб#єCє\  PŽNQєP#бггггУУллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшАч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ`АџџааТАААТPurpose of ReviewСpœ#№#KС1ƒ лtoc 2лФФггггб#XPє\  PŽOQXP#баалллToc 1лааб#єCє\  PŽPQєP#бггггУ УУУллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааSECTION IIСpœ#№#KС2Ф Фƒ лToc 1лФФггггб#XPє\  PŽQQXP#баалллtoc 2лааб#єCє\  PŽRQєP#бггггУУллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшАч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ`АџџааТАААТSummary of Findings and Recommendations for Administrative Improvements and Reductions to Administrative ExpensesСpœ#№#KС2ФФй йƒ лtoc 2лггггб#XPє\  PŽSQXP#бааллл toc 3лааб#єCє\  PŽVQєP#бггггУУллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшxч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ`АџџааТxxxТRecommendations for Improvements in the ProgramСpœ#№#KС3ФФƒ л toc 3лггггб#XPє\  PŽWQXP#бааллл toc 4лааб#Т<є\  PŽZQТP#бггггллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџш@ч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ`АџџааТ@@@ТProcess ImprovementsСpЄ#№#LС4з_HLT445257701зƒ Т@@@ТOutreach ImprovementsСpЄ#№#LС5ƒ л toc 4лггггб#XPє\  PŽ[QXP#бааллл toc 3лааб#єCє\  PŽ\QєP#бггггУУллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшxч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ`АџџааТxxxТDemandСpœ#№#KС6ƒ ТxxxТReductions in Administrative CostsСpœ#№#KС7ФФй d йƒ л toc 3лггггб#XPє\  PŽ]QXP#баалллToc 1лааб#єCє\  PŽ^QєP#бггггУ УУУллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааSECTION IIIСpœ#№#KС8Ф Фƒ лToc 1лФФггггб#XPє\  PŽ_QXP#баалллtoc 2лааб#єCє\  PŽ`QєP#бггггУУллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшАч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ`АџџааТАААТHistory of the Program AdministrationСpœ#№#KС8ФФй йƒ лtoc 2лггггб#XPє\  PŽaQXP#бааллл toc 3лааб#єCє\  PŽbQєP#бггггУУллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшxч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ`АџџааТxxxТStructure of the Independent AdministratorСpœ#№#KС9ƒ ТxxxТAdministrative Processes Established to Meet the Program Design SpecificationsСpH#№#KС10ФФƒ л toc 3лггггб#XPє\  PŽcQXP#бааллл toc 4лааб#Т<є\  PŽdQТP#бггггллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџш@ч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ`АџџааТ@@@ТCurrent ProcessСpX#№#KС10ƒ Т@@@ТWeb SiteСpX#№#KС10ƒ Т@@@ТHandling of ApplicationsСpX#№#KС11ƒ Т@@@ТCustomer Outreach, Education, and Eligible RHCPsСpX#№#KС12ƒ л toc 4лггггб#XPє\  PŽeQXP#бааллл toc 3лааб#єCє\  PŽfQєP#бггггУУллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшxч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ`АџџааТxxxТCurrent Level of RHCD Administrative Costs (Actual 1998 and Budgeted 1999)СpH#№#KС16ƒ ТxxxТOperational Results in 1998 and the Status of Outstanding IssuesСpH#№#KС19ФФй d йƒ л toc 3лггггб#XPє\  PŽgQXP#баалллToc 1лааб#єCє\  PŽhQєP#бггггУ УУУллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааSECTION IVСpH#№#KС22Ф Фƒ лToc 1лФФггггб#XPє\  PŽiQXP#баалллtoc 2лааб#єCє\  PŽjQєP#бггггУУллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшАч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ`АџџааТАААТIndustry Benchmarks for Comparable OrganizationsСpH#№#KС22ФФй йƒ лtoc 2лггггб#XPє\  PŽkQXP#бааллл toc 3лааб#єCє\  PŽlQєP#бггггУУллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшxч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ`АџџааТxxxТDescription of Comparable GroupСpH#№#KС22ƒ ТxxxТSummary of Benchmark AnalysisСpH#№#KС23ФФй d йƒ л toc 3лггггб#XPє\  PŽmQXP#баалллToc 1лааб#єCє\  PŽnQєP#бггггУ УУУллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааSECTION VСpH#№#KС27Ф Фƒ лToc 1лФФггггб#XPє\  PŽoQXP#баалллtoc 2лааб#єCє\  PŽpQєP#бггггУУллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшАч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ`АџџааТАААТCustomer and Stakeholder FeedbackСpH#№#KС27ФФй йƒ лtoc 2лггггб#XPє\  PŽqQXP#бааллл toc 3лааб#єCє\  PŽrQєP#бггггУУллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшxч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ`АџџааТxxxТCustomer GroupsСpH#№#KС27ƒ ТxxxТFeedback from Selected ETCs Involved in Process Development of the ProgramСpH#№#KС27ƒ ТxxxТETCs Focus Group Feedback (Conducted by NTCA, 2/10/99, San Antonio)СpH#№#KС28ƒ ТxxxТFeedback from Selected NonЉETCsСpH#№#KС28ФФй d йƒ л toc 3лггггб#XPє\  PŽsQXP#баалллToc 1лааб#єCє\  PŽtQєP#бггггУ УУУллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааSECTION VIСpH#№#KС29Ф Фƒ лToc 1лФФггггб#XPє\  PŽuQXP#баалллtoc 2лааб#єCє\  PŽvQєP#бггггУУллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшАч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ`АџџааТАААТIdentification and Quantification of Barriers to Efficient Operation and Recommendations for ImprovementСpH#№#KС29ФФй йƒ лtoc 2лггггб#XPє\  PŽwQXP#бааллл toc 3лааб#єCє\  PŽxQєP#бггггУУллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшxч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ`АџџааТxxxТAdministrative BarriersСpH#№#KС29ФФƒ л toc 3лггггб#XPє\  PŽyQXP#бааллл toc 4лааб#Т<є\  PŽzQТP#бггггллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџш@ч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ`АџџааТ@@@ТOutreachСpX#№#KС29ƒ Т@@@ТForms and InstructionsСpX#№#KС31ƒ Т@@@ТResponsiveness of PwC and RHCD to Applicants and VendorsСpX#№#KС32ƒ Т@@@ТEffectiveness of Outsourced ServicesСpX#№#KС32ƒ Т@@@ТCalculation of Urban Rate DifferentialСpX#№#KС32ƒ Т@@@ТLack of Effective CommunicationsСpX#№#KС34ƒ Т@@@ТLack of Program ConsolidationСpX#№#KС34ƒ л toc 4лггггб#XPє\  PŽ{QXP#бааллл toc 3лааб#єCє\  PŽ|QєP#бггггУУллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшxч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ`АџџааТxxxТPolicy BarriersСpH#№#KС35ФФƒ л toc 3лггггб#XPє\  PŽ}QXP#бааллл toc 4лааб#Т<є\  PŽ~QТP#бггггллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџш@ч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ`АџџааТ@@@ТETC RequirementСpX#№#KС35ƒ Т@@@ТThirdЉParty BillingСpX#№#KС35ƒŒееТ@@@ТPosting/Contracting RequirementСpX#№#KС35ƒ Т@@@ТLevel of Money Available per SiteСpX#№#KС35ƒ Т@@@ТTypes of Services Included in ProgramСpX#№#KС36ƒ Т@@@ТRHCPs Do Not Include Rural Nursing Homes, Hospices, Emergency Medical Service Facilities, Community Health Centers, or LongЉTerm Care FacilitiesСpX#№#KС36ƒ Т@@@ТComplexity of the UrbanЉRural Rate DifferentialsСpX#№#KС36ƒ Т@@@ТResale ProhibitionsСpX#№#KС36ƒ Т@@@ТThe Hawaii ProblemСpX#№#KС37ƒ л toc 4лггггб#XPє\  PŽQXP#бааллл toc 3лааб#єCє\  PŽ€QєP#бггггУУллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшxч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ`АџџааТxxxТOther BarriersСpH#№#KС37ФФƒ л toc 3лггггб#XPє\  PŽQXP#бааллл toc 4лааб#Т<є\  PŽ‚QТP#бггггллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџш@ч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ`АџџааТ@@@ТRHCPs Not Interested or Not InformedСpX#№#KС37ƒ Т@@@ТRHCPs Do Not Have Equipment Necessary for TelemedicineСpX#№#KС37ƒ Т@@@ТPOTS May Provide Adequate Level of ServiceСpX#№#KС37ƒ Т@@@ТTelecommunications Providers Not SupportiveСpX#№#KС38ƒ Т@@@ТRHCPs Have TollЉFree Internet AccessСpX#№#KС38ƒ Т@@@ТNot Worth the Effort to RHCPsСpX#№#KС38ƒ Т@@@ТInfrastructure Not Available TodayСpX#№#KС38ƒ Т@@@ТLack of Local CompetitionСpX#№#KС38ƒ Т@@@ТLimited Patient Volume and DemandСpX#№#KС39ƒ Т@@@ТLack of Physician InterestСpX#№#KС39ƒ Т@@@ТLack of Medicare Reimbursements for Telemedicine Consultations Limits Interest in Telemedicine InvestmentСpX#№#KС39й d йƒ л toc 4лггггб#XPє\  PŽƒQXP#баалллToc 1лааб#єCє\  PŽ„QєP#бггггУ УУУллй d йааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааSECTION VIIСpH#№#KС40Ф Фƒ лToc 1лФФггггб#XPє\  PŽ…QXP#баалллtoc 2лааб#єCє\  PŽ†QєP#бггггУУллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшАч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ`АџџааТАААТAnalysis of Demand and Administrative CostsСpH#№#KС40ФФй йƒ лtoc 2лггггб#XPє\  PŽ‡QXP#бааллл toc 3лааб#єCє\  PŽˆQєP#бггггУУллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшxч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ`АџџааТxxxТDemandСpH#№#KС40ƒ ТxxxТAdministrative CostsСpH#№#KС43ФФƒ л toc 3лггггб#XPє\  PŽ‰QXP#бааллл toc 4лааб#Т<є\  PŽŠQТP#бггггллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџш@ч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ`АџџааТ@@@ТOutsourcingСpX#№#KС44ƒ Т@@@ТBilling and CollectionsСpX#№#KС45ƒ Т@@@ТCompensationСpX#№#KС45ƒ Т@@@ТOutreachСpX#№#KС47й d йƒ л toc 4лггггб#XPє\  PŽ‹QXP#баалллToc 1лааб#єCє\  PŽŒQєP#бггггУ УУУллй d йааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааSECTION VIIIСpH#№#KС49Ф Фƒ лToc 1лФФггггб#XPє\  PŽQXP#баалллtoc 2лааб#єCє\  PŽŽQєP#бггггУУллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшАч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ`АџџааТАААТConclusionСpH#№#KС49ƒ лtoc 2лФФггггб#XPє\  PŽQXP#баалллToc 1лааб#єCє\  PŽQєP#бггггУ УУУллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааAPPENDIX AСpH#№#KС50Ф Фƒ лToc 1лФФггггб#XPє\  PŽ‘QXP#баалллtoc 2лааб#єCє\  PŽ’QєP#бггггУУллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшАч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ`АџџааТАААТEstimated Administrative Costs for 1999СpH#№#KС50ƒ лtoc 2лФФггггб#XPє\  PŽ“QXP#баалллToc 1лааб#єCє\  PŽ”QєP#бггггУ УУУллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааAPPENDIX BСpH#№#KС53Ф Фƒ лToc 1лФФггггб#XPє\  PŽ•QXP#баалллtoc 2лааб#єCє\  PŽ–QєP#бггггУУллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшАч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ`АџџааТАААТLetter from Mr. Jonathon LinkousСpH#№#KС53›ФФй йƒ лtoc 2лггггб#XPє\  PŽ—QXP#баалла шшlш авЦl$|4!Цв‡ггггб#XPє\  PŽ˜QXP#баал Body Text 3лааб#XRViа P››QXP#бггггУ Уллааааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџlф%џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааб#єCє\  PŽœQєP#бгUSгUniversal Service Administrative CompanyEvaluation of the Rural Health Care Program л" Body Text 3"лФ Фггггб#XPє\  PŽQXP#бааллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџlФ  tЬ$|д,„м4!џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџаа аа аа в€2222122221€вкў И `И `б#XPє\  PŽžQXP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџlФ  tЬ$|д,„м4!џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџаалfooterлХХааааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ 0@˜!№#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ Аџџааб#;ф2МPБŸQP#бгггглллfooterлггггб#XPє\  PŽ QXP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџlФ  tЬ$|д,„м4!џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааХХааллўкб#;ф2МPБЁQP#б г  гˆа lшАА ав€2222122221€вкй xиxиб#XPє\  PŽЂQXP#бб#;ф2МPБЃQP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџlФ  tЬ$|д,„м4!џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџаалfooterлХХааааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ 0@˜!№#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ Аџџааб#;ф2МPБЄQP#бгггглллpage numberлггггУ УллааааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАР(#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ Аџџааб#єCє\  PŽЅQєP#бMarch 5, 1999ССС`Р?СииФ Фл"page number"лгггглллfooterлггггб#;ф2МPБІQP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџlФ  tЬ$|д,„м4!џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааХХƒааллйкааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџаа л Sectionлааб#ш“ф2МPБЉQшP#бггггллб#XRViа P›ЊQXP#б в€ 1 1€вк# xhxhб#XPє\  PŽЋQXP#бб#XRViа P›ЌQXP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааззб#ш“ф2МPБ­QшP#бSECTION Iззггггб#XPє\  PŽЎQXP#баа#кб#XPє\  PŽЏQXP#бУ УŒа АА   аФ ФеОKб#XPє\  PŽАQXP#ба ААlш аггггб#XPє\  PŽБQXP#баал Body Text 3лааб#XRViа P›ВQXP#бггггУ Уллааааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџlф%џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааб#єCє\  PŽГQєP#бUniversal Service Administrative CompanyEvaluation of the Rural Health Care Program л" Body Text 3"лФ Фггггб#XPє\  PŽДQXP#бааллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџlФ  tЬ$|д,„м4!џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџаа аа ааОеУ УФ Феб#XPє\  PŽЕQXP#ба lшlш аааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшАч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ`Аџџааггггб#XPє\  PŽЖQXP#баав€2222122221€вк% И <И <б#XPє\  PŽЗQXP#бб#єCє\  PŽИQєP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшАч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ`АџџаалfooterлХХааааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ 0@˜!№#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ Аџџааб#;ф2МPБЙQP#бгггглллfooterлггггб#єCє\  PŽКQєP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџшАч#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ`АџџааХХаалл%ка lшlЄ аааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџlФ  tЬ$|д,„м4!џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааб#;ф2МPБЛQP#беУ Уееа ААXX аФ ФеРХб#XPє\  PŽМQXP#бб#;ф2МPБНQP#бл Body Text 3лааб#XRViа P›ОQXP#бггггУ Уллааааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџlф%џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааб#єCє\  PŽПQєP#бUniversal Service Administrative CompanyССEvaluation of the Rural Health Care Program л" Body Text 3"лФ Фггггб#;ф2МPБРQP#бааллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџlФ  tЬ$|д,„м4!џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџаа аа ааб#XPє\  PŽСQXP#бРеУ УФ ФеіLб#XPє\  PŽТQXP#бб#;ф2МPБУQP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџlФ  tЬ$|д,„м4!џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџаав€2222122221€вк% И И б#XPє\  PŽФQXP#бб#;ф2МPБХQP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџlФ  tЬ$|д,„м4!џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџаалfooterлХХааааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ 0@˜!№#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ Аџџааб#;ф2МPБЦQP#бгггглллfooterлггггб#;ф2МPБЧQP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџlФ  tЬ$|д,„м4!џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааХХаалл%ка lЄlЄ аіеУ Уее лheading 6лХХааб#Мgф2МPБШQМP#бггггллззPurpose of ReviewззФ Ф л heading 6 лггггб#XPє\  PŽЩQXP#бХХаалл л 2лааб# kє\  PŽЬQ P#бггггУ УллThe Federal Communications Commission (Commission) proposed that the Universal Service Administrative Company (USAC), pursuant to its obligations as administrator: (1) reduce the administrative expense associated with the rural health care support mechanism to an amount that is commensurate with the size of the support mechanism; (2) evaluate ways to improve opportunities for eligible rural health care providers to take advantage of the support mechanism; and (3) evaluate anticipated demand for 1999. USAC is required to submit revised administrative expenses for the rural health care support mechanism and an evaluation of the Program by March 5, 1999. This report meets those requirements by focusing on the opportunities for improvement in the administration of the rural health care fund, including proposals for reducing administrative costs, and forecasting anticipated demand for the Program. л 2лФ Фггггб#XPє\  PŽЭQXP#бааллв€ 1 1€вк’ xhxhб#XPє\  PŽЮQXP#бб#XRViа P›ЯQXP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџаал Sectionлааб#ш“ф2МPБаQшP#бггггллззSECTION IIззл Sectionлггггб#XRViа P›бQXP#баалл’к лheading 6лХХааб#Мgф2МPБвQМP#бггггУ УллззSummary of Findings and Recommendations for Administrative Improvements and Reductions to Administrative ExpensesззФ Ф л heading 6 лггггб#XPє\  PŽгQXP#бХХааллТТ л 2лааб# kє\  PŽдQ P#бггггУ УллThis report includes an analysis of the policy and administrative barriers identified by the stakeholders that were surveyed. Consistent with the role and mission of USAC, our recommendations focus on administrative improvements and the interpretation of the CommissionРРs rules in the administration of the Program. Rural health care and industry experts have provided USAC with several recommendations for addressing the policy barriers that would require the Commission to reЉevaluate its approach, reexamine policy determinations, and in some instances, seek statutory change. These recommendations are included in Appendix B Ф Фto this report. This report provides a history of the Rural Health Care Program (Program) (Section III), benchmark information regarding administrative costs of other nonЉprofits for comparison purposes (Section IV), and an overview of the customer groups that were surveyed about the Program (Section V). These sections of the report and the feedback from the stakeholders provide the background and basis for the recommendations in the report. The report recommends simplification of the Program to increase participation (especially for small rural health care providers (RHCPs) and small rural telecommunications carriers) and to decrease the administrative costs. Absent simplification, the report recommends other options for reducing administrative costs. These recommendations are primarily found in Section VI, Identification and Quantification of Barriers to Efficient Operations and Section VII, Analysis of Demand and Administrative Costs. л 2лггггб#XPє\  PŽеQXP#бааллТТТ` ` ` Т л 2лааб# kє\  PŽжQ P#бггггУ УллThe report includes the following: л 2лФ Фггггб#XPє\  PŽзQXP#бааллвŒџџџџџџџџџџџџџџџџŒвааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА4` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааТТТ444ТТ` ` ` ТС€44СRecommendations for improvements in the Program ааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` Œ И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааТ` ` ` ТТŒ Œ Œ ТС€` ` СРРССSimplify the urbanР!Рrural rate calculation Т` ` ` ТТŒ Œ Œ ТС€` ` СРРССRecognize that one component of the urbanР!Рrural rate differential is distance Т` ` ` ТТŒ Œ Œ ТС€` ` СРРССSimplify the forms Т` ` ` ТТŒ Œ Œ ТС€` ` СРРССTarget outreach efforts Т` ` ` ТТŒ Œ Œ ТС€` ` СРРССRefocus outreach efforts to partner with additional associations and federal and state agencies Т` ` ` ТТŒ Œ Œ ТС€` ` СРРССConsolidate Program functions Т` ` ` ТТŒ Œ Œ ТС€` ` СРРССExtend the funding cycle for the first year by 6 to 12 months, delay the opening of the second application cycle, and significantly change the Program for the second application cycle. ааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА4` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааТТТ444ТТ` ` ` ТС€44СEstimates of 1998 and 1999 application year demand ааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` Œ И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааТ` ` ` ТТŒ Œ Œ ТС€` ` СРРСС$3,115,000 for 1998 Т` ` ` ТТŒ Œ Œ ТС€` ` СРРСС$9,290,000 for 1999 ааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА4` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааТТТ444ТТ` ` ` ТС€44СRecommendations for reductions in Program administrative expenses ааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` Œ И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааТ` ` ` ТТŒ Œ Œ ТС€` ` СРРСС2УУndФФ Quarter 1999 вŒџџџџџџџџџџџџџџџџŒвааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАŒ И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааТŒ Œ Œ ТТИ И И ТС€Œ Œ СReallocate USAC support (Compensation) ТŒ Œ Œ ТТИ И И ТС€Œ Œ СReallocate the support position 100 percent to the USAC support ТŒ Œ Œ ТТИ И И ТС€Œ Œ СEliminate the President position ааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` Œ И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааТ` ` ` ТТŒ Œ Œ ТС€` ` СРРССFor the Period July 1 Р!Р December 31, 1999 ааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАŒ И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааТŒ Œ Œ ТТИ И И ТС€Œ Œ СР/РССReduce outside contract costs ТŒ Œ Œ ТТИ И И ТС€Œ Œ СР/РССReallocate billing and collections costs ТŒ Œ Œ ТТИ И И ТС€Œ Œ СР/РССNo renewal of the PricewaterhouseCoopers LLP (PwC) contract. If the Commission extends the first year and delays the start of the second application cycle, provide for a transition to complete any remaining first year applications and process all new applications in-house. ааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` Œ И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааТ` ` ` ТТŒ Œ Œ ТС€` ` СРРССAfter January 1, 2000 Р!Р without simplification of the Program ааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАŒ И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааТŒ Œ Œ ТТИ И И ТС€Œ Œ СР/РССConsolidate like functions with other programs ТŒ Œ Œ ТТИ И И ТС€Œ Œ СР/РССConsider bringing functions inЉhouse and/or reЉbid the contract ааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` Œ И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааТ` ` ` ТТŒ Œ Œ ТС€` ` СРРССAfter January 1, 2000 Р!Р with simplification of the Program ааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАŒ И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааТŒ Œ Œ ТТИ И И ТС€Œ Œ СР/РССBring all operations inЉhouse and consolidate wherever possible ааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааТТТ` ` ` Т лLevel AлХХааб#XXф2МPБкQXP#бггггллТТззRecommendations for Improvements in the Programзз лLevel Aлггггб#XPє\  PŽлQXP#бХХааллТТ л1лааб#XRViа P›оQXP#бггггллТТТ` ` ` ТThe primary barrier to a more efficient program is the design that was intended to accommodate a larger number of participants and level of support per participant. However, it appears that existing state and federal universal service policies have minimized any urban-rural rate differential for basic switched services. The best current estimates show that this Program is not likely to exceed $10 million in annual support level in the near term. If this had been the assumption at the onset, a less complex infrastructure likely would have been established. Removal of this barrier for the existing Program will involve simplifying the rate calculations, changing the distance calculations, simplifying the forms required from the RHCPs and the carriers, and consolidation of application handling, customer support, web site maintenance, and support invoicing with other USAC programs. ТТТ` ` ` Т ТТТ` ` ` ТOther major barriers are the completion of the preЉcommitment audit and a few unresolved issues of interpretation. The resolution of these issues should be concluded shortly. ТТТ` ` ` Т ТТТ` ` ` ТWhile outreach itself is not a significant barrier, the actual measure of its effectiveness is a barrier to designing future outreach programs that are more effective. Feedback from applicants on outreach should be incorporated into the customer service representativesРР contact with applicants. Outreach plans for future years should include special emphasis on regions with the highest potential to receive benefits under the Program. The first step in improving outreach must be the continual development of a reliable database of eligible providers beginning with the successful 1998 group of RHCPs. л1лггггб#XPє\  PŽпQXP#бааллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА4` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџаа з_HLT444924801злLevel 1лХХааааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ Єа( € и0ˆр8ш@˜!№#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааб#XXф2МPБтQXP#бггггУУУ УллТЄЄЄТТаааТззProcess Improvements ззФФФ Ф лLevel 1лггггб#XPє\  PŽуQXP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА4` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааХХаалллBody Text Inлааб#XRViа P›цQXP#бггггг??гллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТIt is critically important that USAC do whatever it can to get this Program on solid footing. In that regard, USAC should work closely with the Commission to implement programmatic changes as quickly as possible. USAC is concerned that the current Program is in serious jeopardy because the level of frustration of RHCPs is high, the level of demand is low, and the level of administrative costs for the Program currently may exceed the support that is provided to RHCPs. ТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТThe most important process improvement needed at this time is the simplification of the rate calculation process. The time spent on this function is vastly out of proportion to the benefit. The most straightforward solution, which can be accomplished within the bounds of the Telecommunications Act of 1996 (Act of 1996), is simplification of the urban-rural rate differential calculation. One method for accomplishing that would be to calculate a statewide average discount for eligible services. This discount could simply be applied to all distance-based services including T-1 and fractional T-1. If program changes are also made that allow a different approach for identifying the urban-rural rate difference, such as mileage or longЉdistance charges, a simple discount can apply to all services. The mileage component or the longЉdistance charges could be a surrogate for the urban-rural rate difference. The mileage discount would be based on the charge for the mileage from the rural provider to the outer bounds of the nearest urban area. This would be simple to calculate and apply. It would not involve calculating a hypothetical urban rate for comparison and would not involve a maximum allowable distance calculation. This recommendation holds the most promise for administrative expense reduction. ТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТAnother simplification available to the Commission would be for it to recognize, like the Commission recognized for access to the Internet, that longЉdistance charges represent a rate difference between urban and rural service. ТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТInternally, USAC will look to consolidate the rural health care processes into processes that are being performed for other universal service programs. For example, client assistance could be consolidated for the Schools and Libraries and Rural Health Care Programs once current contracts expire. ТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТThis Program is important to rural communities and to the provision of health care to those communities. USAC is committed to working with the Commission, RHCPs, and carriers to make this Program work. Because of the concern for the viability of the Program, USAC recommends that the Commission consider delaying the opening of the second round of applications and extending the funding period for the first application cycle. This would eliminate the need for RHCPs to reapply for support beginning July 1,1999. Going forward, it would eliminate the need to continue to use the current system, which is burdensome and costly; it would give the Commission time to implement changes to the Program; it would provide industry experts with time to provide the Commission with specific recommendations on how to implement these improvements; and it would allow USAC to decrease administrative costs. Delaying the opening of the second application cycle would also ensure that RHCPs would know what funding they will receive prior to filing their next application. USAC recommends that the extension be limited to 6 Р!Р 12 months and that the Commission immediately establish a Task Force to work out the details of a simplified program that implements the recommendations in this report. USAC is committed to working with the Commission, RHCPs, the carriers, and other government agencies to complete the task in this time frame. ТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТThe rural health care experts have said that, Р Рthe application process as it exists today is burdensome, complicated, causes substantial hardship on applicants, and creates a barrier on getting the Program benefits out to the intended beneficiaries.РРл#Body Text In#лгUSгггггб#XPє\  PŽчQXP#баалллfootnote refлб#Т<є\  PŽъQТP#бггггУУллв X0УУФФУУФФX0УУФФУУФФ вФФв X0УУФФX0УУФФ вжЖџџб#XPє\  PŽыQXP#бб#Т<є\  PŽьQТP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџаагUSгггггб#XPє\  PŽэQXP#бааУУлfootnote texлааааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ Lxа( € и0ˆр8ш@˜!№#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааб#Т=Viа P›№QТP#бгггглллfootnote refлб#Т<є\  PŽёQТP#бггггллФФл#footnote ref#лггггб#Т=Viа P›ђQТP#блл УУSee ФФAppendix B.ЖжУУФФб#XRViа P›ѓQXP#б The current process is also very costly for USAC to administer. Without significant changes in the process, USAC will continue to incur administrative costs significantly above comparable benchmarks and above those costs that serve the public interest. ТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТUSAC realizes that there are potential disadvantages to this recommendation: it may be viewed as but one more delay in the Program, and RHCPs that do not file a Form 465 by May 15, 1999, will have to wait until they can file for Year 2. Because of concern for the current vulnerability of the Program and our desire to get it on solid footing as soon as possible while reducing the costs to administer the Program, USAC puts forward this recommendation as an additional option for Commission consideration. гUSгггггб#XPє\  PŽєQXP#бааТТТ` ` ` Т лLevel 1лХХааааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ Єа( € и0ˆр8ш@˜!№#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааб#XXф2МPБѕQXP#бггггУУУ УллТЄЄЄТТаааТззOutreach Improvements ззФФФ Ф лLevel 1лггггб#XPє\  PŽіQXP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааХХаалллBody Text Inлааб#XRViа P›їQXP#бггггг??гллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТContinued working relationships with the National Telephone Cooperative Association (NTCA) and the National Organization of State Offices of Rural Health (NOSORH) are important to maintain broad awareness of the Program. However, it is not necessary to award contracts again for the 1999 year. Efforts of the Rural Health Care Division (RHCD) should be concentrated on continuing to develop an accurate database of RHCPs based on the applicant pool, to target additional efforts to regions that have the highest possibility of receiving support, and to coordinate efforts with the NTCA, NOSORH, and other associations. Outreach plans should also include partnering with associations, government agencies, the telecommunications industry, and the other universal service programs. гUSгA communityЉbased approach working with carriers, community leaders, schoolг??г гUSгand library officials, and other government agencies to outreach should beг??г гUSгconsidered. г??гAssociations, government agencies, and industry should also continue to be used as a resource for identifying the eligible RHCPs. In addition, some RHCD outreach should be specifically targeted to the beginning of the new Program year to maximum available months of support. л#Body Text In#лгUSгггггб#XPє\  PŽјQXP#бааллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА4` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааТ444ТТ` ` ` Т лLevel AлХХааб#XXф2МPБљQXP#бггггллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааТТззDemandзз лLevel Aлггггб#XPє\  PŽњQXP#бХХааллТТТ` ` ` Т л1лааб#XRViа P›ћQXP#бггггллТТТ` ` ` ТDemand will not increase significantly without major changes in the Program (such as increases in the type of health care providers that qualify and the services that are covered) and the removal of some of the health care industry barriers. Absent changes, demand is not likely to exceed $10 million in annual support next year. Over time, demand will increase from this amount with simplification of the Program, with the growth of telemedicineл1лггггб#XPє\  PŽќQXP#баалллfootnote refлб#Т<є\  PŽ§QТP#бггггУУллФФв X0УУФФX0УУФФ вж“џџб#XPє\  PŽўQXP#бб#Т<є\  PŽџQТP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџаалfootnote texлааааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ Lxа( € и0ˆр8ш@˜!№#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааб#Т=Viа P›QТP#бггггллУУлfootnote refлб#Т<є\  PŽQТP#бггггллХХб#Т=Viа P›QТP#бФФл#footnote ref#лггггб#Т=Viа P›QТP#блл The term Р РtelemedicineРР is used throughout this report as the broad term to apply to all applications as described in the Commission УУOrderФФ: Р РFor purposes of this УУOrderФФ, we consider the terms РРtelemedicine,РР РРtelehealth,РР РРtelemedicinal applications,РР and РРtelemedicineЉrelated servicesРР to be interchangeable. The Joint Working Group on Telemedicine defines РРtelemedicineРР as РРthe use of telecommunications and information [service] technologies for the provision and support of clinical care to individuals at a distance and the transmission of information needed to provide that care.РР It defines РРtelehealthРР as including clinical care, but additionally encompassing the related areas of РРhealth professionals' education, consumer health education, public health, research and administration of health services.РР See JOINT WORKING GROUP ON TELEMEDICINE, TELEMEDICINE REPORT TO THE CONGRESS at 90, U.S. Department of Commerce (1997) (Joint Working Group Report).РРХХ“жУУФФб#XRViа P›QXP#б networks, and if Alaska can develop a model to overcome the ETC barrier (as discussed in Sections III and VI of this report). ггггб#XPє\  PŽQXP#баалLevel 1лХХааааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ Єа( € и0ˆр8ш@˜!№#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааб#XXф2МPБQXP#бггггУУУ УллТЄЄЄТТаааТФФФ ФлLevel 1лггггб#XPє\  PŽQXP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааХХаалл лLevel AлХХааб#XXф2МPБQXP#бггггллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааТТззReductions in Administrative Costs зз лLevel Aлггггб#XPє\  PŽ QXP#бХХааллТТТ` ` ` Т л1лааб#XRViа P› QXP#бггггллТТТ` ` ` ТReductions in administrative costs are necessary to bring Program costs in line with demand for support. Some reductions in administrative costs are possible in the short term; however, changes in the Program are necessary to bring costs to a level that is consistent with the public interest. Administrative costs should move toward comparable benchmark figures for government foundation groups. This report examines benchmark administrative costs for three groups of grantЉgiving organizations. The government foundation group shows a top level of administrative costs of 26 percent of Program size. The RHCD should take steps immediately to move toward this goal in the short term. The organization should work to bring administrative costs within the five to ten percent ranges in the long term. ТТТ` ` ` Т ТТТ` ` ` ТThe 1998 and 1999 budgets are comprised primarily of four cost categories: outsourcing, billing and collections, compensation, and outreach. Each of these categories will need to be reduced in the short term to make significant movement toward the benchmarks. There are three contracts currently in place: one with PwC until June 1999, and two outreach contracts (NTCA and NOSORH) that should be concluded within a few months. У У ТТТ` ` ` ТФ Ф ТТТ` ` ` ТThe following chart summarizes the range of proposed cost reductions. ТТТ` ` ` Т ааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАA И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааТA A A Тб#єJф2МPБ QєP#бУ УSummary of Proposed RHCD Cost Reductions for 1999 (Annualized Estimates) л1лггггб#XPє\  PŽ QXP#баалла lЄ А авЦB 5щ(#Цв‡ааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааCost Item Range of Net ReductionsФ ФˆвЦB 5щ(#Цв‡Outsourcing: PwC $569,940ˆвЦB 5щ(#Цв‡Billing and Collection $736,100ˆвЦB 5щ(#Цв‡Compensation $10,000 to $298,000ˆвЦB 5щ(#Цв‡Outreach $24,500ˆвЦB 5щ(#Цв‡Total Up to $1,628,540ˆа  ААА аааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааТТТ` ` ` ТУ УФ Ф л1лааб#XRViа P› QXP#бггггллТТТ` ` ` ТIf all of these cost reductions were implemented, administrative costs allocated to the RHCD would be lower for the 1999 plan year. However, the majority of these savings would only be realized for the second half of the year. Estimated 1999 administrative costsР"Рassuming the current first quarter budget, a revised second quarter budget adjusted for compensation savings, and six months of cost savings identified aboveР"Рwould be approximately 35 percent of the projected 1999 funding level. Reductions in costs at or slightly below the high range of the benchmark study contained herein can be made through consolidation of functions with other programs. However, significant reductions can only be accomplished if the proposed Program simplification is implemented. ТТТ` ` ` ТŒТТТ` ` ` ТAnother way to reduce administrative costs significantly in the short term is to extend the current funding cycle and delay the opening of the second application cycle until the Program is simplified. ТТТ` ` ` Т л1лггггб#XPє\  PŽQXP#бааллк“ xhxhб#XPє\  PŽQXP#бб#XRViа P›QXP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџаал Sectionлааб#ш“ф2МPБQшP#бггггллззSECTION IIIззл Sectionлггггб#XRViа P›QXP#баалл“к лheading 6лХХааб#Мgф2МPБQМP#бггггУ УллззHistory of the Program Administrationзз л heading 6 лФ Фггггб#XPє\  PŽQXP#бХХаалл л 2лааб# kє\  PŽQ P#бггггУ УллOn February 8, 1996, the Telecommunications Act of 1996 (the Act of 1996) was enacted into law as an amendment to the Communications Act of 1934. Section 254(h) of the Act of 1996 require that all public and nonЉprofit health care providers have access to telecommunications services necessary for the provision of health care services at rates that are comparable to rates paid in urban areas for comparable services. Specifically, the Act of 1996 states: A telecommunications carrier shall, upon receiving a bona fide request, provide telecommunications services which are necessary for the provision of health care services in a State, including instruction relating to such services, to any public or nonprofit health care provider that serves persons who reside in rural areas in that State at rates that are reasonably comparable to rates charged for similar services in urban areas in that State. A telecommunications carrier providing service under this paragraph shall be entitled to have an amount equal to the difference, if any, between the rates for services provided to health care providers for rural areas in a State and the rates for similar services provided to other customers in comparable rural areas in that State treated as a service obligation as a part of its obligation to participate in the mechanisms to preserve and advance universal service.л 2лФ Фггггб#XPє\  PŽQXP#баалллfootnote refлб#Т<є\  PŽQТP#бггггУУллФФв X0УУФФX0УУФФ вжџџб#XPє\  PŽQXP#бб#Т<є\  PŽQТP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџаалfootnote texлааааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ Lxа( € и0ˆр8ш@˜!№#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааб#Т=Viа P›QТP#бггггллУУлfootnote refлб#Т<є\  PŽQТP#бггггллб#Т=Viа P›QТP#бФФл#footnote ref#лггггб#Т=Viа P›QТP#блл УУSee ФФ47 U.S.C. РР 254(h)(1)(A).жУУФФб#XRViа P›QXP#б ТТŒТТThe May 8, 1997, Commission Orderггггб#XPє\  PŽQXP#баалfootnote refлб#Т<є\  PŽ QТP#бггггУУллФФв X0УУФФX0УУФФ вжџџб#XPє\  PŽ!QXP#бб#Т<є\  PŽ"QТP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџаалfootnote texлааааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ Lxа( € и0ˆр8ш@˜!№#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааб#Т=Viа P›#QТP#бггггллУУлfootnote refлб#Т<є\  PŽ$QТP#бггггллб#Т=Viа P›%QТP#бФФл#footnote ref#лггггб#Т=Viа P›&QТP#блл FederalЉState Joint board on Universal Service, УУReport and OrderФФ, CC Docket No. 96Љ45, FCC 97Љ157, 12 FCC Rcd 8776 (rel. May 8, 1997) (УУOrderФФ).жУУФФб#XRViа P›'QXP#б (Order) defined services to be supported by the universal service programs, including rural health care. It defined support mechanisms and made changes to Commission rules to implement the Act of 1996. According to the Commission Order, support is available for telecommunications services with a maximum bandwidth of 1.544 Mbps and for longЉdistance charges to access an Internet service provider. It also delineated how the health care provider would be classified as rural. Support is generally equivalent to the differential between the rural rate and the nearest urban rate for a comparable eligible service. This support is available only to public and notЉforЉprofit organizations that contract with an eligible telecommunications carrier (ETC). Individual state commissions designate ETC status. The Program was designed based on the best information available regarding telemedicine programs, the need for telecommunications assistance, and the number of eligible RHCPs. The National Exchange Carrier Association (NECA) was appointed as the temporary administrator of the universal service programs in the May 8 Order, and was provided administrative rules in the Second Order on Reconsideration on July 18, 1997.ггггб#XPє\  PŽ(QXP#баалfootnote refлб#Т<є\  PŽ)QТP#бггггУУллФФв X0УУФФX0УУФФ вж‡џџб#XPє\  PŽ*QXP#бб#Т<є\  PŽ+QТP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџаалfootnote texлааааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ Lxа( € и0ˆр8ш@˜!№#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааб#Т=Viа P›,QТP#бггггллУУлfootnote refлб#Т<є\  PŽ-QТP#бггггллб#Т=Viа P›.QТP#бФФл#footnote ref#лггггб#Т=Viа P›/QТP#блл Changes to the Board of Directors of the National Exchange Carrier Association, Inc. and FederalЉState Joint Board on Universal Service, УУSecond Report and Order and Second Order on ReconsiderationФФ, CC Docket Nos. 97Љ21 and 96Љ45, 12 FCC Rcd 18400 (УУUSAC OrderФФ).‡жУУФФб#XRViа P›0QXP#б USAC was created in 1997 as a subsidiary of NECA. The independent Rural Health Care Corporation (RHCC) was established in September 1997 and funds were first available for the Program on January 1, 1998. The newly elected RHCC Board hired a CEO on January 27, 1998. Three other employees were hired shortly thereafter. The RHCD of USAC now administers the Rural Health Care Universal Service Program pursuant to its appointment by the Commission. The mission of the RHCD is to administer the Program in an efficient and effective manner as directed by the Commission. ггггб#XPє\  PŽ1QXP#баалLevel AлХХааб#XXф2МPБ2QXP#бггггллТТззStructure of the Independent Administratorзз лLevel Aлггггб#XPє\  PŽ3QXP#бХХаалл л1лааб#XRViа P›4QXP#бггггллТТТ` ` ` ТOn January 1, 1999, the Rural Health Care Corporation and the Schools and Libraries Corporation were merged into USAC. As part of the merger, USAC created the Rural Health Care Division to oversee the administration of the Rural Health Care Universal Service Program. ТТТ` ` ` Т ТТТ` ` ` ТPrior to the merger, the RHCC had four fullЉtime employees. The President was Lee Bailey who was responsible for the management and operation of the corporation and for program and application process administration, accounting, regulatory, legal, outreach, and personnel. Melvin Blackwell, Vice President, has been responsible for outreach to rural health care providers, telephone service providers, industry associations, and media to promote the Program. Mr. Blackwell was also responsible for program development and implementation, education, and responding to inquiries from Congress. ТТТ` ` ` Т ТТТ` ` ` ТWilliam England was the Director of Corporate Systems and Policy. His responsibilities included the dayЉtoЉday management of the RHCC application process, telecommunications provider invoicing and payment systems, general data management and processing, and program statistics. He was also responsible, in part, for outreach and information dissemination. Donna Faunce was the Executive Assistant, responsible for procurement, supervision of accounting, employee benefits, and scheduling. She also provided administrative and clerical support to all employees. ТТТ` ` ` Т ТТТ` ` ` ТRHCC received bids from potential contractors to perform the customer help desk and application processing functions as well as web site development. In February 1998, RHCC selected PwC as the lowest cost bidder to perform these functions. As part of the contract, PwC employees have also been involved in calculating the urbanЉrural rate differentials and have worked closely with RHCC employees in problem solving and process development. ТТТ` ` ` Т ТТТ` ` ` ТThe merger has allowed USAC to consolidate and take advantage of redundant functions of the three corporations. Accordingly, the responsibilities of some of these employees have been adjusted and reallocated. Mr. Blackwell and Ms. Faunce have added responsibilities for all of the programs and a portion of their time is allocated to the three other programs rather than 100 percent to the new RHCD. In addition, management employees of USAC now have overall responsibilities for this Program as well as the other three. Mr. Bailey is now President of the RHCD and Mr. England is Director of RHCD Operations and Systems. Mr. Blackwell is now Vice President of External Communications for the entire USAC organization and Ms. Faunce is now Executive Assistant for Programs reporting to the President of the High Cost Low Income (HCLI) Division and the President of the Schools and Libraries Division (SLD) in addition to Mr. Bailey. Sixty percent of Ms. FaunceРРs time is currently allocated to the Rural Health Care (RHC) Program and the balance is allocated to the other programs. However, the total allocation of salaries and fullЉtime equivalent (FTE) employees to the RHC Program has not changed significantly. ТТТ` ` ` Т л1лггггб#XPє\  PŽ5QXP#баалллLevel AлХХааб#XXф2МPБ6QXP#бггггллТТззAdministrative Processes Established to Meet the Program Design Specificationsзз лLevel Aлггггб#XPє\  PŽ7QXP#бХХаалллLevel 1лХХааааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ Єа( € и0ˆр8ш@˜!№#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааб#XXф2МPБ8QXP#бггггУУУ УллТЄЄЄТТаааТ ТЄЄЄТТаааТззCurrent ProcessззФФФ Ф лLevel 1лггггб#XPє\  PŽ9QXP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааХХаалллBody Text Inлааб#XRViа P›:QXP#бггггг??гллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааТТТ` ` ` ТТИ И И ТŒТТТ` ` ` ТТИ И И ТThe mechanism for requesting support is a series of forms, which can be downloaded from an Internet site. The first form, 465, is filled out by the RHCPs and indicates interest in acquiring support for telecommunications service for new or existing telemedicine program. Form 465 also determines whether a rural health care provider (RHCP) is eligible to receive funds from the Program. Funds may be distributed up to $400 million on an annual basis. ТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТFollowing the review of Form 465, the RHCD and its contractor, PwC, determine eligibility of the RHCP and post the request for service on a web site with the intention of attracting bids for that service. The rural health care provider selects the service and a carrier and notifies the RHCD via Form 466 after the posting period is expired. The eligible telecommunications provider also supplies information to the RHCD via Form 468. The RHCP then files Form 467 to certify that the services are being provided. The RHCD commits the funds to the telecommunications provider on a monthly basis. Finally, the telecommunications provider provides the credit to the RHCP. л#Body Text In#лгUSгггггб#XPє\  PŽ;QXP#баалл лLevel 1лХХааааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ Єа( € и0ˆр8ш@˜!№#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааб#XXф2МPБ<QXP#бггггУУУ УллТЄЄЄТТаааТззWeb Site ззФФФ Ф лLevel 1лггггб#XPє\  PŽ=QXP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааХХаалллBody Text Inлааб#XRViа P›>QXP#бггггг??гллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТThe RHCD web site is the center of information sharing between the RHCD and providers: УУrhc.universalservice.orgФФ. The development of the current site was contracted to PwC after the RHCC Board rejected an initial attempt by another firm. The PwC site has been up and running for approximately 10 months. The site has two primary functions. One function is to share information about the Program with any interested party. The second purpose is to facilitate the application process. Forms can be downloaded and then filed on paper. Form 465 can be uploaded when complete but must be filed on paper with a valid signature as well. ТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТIn addition, the web site contains useful information for RHCP and telecommunications providers, such as links to state regulators and a list of eligible telecommunications carriers (ETCs) by state to help participants determine which telecommunications providers are eligible to participate in the Program. USAC is responsible for maintaining the list of ETCs. ТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТA PwC Webmaster handles development and maintenance of the web site. This includes updates to current information on the site, process enhancements, and form updates in accordance with CommissionЉapproved changes. л#Body Text In#лгUSгггггб#XPє\  PŽ?QXP#бааллŒлLevel 1лХХааааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ Єа( € и0ˆр8ш@˜!№#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааб#XXф2МPБ@QXP#бггггУУУ УллТЄЄЄТТаааТззHandling of ApplicationsззФФФ Ф лLevel 1лггггб#XPє\  PŽAQXP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааХХаалллBody Text Inлааб#XRViа P›BQXP#бггггг??гллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТPwC employees handle the actual processing of all forms according to direction given from the RHCD staff. Where interpretation of specific provider information or Commission rules is needed, PwC consults with RHCD staff. RHCD has consulted with the Commission on numerous occasions, although only two requests for clarification were filed formally with the Secretary. There have also been many informal, written requests addressed to the Commission staff. PwC has also consulted with the Commission directly. While this has added time to the process, it is necessary to ensure that the RHCD is administering the Program consistent with the Commission Orders and rules and it also helps to avoid incorrect interpretations, which are more difficult to correct at the end of the process. ТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТThe application process can be roughly divided into three phases: confirmation of eligibility and posting of request for services; verification and calculation of rates and discounts; and approval of funding and arrangement of credits for providers. The first two phases have been completed for many of the 1998 planЉyear applicants; however, given the current hold on commitments, the final phase has not yet been implemented. Any comments herein on the third phase are not based on any actual experience to date. ТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТTo initiate the first phase of the application process, the RHCP completes Form 465, УУDescription of Services Requested and Certification FormФФ. Upon receiving this form, the customer service representative (CSR) of PwC must confirm eligibility and post the request for new service (or existing tariff service) on the web site. An applicant who meets the tests for eligibility is deemed Р Рapproved.РР This does not mean, however, that the applicant is approved to receive support. At this stage there are no commitments either from RHCD or from the RHCP that telemedicine is being used (or planned to be used) or that support will be forthcoming. ТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТThe CSR must also calculate the MAD to be used in calculating distanceЉsensitive rate differentials. ТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТThe Internet posting is required for 28 days before a provider can be selected and before the next form can be filed. For preЉexisting services under contract, the 28Љday period is waived. The next step for the RHCP is to contract with the telecommunications provider that provides the most costЉeffective services considering their needs. The Commission designed this Program with the expectation that telecommunications providers would bid to provide the services requested. The RHCP can also seek bids independent of the web site. Neither RHCD nor PwC get involved in the bid process itself. ТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТOnce an ETC is selected, the applicant completes Form 466, УУServices Ordered and Certification FormФФ. (As discussed elsewhere in this report, in most instances there is only one ETC to choose from at this time.) The purpose of this form is to identify the types of services ordered and to certify that the most costЉeffective provider was selected. Only ETCs are eligible to receive discounts. A circuit may contain an ETC and a nonЉETC, but the portion provided by the nonЉETC will not be supported. ТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТIn parallel, the telecommunications provider completes Form 468, УУTelecommunications Support FormФФ. The functions of this form are to verify the services offered and to calculate the rural and urban rate differential for this provider. An Р РoptionalРР worksheet is offered to assist with the rate calculation. Although the form is Р Рoptional,РР carriers have found it is a necessary tool for completing the form. ТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТThe final step in the process is the commitment of funds by the RHCD.л#Body Text In#лгUSгггггб#XPє\  PŽCQXP#баалллfootnote refлб#Т<є\  PŽDQТP#бггггУУллФФв X0УУФФX0УУФФ вжзџџб#XPє\  PŽEQXP#бб#Т<є\  PŽFQТP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџаалfootnote texлааааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ Lxа( € и0ˆр8ш@˜!№#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааб#Т=Viа P›GQТP#бггггллУУлfootnote refлб#Т<є\  PŽHQТP#бггггллб#Т=Viа P›IQТP#бФФл#footnote ref#лггггб#Т=Viа P›JQТP#блл The Commission has required that an independent audit firm review the procedures and internal controls and provide an opinion that procedures are in place to protect against waste, fraud, and abuse. This audit must be completed and the RHCD must receive a letter from the Commission Chairman agreeing with the audit findings. The signЉoff from the Chairman, indicating that he is confident that adequate procedures are in place, must be received before commitment letters can be issued by the RHCD. The RHCD is in the process of having this audit redone, as the Commission did not accept the first review.зжУУФФб#XRViа P›KQXP#б After the RHCP is notified of its support amount, it submits Form 467, УУService Confirmation FormФФ, to verify that service is being provided. This will ensure that those services contracted for are actually received during the Program year. The 1998 plan year was originally a calendar year but has been extended to June 30, 1999, making it an 18Љmonth cycle. Applications for the 1999 year have been accepted since March 1, 1999. The 1999 plan year will begin July 1, 1999, and end on June 30, 2000. An applicant who wants to apply for the 1999 year must follow the process outlined above. All health care providers seeking Universal Service Fund (USF) support for the second year must apply regardless of whether they applied in 1998. гUSгггггб#XPє\  PŽLQXP#бааТТТ` ` ` ТТИ И И ТТТ лLevel 1лХХааааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ Єа( € и0ˆр8ш@˜!№#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааб#XXф2МPБMQXP#бггггУУУ УллТЄЄЄТТаааТззCustomer Outreach, Education, and Eligible RHCPsззФФФ Ф лLevel 1лггггб#XPє\  PŽNQXP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааХХаалллBody Text Inлааб#XRViа P›OQXP#бггггг??гллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТCustomer Outreach and Education activities have been carried out by employees of the RHCD, Board members, and two contractors (NTCA and NOSORH) hired to assist with disseminating information about the Program.ŒТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТAs a first step in identifying a target market for the Program, staff obtained a list of eligible health care providers. However, staff quickly learned that while the list from the American Hospital Association contained 12,000 hospitals, many were not eligible to participate in this Program because they were either urban or forЉprofit. Staff then continued to work to develop a comprehensive list of potentially eligible health care providers. ТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТRHC staff contacted the following resources in an effort to secure their databases, mailing lists, membership rosters, or any other information which would help identify and reach out to rural, nonЉprofit, health care providers: ТТТ` ` ` ТТИ И И Т вŒџџџџџџџџџџџџџџџџŒвааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАф hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааТф ф ф ТТТС€ф ф СAmerican Hospital Association Тф ф ф ТТТС€ф ф СNational Association of County Health Centers Тф ф ф ТТТС€ф ф СNational Rural Health Association Р!Р list of members Тф ф ф ТТТС€ф ф СRural Health Clinics Р!Р membership list of 3,000 Тф ф ф ТТТС€ф ф СAmerican Association of Medical Colleges Тф ф ф ТТТС€ф ф СRural Roundtable Тф ф ф ТТТС€ф ф СHCFAР!Р rural health clinics and Medicare hospitals Тф ф ф ТТТС€ф ф СAmerican Psychology Association Тф ф ф ТТТС€ф ф СAmerican Academy of Family Physicians Тф ф ф ТТТС€ф ф СAmerican Medical Association Тф ф ф ТТТС€ф ф СAmerican Academy of Physician Assistants Тф ф ф ТТТС€ф ф СAmerican College of Nurses Тф ф ф ТТТС€ф ф СAmerican Nurse Practitioners Тф ф ф ТТТС€ф ф СOffice of Migrant Health, HHS Тф ф ф ТТТС€ф ф СNational Association of Community Health Centers Тф ф ф ТТТС€ф ф СNational Rural Mental Health Association Тф ф ф ТТТС€ф ф СBureau of Primary Care, Office of Rural Health Policy Тф ф ф ТТТС€ф ф СState Offices of Rural Health Тф ф ф ТТТС€ф ф СCenters for Disease Control and Prevention Тф ф ф ТТТС€ф ф СState and Territorial Public Health Directors Тф ф ф ТТТС€ф ф СLocal Public Health Directors Тф ф ф ТТТС€ф ф СLocal Boards of Health ааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТThese contacts did not provide a comprehensive list of eligible RHCPs. In light of this, staff used a broad list as the basis for its initial mailing. Through this approach, nonЉhealth care providers, urban providers, and forЉprofit providers learned about the Program. The informational mailing went to over 20,000 potential applicants. From this mailing effort, over 1,400 responses were received and in turn each were sent an information packet and application. ŒТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТIn addition, efforts of the staff of the RHCC and the newly formed RHCD, and Board and Committee members of the same, have included a number of varied activities. Between March 1998 and February 1999, the RHCC and RHCD were directly involved in approximately 40 different conferences, events, exhibits, workgroups, seminars, and workshops in the following states: ТТТ` ` ` ТТИ И И Т ааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАф hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааТф ф ф ТТТС€ф ф СAlabama Тф ф ф ТТТС€ф ф СCalifornia Тф ф ф ТТТС€ф ф СColorado Тф ф ф ТТТС€ф ф СFlorida (3) Тф ф ф ТТТС€ф ф СMaryland Тф ф ф ТТТС€ф ф СMississippi (2) Тф ф ф ТТТС€ф ф СNebraska Тф ф ф ТТТС€ф ф СNew Jersey (2) Тф ф ф ТТТС€ф ф СNew Mexico Тф ф ф ТТТС€ф ф СNew York (2) Тф ф ф ТТТС€ф ф СNorth Carolina (3) Тф ф ф ТТТС€ф ф СOhio Тф ф ф ТТТС€ф ф СOregon Тф ф ф ТТТС€ф ф СTexas (2) Тф ф ф ТТТС€ф ф СUtah Тф ф ф ТТТС€ф ф СVirginia (2) Тф ф ф ТТТС€ф ф СWashington Тф ф ф ТТТС€ф ф СWashington, DC (9) ааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааТТТ` ` ` ТТИ И И ТСССС ТТТ` ` ` ТТИ И И ТRHC staff participated in audio and video callЉin seminars, which have had a broader reach. One teleconference covered Alaska. RHC staff has created a broadcastЉtraining program, which was broadcast to 48 locations and viewed over the Internet by over 1,000 people. About 350 people additional people have viewed the videotape created from this training session. Other outreach activities include regular eЉmail updates to a group of 100 interested parties and participation in three ongoing workgroups. ТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТThe NOSORH contract proposed to issue mini grants to State Offices of Rural Health (SORH) for a variety of outreach activities. The SORH will suggest outreach activities in their applications for the mini-grants. The activities will include: defining telemedicine, exploring benefits of using telemedicine in rural areas, providing increased understanding of infrastructure needs associated with telemedicine, and identifying resources available for paying for telemedicine including the USF. As of February 19, 1999, 30 projects have been approved for funding through the NOSORH contract. These projects represent about $100,000. The cost reporting and evaluation method for these projects is still in the development stage so there are no specific measurable results to report to date. Most projects are scheduled to be completed by April 1999. No payments have been made to date. ТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТNOSORH outreach activities will take place primarily in spring of 1999. This clearly will not materially affect the results for the 1998 plan year. This schedule appears to be behind that agreed to in the contract due to an extension of time to file for grants. The SORH are required to update the NOSORH web site with information on grant activities. The web site is УУwww.ruralcenter.org/nosorhФФ; however, it does not have specific information about the individual grant programs or general tips for how to apply. Finally, the SORH must fill out an evaluation and cost report to be reimbursed by NOSORH. ТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТThe NTCA contract promised to deliver 100 or more applications to the RCHD by December 31, 1998, and to educate all 500 NTCA member phone companies, rural development organizations, the medical industry, and 18,000 Р РeligibleРР RHCPs about the Program. A November 5, 1998, report on the progress of this contract indicates a significant volume of outreach activity over the period, including a training session for the NTCA staff, publication of articles in the popular and trade press, and workshops and briefings at industry meetings. In addition, NTCA has developed eЉmail lists, conducted surveys, and made site visits to rural carriers. The objective cited in the original contract is that NTCA would bring 100 more applications. NTCA reported on the number of outreach activities but indicated that its goal of having the carriers submit written commitments was not possible. The Program is running behind its original schedule and NTCA has asked if the time can be extended so that it can continue to participate in outreach opportunities. An extension will put the outreach into the second Program year.У УФ Ф ТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТThe NTCA also held a focus group session for telecommunications providers in San Antonio, in February 1999. ТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТIn addition, RHCD, at the direction of the former RHCC board, contacted a number of academics and professionals in the field of telemedicine to get better information on the pool of eligible health care providers. Those experts indicated that the market was far smaller than originally estimated. This was due in part to a recognition that recent changes in telecommunications technology, as well as information technologies in the health care field, have resulted in an apparent trend away from the TЉ1 type, pointЉtoЉpoint service to lower cost switched offerings and Internet based applications. Further investigation also confirmed that the growth in hub/spoke network development was slow largely due to the need for outside funding to support the networks, and due to the fact that telecommunications costs are but a small piece of the overall network. ТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТData collected by American Telemedicine Service Providers (ATSP) for 1998 reported 157 networks covering 1,345 sites for 1998. Academic medical centers and hospital/health networks make up the bulk of the programs. Grants, internal funding, and state contracts/subsidies are the primary source of the funding. The majority of the programs report that their systems are used primarily for clinical uses; however, a number of the respondents were for profit or private and a number of respondents were in urban areas. Only about 40 percent of the respondents used TЉ1 type point to point telecommunications service that would receive Program support. While the ATSP survey does not provide a list of eligible participants, it is the best data there is on telemedicine participation and confirms the view that the market for the subsidy is relatively small. ТТТ` ` ` ТТИ И И Т ТТТ` ` ` ТТИ И И ТThere has been no effort to create an exact count or database of potentially eligible RHCPs that would supplant the original estimate of 12,000 used by the Commission. л#Body Text In#лгUSгггггб#XPє\  PŽPQXP#бааллТТТ` ` ` Т лLevel AлХХааб#XXф2МPБQQXP#бггггллТТззCurrent Level of RHCD Administrative Costs (Actual 1998 and Budgeted 1999)зз лLevel Aлггггб#XPє\  PŽRQXP#бХХааллТТТ` ` ` Т л1лааб#XRViа P›SQXP#бггггллТТТ` ` ` ТActual administrative costs for 1998 represent development costs associated with startup and implementation of a new program. The costs for 1998 also reflect systems designed for a $400 million program with 12,000 applicants. The system was set up to handle accurate tracking and to handle the anticipated volume, to be consistent with Commission rules and to protect against waste, fraud, and abuse. ТТТ` ` ` Т ТТТ` ` ` ТIn 1999, startЉup costs should be eliminated, but the ongoing maintenance costs for systems, which were set up with highЉvolume expectations, remain until program simplifications are adopted. Preliminary figures for actual 1998 costs show that $4,612,360 was spent in calendar year 1998. Projections for 1999, which reflect the merger of RHCC with USAC, show that expected administrative costs are $4,184,200. This is a reduction of $428,160 or about 9 percent compared to 1998. ТТТ` ` ` Т ТТТ` ` ` ТThe UASC Board of Directors approved the quarterly 1999 budget projections in January 1999; however, it recognized that significant changes to administrative costs would need to be made as part of this evaluation and report. The following table shows the budget estimates provided to the Commission for RHC Program administration.л1лггггб#XPє\  PŽTQXP#баалл л 2лааб# kє\  PŽUQ P#бггггУ Улл л 2лФ Фггггб#XPє\  PŽVQXP#бааллааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАA И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааТA A A Тб#єJф2МPБWQєP#бУ УProjections for 1999 RHCD Administrative Costs Prior to the Adjustments Recommended in this Report (Thousands of Dollars) а ААœ А авЦFœ „ќrъЋ#™вJV"Цв‡ааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааItem аа99 Q1 99 Q2 99 Q3 99 Q4 99 TotalФ ФˆвЦFœ „ќrъЋ#™вJV"Цв‡ааCompensation аа 100 аа100 100 100 400ˆвЦFœ „ќrъЋ#™вJV"Цв‡ааTravel аа5 5 5 5 20ˆвЦFœ „ќrъЋ#™вJV"Цв‡ааMailings аа3 3 2.4 2.4 10.8ˆвЦFœ „ќrъЋ#™вJV"Цв‡ааAudit аа 40 40ˆвЦFœ „ќrъЋ#™вJV"Цв‡ааTel аа5 5 5 5 20ˆвЦFœ „ќrъЋ#™вJV"Цв‡ааTaxes аа2 2 2 2 8ˆвЦFœ „ќrъЋ#™вJV"Цв‡ааMisc. аа6 6 6 6 24ˆвЦFœ „ќrъЋ#™вJV"Цв‡ааPwC аа504 558 492 492 2046ˆвЦFœ „ќrъЋ#™вJV"Цв‡ааOutsourcing Outreach аа200 150 10.5 35 395.5ˆвЦFœ „ќrъЋ#™вJV"Цв‡ааTotal Direct аа825 869 622.9 647.4 2964.3ˆвЦFœ „ќrъЋ#™вJV"Цв‡ааUSAC Support аа120.6 121.7 120.4 118.1 480.8ˆвЦFœ „ќrъЋ#™вJV"Цв‡ааBilling and Collection аа183.1 182.8 187.8 185.4 739.1ˆвЦFœ „ќrъЋ#™вJV"Цв‡ааУ УTotal RHCD аа1128.7 1173.5 931.1 950.9 4184.2Ф Фˆа œ ААА аааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааб#XPє\  PŽXQXP#б л1лааб#XRViа P›YQXP#бггггллТТТ` ` ` ТA straightforward comparison of the total 1998 administrative costs and the total 1999 budget is difficult due to the startup nature of 1998 and due to the new corporate structure in 1999. Instead, it makes more sense to focus attention on the four items that represent the most significant percent of both years: Outsourcing to PwC, Billing and Collection, Compensation (direct and indirect allocations), and Outsourcing for Outreach. These items represented 90 percent of administrative expenses in 1998 and 91 percent in 1999. The following table summarizes the projected levels of these items for 1999. л1лггггб#XPє\  PŽZQXP#баалл б#єJф2МPБ[QєP#бУ УBudget Focus on Key Administrative Costs for RHCD 1999 (Thousands of Dollars) а ААК А авЦFК fŸSиŒЦzi8"Цв‡Item аа1Q99 2Q99 3Q99 4Q99 Total 99Ф ФˆвЦFК fŸSиŒЦzi8"Цв‡ааOutsource: PwC аа504 558 492 492 2046ˆвЦFК fŸSиŒЦzi8"Цв‡ааBilling & Collection аа183.1 182.8 187.8 185.4 739.1ˆвЦFК fŸSиŒЦzi8"Цв‡ааCompensation аа153лfootnote refлб#Т<є\  PŽ\QТP#бггггУУллв X0УУФФX0УУФФ вжб#XPє\  PŽ]QXP#бб#Т<є\  PŽ^QТP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџаалfootnote texлааааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ Lxа( € и0ˆр8ш@˜!№#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааб#Т=Viа P›_QТP#бггггллУУлfootnote refлб#Т<є\  PŽ`QТP#бггггллФФл#footnote ref#лггггб#Т=Viа P›aQТP#блл Direct compensation costs for RHCD staff for each quarter in 1999 are $100,000. USAC common compensation costs of 24 percent ($53,000) are also allocated to the RHCD for total compensation costs of $153,000.жФФб#єJф2МPБbQєP#б 153 153 153 612ˆвЦFК fŸSиŒЦzi8"Цв‡ааOutsource: Outreach аа200 150 10.5 35 395.5ˆвЦFК fŸSиŒЦzi8"Цв‡ааУ УTotal ааг??г1,040.1гUSг г??г1,043.8гUSг г??г843.3гUSг г??г865.4гUSг 3,792.6Ф Фˆа К ААА аб#XPє\  PŽcQXP#б л1лааб#XRViа P›dQXP#бггггллТТТ` ` ` ТThe У УOutsource: PwCФ Ф figures are the most significant budget item both in 1998 and 1999. The first task of the RHCCРРs newly hired staff was to review proposals submitted in response to its RFP for performing the functions of web site development and maintenance, customer service, and application processing. It received three proposals. The proposal submitted by PwC was the least expensive bid, with an estimated cost of $6.4 million for up to four years. The RHCC management and the Board determined that the quality and cost of this proposal was superior to the other bids and entered into a service contract with PwC. ТТТ` ` ` Т ТТТ` ` ` ТThe original estimate for web site development was $464,000. As of February 15, 1999, additional web development and maintenance costs have totaled approximately $307,000. ŒТТТ` ` ` Т ТТТ` ` ` ТDuring the first six months of the contract, the average monthly cost for PwC services was $239,267. This included web site maintenance, forms processing, customer service, outreach, form revision, urban rate development and multiple bill circuit assistance, development of the invoicing system, and project management. In August, RHCC recognized that the scope of the Program was significantly different than what the Commission had anticipated. The RHCC and PwC entered into a contract modification that, among other things, reduced the average monthly billings by 29 percent, or in fixed price terms, $170,000 per month through February 1999. This cost cutting exercise brought inЉhouse to RHCC certain analytical and reporting activities, significantly reduced PwCРРs outreach and training activities, and reduced the customer service representatives from five to three. Staffing on the help desk was reduced to accommodate this reduction. ТТТ` ` ` Т ТТТ` ` ` ТIn December 1998, recognizing that the scope of the Program was even smaller still than anticipated, but also recognizing that the complexity of the application process as well as the number of packets being received consumed far greater customer service time than expected, RHCC and PwC again renegotiated the contract for the period from March 1 through June 30, 1999, at a flat rate of $186,000 per month. The increase from $170,000 to $186,000 per month is due to the need to increase the customer service representatives from three to six in order to review 1998 Form 466/468 packets as well as to process the applications expected to be received in the new year that begins March 1, 1999. ТТТ` ` ` Т ТТТ` ` ` ТPwC has been very willing to adjust the contract to reflect changed circumstances. Since the contract currently extends to June 30, 1999, the contract will again need to be revisited in a few months. Even with the modifications to the PwC contract, the relative size of the PwC contract compared to the projected support amounts is disproportionate ТТТ` ` ` Т ТТТ` ` ` ТThe У УBilling and Collection Ф Фamounts reflect a system of cost allocations among the four USAC programs. Specifically, the expense for billing and collections (and some distribution costs) is divided evenly between the programs since each provider must be billed and the cost of billing is not affected by the size of the bill. This equal division allocates a relatively large amount of costs to the Program when compared to the projected support amounts for the Program. ТТТ` ` ` Т ТТТ` ` ` ТThe amounts for У УCompensationФ Ф have stayed relatively constant over the life of the Program. There were four FTE employees in 1998 and 2.6 directly assigned in 1999 following the merger. The other 1.4 FTE employees have been allocated to the USAC organization. The merger has reallocated some time from other USAC staff to RHCD, which effectively brings the number of staff back to the four FTE employees.ŒТТТ` ` ` Т ТТТ` ` ` ТThe У УOutsource: OutreachФ Ф expense figures are not significant relative to the items discussed above and these costs will decrease significantly in the third and fourth quarters. л1лггггб#XPє\  PŽeQXP#баалл лLevel AлХХааб#XXф2МPБfQXP#бггггллТТззOperational Results in 1998 and the Status of Outstanding Issuesзз лLevel Aлггггб#XPє\  PŽgQXP#бХХаалл л1лааб#XRViа P›hQXP#бггггллТТТ` ` ` ТOperational results for 1998 are difficult to assess since no awards or credits have been made at this time. The 1998 plan year was extended through June 30, 1999. The 1999 plan year will begin on July 1, 1999, and end on June 30, 2000. This means that the awards for 1998 could span as much as 18 months for those who had existing contracts for telecommunications services for telemedicine. A review of the current data shows only a few applicants will qualify for 18 months of support. Actual support commitments are awaiting a predisbursement audit of PwC. There are also some outstanding interpretation issues at the Commission that might increase the level of funding for eligible applicants. The outstanding issues include the following: ТТТ` ` ` Т ТТТ` ` ` ТУ УPredisbursement Audit. Ф ФThe Commission has not signed off on the predisbursement audit contracted for by the RHCC because it was not complete, and the Commission could not confirm that procedures are in place to guard against waste, fraud, and abuse. Those procedures must be in place and the Commission must be confident that they are in place before any commitment letters can be issued and before and funds can be provided. On January 29, 1999, USAC was directed to take immediate steps to engage an auditor to complete the review and submit it to the Commission. RHCD has not contacted applicants but will need to as soon as USAC knows how long the second audit will take. If the initial audit had been approved and had demonstrated that adequate procedures were in place, as of today approximately 105 sites would qualify for funding of $605,000. ТТТ` ` ` Т ТТТ` ` ` ТУ УContract/Tariff Issue.Ф Ф In June 1998, the RHCC asked the Commission whether a contract that refers to a tariff should be treated as a tariffed purchase. This interpretation of the definition of a contract results in any negotiated arrangement or service contract, which referred to a tariff number, to be denied the ability to receive retroactive funds for the eligible service. ТТТ` ` ` ТУ УФ Ф ТТТ` ` ` ТMany state commissions require, as a matter of law, that all services are offered under a tariffed rate. However, as competition created pressure for individually negotiated rates, one preferred BandЉAid approach was a shell tariff that allowed individually contracted rates as long as the tariff number was cited. Alternatively, individually negotiated rates are given a unique tariff number for the sake of the state requirement. In actuality, these negotiated agreements are much more like contracts than they are like a generally available tariffed service. ТТТ` ` ` ТУ УФ Ф ТТТ` ` ` ТCommission staff has confirmed to RHCD staff that the intent of the distinction drawn in the Commission Order was for arrangements that appear in all respects like a contract and should be considered a contract, and that retroactive awards would be possible for 1998. This distinction is consistent with the situation in most states as discussed above. RHCD staff estimates that the current interpretation will increase current year commitments by $990,000. This issue should be resolved quickly; however, it will require a recalculation of support for the applications already processed. ТТТ` ` ` Т ТТТ` ` ` ТУ УETC Support CalculationФ Ф. The requirement that support is only available to ETCs limits the support available to RHCPs, as nonЉETC service is not part of the calculation of the urbanЉrural rate differential. Because the interЉexchange carrier (IXC) which provides service that crosses a LATA is often not an ETC, the reimbursement of the rural rate differential must not include the cost of the IXC piece. The comparable urban rate does not have any longЉdistance component, so the entire longЉdistance portion should be eligible for support, if it is offered by an ETC. However, many ETCs do not provide longЉdistance service, and some are legally barred from providing it at this time. Similarly, many interЉexchange carriers (IXCs) have not filed to become an ETC. ТТТ` ` ` ТУ УФ Ф ТТТ` ` ` ТAbsent the adoption of a different definition of ETC, or clarification that non-ETCs may provide discounted service to RHCPs for the longЉdistance portion of service, the limited use of resale of longЉdistance service by nonЉregional Bell operating company (RBOC) ETCs results in less support for the RHCPs than they otherwise should receive. The Commission is currently examining this issue. ТТТ` ` ` ТУ У ТТТ` ` ` ТThe Alaska Reimbursement Timing Problem. Ф ФFor any ETC, the Commission rules state, that the carrier may receive direct reimbursement if the total amount of support owed the carrier exceeds its obligation, Р Рcalculated on an annual basis.РР This has been interpreted to mean that the carrier must wait until the end of the year to receive the additional amount. USAC is examining with the Commission whether a carrierРРs obligation Р Рcalculated on an annual basisРР could allow for direct reimbursement based on a monthЉbyЉmonth calculation of a carrierРРs annual obligation. ТТТ` ` ` ТУ УФ Ф ТТТ` ` ` ТIn some situations in Alaska where the maximum allowable distance (MAD) is exceptionally high, this rule can lead to a significant cash flow problem for a small utility. Out of 50 packets (representing 230 sites) for an Alaska location, the average MAD is 402 miles and the median MAD is 475 miles. The maximum value of the MAD is 1,110 miles. The monthly credit for a single site can run several thousand dollars. ТТТ` ` ` Т ТТТ` ` ` ТIn addition to exploring the monthЉbyЉmonth calculations of a carrierРРs annual obligation, the Commission has suggested that the carriers apply for a waiver. If a waiver of the Commission rule is not provided, the telecommunications providers may be reluctant to participate in the Program. There have been 230 Form 465s filed for sites in Alaska. Many have not yet filed Forms 466 and 467 due to the uncertainty of the cash flow for the local exchange carrier (LEC). ТТТ` ` ` Т ТТТ` ` ` ТУ УThe Alaska Resell Issue.Ф Ф A solution to the ETC issue has been proposed in Alaska. Almost all service in Alaska would be provided by nonЉETCs. Since Alaskan nonЉRBOC ETCs can resell nonЉETC service, RHCPs can receive support for nonЉETC circuits. This resale option would be available to all ETCs other than RBOCs in locations outside of Alaska. Alaska has found, however, that the resale solution is difficult to put into practice. Only one network has put this plan in place as of the date of this report. ТТТ` ` ` Т ТТТ` ` ` ТУ УThe ThirdЉParty Billing IssueФ Ф. The thirdЉparty billing issue refers to the common practice for rural health care providers to receive telecommunications services at one site and have the bill sent to another site or another entity for payment. The issue is how to ensure that the credits, which are not directly received by the RHCPs, translate into a direct telecommunications credit or benefit to the RHCPs. This issue may affect more than 50 percent of the applications. The RHCD and Commission staff are close to a resolution of this issue. ТТТ` ` ` ТУ У ТТТ` ` ` ТThe PerЉLocation Funding Limit Problem.Ф Ф The perЉlocation funding level cannot be greater than the TЉ1 rate. In some locations, the comparable TЉ1 rates for rural and urban locations are the same, but 56k lines may have a greater cost in the rural area. The outstanding question is, does the lack of TЉ1 rate differential determine that no credit can be given? The RHCD staff has asked the Commission for a written interpretation of this issue. A related issue occurs when the services have no circuit distance and might result in zero support based on the standard calculations. This issue does not effect a large number of applicants based upon the applications that have been reviewed to date. ТТТ` ` ` ТУ УФ Ф л1лггггб#XPє\  PŽiQXP#бааллв€ 1 1€вк’ xhxhб#XPє\  PŽjQXP#бб#XRViа P›kQXP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџаал Sectionлааб#ш“ф2МPБlQшP#бггггллззSECTION IVззл Sectionлггггб#XRViа P›mQXP#баалл’к лheading 6лХХааб#Мgф2МPБnQМP#бггггУ УллззIndustry Benchmarks for Comparable Organizations зз л heading 6 лФ Фггггб#XPє\  PŽoQXP#бХХаалл лLevel AлХХааб#XXф2МPБpQXP#бггггллТТззDescription of Comparable Groupзз лLevel Aлггггб#XPє\  PŽqQXP#бХХаалл л1лааб#XRViа P›rQXP#бггггллТТТ` ` ` ТTo assess the RHCD administrative costs with comparable funds and charities, data collected on administrative expenses, total Program expenses, and fullЉtime equivalent (FTE) staff levels were reviewed. Sample data from 45 funds were extracted from УУThe Foundation CenterРРs Database on CDЉROM.ФФ Comparable data for 18 large charities was extracted from the УУInternet Nonprofit Center LibraryФФ. The third comparable group consists of 10 organizations created primarily by Federal government agencies. Information on this group was collected from Internet web sites and from personal telephone interviews with staff. The group with Federal government ties, for the most part, reported to the Office of Management and Budget (OMB) and the government agency to which it is attached. ТТТ` ` ` Т ТТТ` ` ` ТPublic and private funds were chosen for the benchmarking process that were either endowed or received directly from a corporate organization. No fund raising activities are included in these organizations. This makes them more comparable to RHCD than those that spend significant resources on fund raising. The sample population of large charities was chosen to provide a corroborative perspective. The organizations created by Federal government agencies provide insight into the cost of adhering to Federal government reporting and infrastructure requirements. For organizations of like size, the RHCD is more like agencies created by the Federal government than private foundations. ТТТ` ` ` Т ТТТ` ` ` ТThe funds selected from УУThe Foundation CenterРРs Database on CDЉROMФФ produced a population that ranged in annual giving from $5Љ120 million and the charities from the УУInternet Nonprofit Center Library ФФranged from about $1-100 million. The overall quasiЉgovernment group ranged in size from $2 million to $262 billion, but a smaller group was used for the benchmark analysis spanning a program size of $2Љ19 million. The fund sample was weighted more heavily in the $5Љ50 million range to be more representative of the RHCD distribution range. Funds under $5 million were not included because those funds most often did not list staff or administrative expense and the upper end of the range was limited to $100 million for trending purposes. The trend lines in these charts are second degree polynomial fits to the data. ТТТ` ` ` ТŒТТТ` ` ` ТSubtracting Total Funds Given from Fund Expenditures creates the measure of Administrative Expenses. The Percent Administration is calculated as the Administrative Expense divided by the amount of Funds Given times 100. The Weighted Staff is the sum of full time professional and support staff plus half the part time professional and support staff. ТТТ` ` ` Т ТТТ` ` ` ТThese calculations are straightforward and do not look at finer gradations in expenses. Data for this study was limited to that which is publicly available. While this may cause some imperfect category comparisons, USAC believes that the results are reasonable and generally reliable. No graphs are provided for the governmental group since the sample size of comparable groups is too small. л1лггггб#XPє\  PŽsQXP#баалл лLevel AлХХааб#XXф2МPБtQXP#бггггллТТззSummary of Benchmark Analysisзз лLevel Aлггггб#XPє\  PŽuQXP#бХХаалл л1лааб#XRViа P›vQXP#бггггллТТТ` ` ` ТThe trend analysis for charities is plotted for administrative expenses vs. distribution and for the ratio of administrative expenses to distribution. Staffing data for these charities were not available. ТТТ` ` ` Т ТТТ` ` ` ТУ УFund Administrative Expense for Fund Sample. Ф ФFund administrative expense appears to grow with fund size, but as the fund size decreases the administrative cost approaches the $1Љ2 million range. а ААі А аг??гл1лггггб#XPє\  PŽwQXP#баалла і ААА ав€11€вкм€pы P pыб#XPє\  PŽxQXP#бб#XRViа P›yQXP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааб#XPє\  PŽzQXP#б_ EMBED Excel.Sheet.8 ___мкл1лааб#XRViа P›{QXP#бгггглла ААі А аааб#єJф2МPБ|QєP#бгUSгУ УRatio of Administrative Expense to Funds GivenФ Ф а і ААА аааТТТ` ` ` Тл1лггггб#XPє\  PŽ}QXP#бааллв€11€вкм€pы “ pыб#XPє\  PŽ}QXP#бб#XRViа P›}QXP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааб#XPє\  PŽ}QXP#б_ EMBED Excel.Sheet.8 ___мкл1лааб#XRViа P›}QXP#бггггллТТТ` ` ` ТThe ratio of Administrative Expense to the Fund Giving Size appears to be more or less constant across the range of fund sizes, and about 20 percent for funds in the $5Љ100 million range. ТТТ` ` ` Т л1лггггб#XPє\  PŽ}QXP#баалллBody Textлааб#XRViа P›}QXP#бггггллТТТ` ` ` Тй Ш й ТТТ` ` ` ТThe staff supporting a fund increases with fund size, but as the fund decreases the staff size levels out around seven weighted staffers (fullЉtime + РР partЉtime). л Body Text лггггб#XPє\  PŽ}QXP#бааллааТТТ` ` ` ТУУФФй йв€11€вкŽ€p  в p б#XPє\  PŽ}QXP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџаа_ EMBED Excel.Sheet.8 ___ŽкТИ И И ТТТ л1лааб#XRViа P›}QXP#бггггллТТТ` ` ` ТУ УAdministrative Expenses for Large Charities Sample. Ф ФFor large charities elimination of the two outlying charities over $100 million indicates a trend leveling off around $1Љ2 million at the low end which is consistent with the fund analysis above. ТТТ` ` ` Тл1лггггб#XPє\  PŽ}QXP#бааллв€11€вкм€p ќ pб#XPє\  PŽ}QXP#бб#XRViа P›}QXP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааб#XPє\  PŽ}QXP#б_ EMBED Excel.Sheet.8 ___мкл1лааб#XRViа P›}QXP#бггггллТТТ` ` ` Т ТТТ` ` ` ТУ УФ Ф ТТТ` ` ` ТThe ratio of administrative expenses to the size of the distribution for the large charities indicates a relatively constant ratio with an average of about 13 percent for the charities with distributions less than $100 million. This is slightly lower than the trend for the funds displayed above. ТТТ` ` ` Т ТТТ` ` ` Тг??гл1лггггб#XPє\  PŽ}QXP#бааллв€11€вкм€p ˜ pб#XPє\  PŽ}QXP#бб#XRViа P›}QXP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааб#XPє\  PŽ}QXP#б_ EMBED Excel.Sheet.8 ___мкл1лааб#XRViа P›}QXP#бггггллТТТ` ` ` ТгUSгThe following table compares these trends in administrative loading. ТТТ` ` ` Т л1лггггб#XPє\  PŽ}QXP#баалл ааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАŒ И hРpШ xа (#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааТŒ Œ Œ Тб#єJф2МPБ}QєP#бУ УBenchmark Data Summary а ААК А авЦEК т–GћїЋЇ[8"Цв‡ааааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџаа Fundsлfootnote refлб#Т<є\  PŽ}QТP#бггггУУллв X0УУФФX0УУФФ вжŒб#XPє\  PŽ}QXP#бб#Т<є\  PŽ}QТP#ба К АК А аааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааУ УФ Флfootnote texлааааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ Lxа( € и0ˆр8ш@˜!№#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааб#Т=Viа P›}QТP#бггггллУУУ Улfootnote refлб#Т<є\  PŽ}QТP#бггггллФФФ Фл#footnote ref#лггггб#Т=Viа P›}QТP#блл Based on a $10Љ20 million fund estimate.ŒжФФб#єJф2МPБ}QєP#б Large Charitiesлfootnote refлб#Т<є\  PŽ}QТP#бггггУУллв X0УУФФX0УУФФ вжŒб#XPє\  PŽ}QXP#бб#Т<є\  PŽ}QТP#ба К АК А аааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааУ УФ Флfootnote texлааааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ Lxа( € и0ˆр8ш@˜!№#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааб#Т=Viа P›}QТP#бггггллУУУ Улfootnote refлб#Т<є\  PŽ}QТP#бггггллФФФ Фл#footnote ref#лггггб#Т=Viа P›}QТP#блл Based on a $10Љ20 million fund estimate.ŒжФФб#єJф2МPБ}QєP#б Government Originлfootnote refлб#Т<є\  PŽ}QТP#бггггУУллв X0УУФФX0УУФФ вжЯб#XPє\  PŽ}QXP#бб#Т<є\  PŽ}QТP#ба К АК А аааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааУ Улfootnote texлааааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ Lxа( € и0ˆр8ш@˜!№#џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџааб#Т=Viа P›}QТP#бггггллУУ л#footnote tex#лггггб#Т<є\  PŽ}QТP#бааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџА` џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџАџџаааалллfootnote refлб#Т<є\  PŽ}QТP#бггггллФФФ Фл#footnote ref#лггггб#Т<є\  PŽ}QТP#бллBased on a $2Љ19 million fund estimate.ЯжФФб#єJф2МPБ}QєP#б Current RHCD 1999Ф ФˆвЦEК т–GћїЋЇ[8"Цв‡ааRatio of Expense to Fund Size аа18% Љ 20% 11% Љ 12% 10% Љ 26% 50%ˆвЦEК т–GћїЋЇ[8"Цв‡ааStaff аа8 Љ 10 NA 1 Љ 34 17лfootnote refлб#Т<є\  PŽ}QТP#бггггУУллв X0УУФФX0УУФФ вж)ааџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџXА` И hРpШ xа (#€%и'0*ˆ,р.813ш5@8˜:№