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1、Report to the FCCEvaluation of the Rural Health Care ProgramSuggested Improvements Anticipated DemandRevised Administrative Expenses March 5, 1999UNIVERSAL SERVICE ADMINISTRATIVE COMPANYRURAL HEALTH CARE DIVISIONEvaluation of the Rural Health Care ProgramUniversal Service Administrative Company583 D
2、Onofrio Drive, Suite 201Madison, WI 53719-2055Phone 608-827-8872 Fax 608-872-8893Home Page: http:/www.universalservice.org2120 L Street, N.W., Suite 600Washington, D.C. 20037Phone 202-776-0200 Fax 202-776-0800Table of ContentsTable of ContentsiSECTION I1Purpose of Review1SECTION II2Summary of Findin
3、gs and Recommendations for Administrative Improvements and Reductions to Administrative Expenses2Recommendations for Improvements in the Program3Process Improvements4Outreach Improvements5Demand6Reductions in Administrative Costs7SECTION III8History of the Program Administration8Structure of the Ind
4、ependent Administrator9Administrative Processes Established to Meet the Program Design Specifications10Current Process10Web Site10Handling of Applications11Customer Outreach, Education, and Eligible RHCPs12Current Level of RHCD Administrative Costs (Actual 1998 and Budgeted 1999)16Operational Result
5、s in 1998 and the Status of Outstanding Issues19SECTION IV22Industry Benchmarks for Comparable Organizations22Description of Comparable Group22Summary of Benchmark Analysis23SECTION V27Customer and Stakeholder Feedback27Customer Groups27Feedback from Selected ETCs Involved in Process Development of
6、the Program27ETCs Focus Group Feedback (Conducted by NTCA, 2/10/99, San Antonio)28Feedback from Selected Non-ETCs28SECTION VI29Identification and Quantification of Barriers to Efficient Operation and Recommendations for Improvement29Administrative Barriers29Outreach29Forms and Instructions31Responsi
7、veness of PwC and RHCD to Applicants and Vendors32Effectiveness of Outsourced Services32Calculation of Urban Rate Differential32Lack of Effective Communications34Lack of Program Consolidation34Policy Barriers35ETC Requirement35Third-Party Billing35Posting/Contracting Requirement35Level of Money Avai
8、lable per Site35Types of Services Included in Program36RHCPs Do Not Include Rural Nursing Homes, Hospices, Emergency Medical Service Facilities, Community Health Centers, or Long-Term Care Facilities36Complexity of the Urban-Rural Rate Differentials36Resale Prohibitions36The Hawaii Problem37Other Ba
9、rriers37RHCPs Not Interested or Not Informed37RHCPs Do Not Have Equipment Necessary for Telemedicine37POTS May Provide Adequate Level of Service37Telecommunications Providers Not Supportive38RHCPs Have Toll-Free Internet Access38Not Worth the Effort to RHCPs38Infrastructure Not Available Today38Lack
10、 of Local Competition38Limited Patient Volume and Demand39Lack of Physician Interest39Lack of Medicare Reimbursements for Telemedicine Consultations Limits Interest in Telemedicine Investment39SECTION VII40Analysis of Demand and Administrative Costs40Demand40Administrative Costs43Outsourcing44Billin
11、g and Collections45Compensation45Outreach47SECTION VIII49Conclusion49APPENDIX A50Estimated Administrative Costs for 199950APPENDIX B53Letter from Mr. Jonathon Linkous53SECTION IPurpose of ReviewThe Federal Communications Commission (Commission) proposed that the Universal Service Administrative Comp
12、any (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
13、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 focusi
14、ng 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.SECTION IISummary of Findings and Recommendations for Administrative Improvements and Reductions to A
15、dministrative ExpensesThis 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 Commissions rules i
16、n 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 re-evaluate its approach, reexamine policy determinations, and in some instances, seek statutory change.
17、 These recommendations are included in Appendix B to this report. This report provides a history of the Rural Health Care Program (Program) (Section III), benchmark information regarding administrative costs of other non-profits for comparison purposes (SectionIV), and an overview of the customer gr
18、oups that were surveyed about the Program (SectionV). 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
19、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 Quantificatio
20、n of Barriers to Efficient Operations and Section VII, Analysis of Demand and Administrative Costs. The report includes the following: Recommendations for improvements in the Program Simplify the urbanrural rate calculation Recognize that one component of the urbanrural rate differential is distance
21、 Simplify the forms Target outreach efforts Refocus outreach efforts to partner with additional associations and federal and state agencies Consolidate Program functions Extend the funding cycle for the first year by 6 to 12 months, delay the opening of the second application cycle, and significantl
22、y change the Program for the second application cycle. Estimates of 1998 and 1999 application year demand $3,115,000 for 1998 $9,290,000 for 1999 Recommendations for reductions in Program administrative expenses 2nd Quarter 1999 Reallocate USAC support (Compensation) Reallocate the support position
23、100 percent to the USAC support Eliminate the President position For the Period July 1 December 31, 1999 Reduce outside contract costs Reallocate billing and collections costs No renewal of the PricewaterhouseCoopers LLP (PwC) contract. If the Commission extends the first year and delays the start o
24、f the second application cycle, provide for a transition to complete any remaining first year applications and process all new applications inhouse. After January 1, 2000 without simplification of the Program Consolidate like functions with other programs Consider bringing functions in-house and/or
25、re-bid the contract After January 1, 2000 with simplification of the Program Bring all operations in-house and consolidate wherever possibleRecommendations for Improvements in the ProgramThe primary barrier to a more efficient program is the design that was intended to accommodate a larger number of
26、 participants and level of support per participant. However, it appears that existing state and federal universal service policies have minimized any urbanrural rate differential for basic switched services. The best current estimates show that this Program is not likely to exceed $10 million in ann
27、ual 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 for
28、ms required from the RHCPs and the carriers, and consolidation of application handling, customer support, web site maintenance, and support invoicing with other USAC programs.Other major barriers are the completion of the pre-commitment audit and a few unresolved issues of interpretation. The resolu
29、tion of these issues should be concluded shortly.While 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 servi
30、ce representatives 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
31、 beginning with the successful 1998 group of RHCPs.Process Improvements It 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 concern
32、ed 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. The most important process improvement needed at this ti
33、me 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 urbanrura
34、l 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 distancebased services including T1 and fractional T1. If program changes are also made that allow a different app
35、roach for identifying the urbanrural rate difference, such as mileage or long-distance charges, a simple discount can apply to all services. The mileage component or the long-distance charges could be a surrogate for the urbanrural rate difference. The mileage discount would be based on the charge f
36、or 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 m
37、ost promise for administrative expense reduction. Another simplification available to the Commission would be for it to recognize, like the Commission recognized for access to the Internet, that long-distance charges represent a rate difference between urban and rural service.Internally, USAC will l
38、ook 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.This Program is important t
39、o 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
40、 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;
41、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 sec
42、ond 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 12 months and that the Commission immediately establish a Task Force to work out the details of a simplified program
43、 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.The rural health care experts have said that, “the application process as it exists today is burdensome, c
44、omplicated, causes substantial hardship on applicants, and creates a barrier on getting the Program benefits out to the intended beneficiaries.” See Appendix B. The current process is also very costly for USAC to administer. Without significant changes in the process, USAC will continue to incur adm
45、inistrative costs significantly above comparable benchmarks and above those costs that serve the public interest. USAC 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,
46、 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 Commi
47、ssion consideration.Outreach Improvements Continued 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, an
