The health of rural telecom

In an effort to breathe more life into a troubled program that subsidizes rural health care providers' telephone bills, an FCC order approved last month expands the types of carriers and telecom services that can be funded by the universal service program. However, according to telemedicine experts, it's still difficult to obtain the badly needed funds.

The order ensures that all carriers - not just local telcos - and all services with speeds of more than 1.544 Mb/s will be covered.

"These changes are going to be great. They're going to give us a big shot in the arm," said Melvin Blackwell, a vice president of the Universal Service Administrative Co., the Washington-based nonprofit organization that administers the rural health care program.

But not everyone agreed. "It's still not enough," said Jonathan Linkous, executive director of the American Telemedicine Association in Washington. "There still need to be legislative changes," but congressional action this year is unlikely, he added.

To boost rural health care, the Telecommunications Act of 1996 ordered that rural hospitals, clinics, public health departments and other nonprofit providers pay no more than their urban counterparts for comparable phone services, including basic service, T-1 lines and videoconferencing. Linked by high-speed communications networks, these sites deliver radiology consultations, office visits and other medical services to patients who otherwise might drive hundreds of miles to receive them.

Despite its good intentions, the program has been stiffled by red tape, complex paperwork and delays in funding, critics say.

"The number of projects receiving funding has not been what we expected. The program has been far more complicated than we expected," Linkous said.

As of mid-October, only $1.1 million of $400 million in authorized first-year funding had been committed to 183 health care providers. Administrators still are doling out money for the first year, an 18-month period that ended June 30.

The Year 2 program, which began July 1 and has $12 million to distribute, has attracted more than 800 applications so far, about the same as last year, but is below the 5000 or so rural medical sites that could apply, Blackwell said.

He estimated that the USAC would give more than $8 million in funds this year vs. about $2 million for the first year when all applications were completed.

What is or is not covered has been a big sticking point in the program. Originally, only telecom services provided by local exchange carriers were eligible. Now the FCC will let all carriers participate, receiving credits against their universal service contributions.

"Our interpretation of the statutory requirement may have been too narrow," an FCC staff member said. "It left some rural health care providers with no carrier to provide [subsidized] service."

Many telemedicine facilities - about 25%, estimated Blackwell - rely heavily or even exclusively on long-distance companies, which in turn pay local carriers to provide their connections. The exclusion of interexchange carriers hurts the program by reducing the number of applicants, he said.

The other big change, which took effect July 1, allows rural health care providers to apply for subsidies of any telecom service, regardless of bandwidth. Previously, only services of 1.544 Mb/s or less were covered.

Still, only distance-related charges apply, so long-distance service is excluded.

Although monthly charges for ISDN - the technology to which many telemedicine sites are migrating - are covered, in practice, subsidies for it usually aren't available because there's no difference between urban and rural rates, Blackwell said.

The FCC also simplified the often-criticized complex formula for calculating the subsidy by eliminating one of four forms applicants had to fill out, an FCC source said.

But plenty of paperwork remains to be done, telemedicine providers said.

"I see no reduction in the paperwork, but I know they're trying to change that," said Susan Becklenberg, assistant director of the Missouri Telemedicine Network, a Columbia, Mo.-based network that includes 14 rural sites.