Many healthcare providers (HCPs) do not have access to broadband facilities that are capable of supporting bandwidth-hungry telemedicine applications – either because it is simply unavailable or too expensive. Congress recognized this problem when it created the Health Care Support component of the Universal Service Fund. In December 2012, the FCC changed the program to make it more useful to HCPs seeking to expand their telemedicine offerings. Specifically, the FCC created the Health Care Connect Fund (HCF), which aims to distribute $400 million annually to rural HCPs and their non-rural partners.

The purpose of the HCF is to expand broadband access to HCPs and to encourage the development of state and regional broadband networks for telemedicine. The HCF will support the cost of (1) broadband and other advanced services; (2) upgrading existing facilities to higher bandwidth; (3) equipment necessary to create HCP networks or use broadband services; and (4) HCP-owned infrastructures where shown to be the most cost-effective option.

The HCF will allow eligible HCPs the option of purchasing services or designing and building networks if they can demonstrate that their choice is the most cost-effective option (the option for building new networks is available only to members of a consortium). Infrastructure funding, which is capped at $150 million each year, may be used in combination with services purchased from commercial service providers. Only consortia will be permitted to receive support for new infrastructure builds. Urban HCPs will be permitted to participate in those consortia with Rural HCPs so long as the Urban HCPs are not a majority of the participants. The HCF will pay 65 percent of eligible costs, with the participating HCPs required to pick-up the remaining 35 percent. While the HCP contribution obligation is not insignificant, the FCC specifically approved a variety of creative ways for HCPs to finance their 35 percent share of the costs.

Participants in the precursor to the HCF, the Rural Healthcare Pilot Program, can seek HCF funding beginning July 1 of this year. The FCC is expected to finalize the applications for the HCF by the end of the summer and funding will begin for new participants on January 1, 2014.