§ 54.633   Health care provider contribution.

   (a) Health care provider contribution. All health care providers receiving
   support  under  the Healthcare Connect Fund shall receive a 65 percent
   discount  on  the  cost  of eligible expenses and shall be required to
   contribute 35 percent of the total cost of all eligible expenses.

   (b) Limits on eligible sources of health care provider contribution. Only
   funds from eligible sources may be applied toward the health care provider's
   required contribution.

   (1) Eligible sources include the applicant or eligible health care provider
   participants; state grants, funding, or appropriations; federal funding,
   grants, loans, or appropriations except for other federal universal service
   funding; Tribal government funding; and other grant funding, including
   private grants.

   (2) Ineligible sources include (but are not limited to) in-kind or implied
   contributions from health care providers; direct payments from vendors or
   other service providers, including contractors and consultants to such
   entities; and for-profit entities.

   (c)  Disclosure  of health care provider contribution source. Prior to
   receiving support, applicants are required to identify with specificity
   their sources of funding for their contribution of eligible expenses.

   (d) Future revenues from excess capacity as source of health care provider
   contribution.   A  consortium  applicant  that  receives  support  for
   participant-owned network facilities under § 54.636 may use future revenues
   from excess capacity as a source for the required health care provider
   contribution, subject to the following limitations.

   (1)   The   consortium's   selection   criteria   and  evaluation  for
   “cost-effectiveness” pursuant to § 54.642 cannot provide a preference to
   bidders that offer to construct excess capacity.

   (2) The applicant must pay the full amount of the additional costs for
   excess capacity facilities that will not be part of the supported health
   care network.

   (3) The additional cost of constructing excess capacity facilities may not
   count toward a health care provider's required contribution.

   (4) The inclusion of excess capacity facilities cannot increase the funded
   cost of the dedicated health care network in any way.

   (5) An eligible health care provider (typically the consortium, although it
   may be an individual health care provider participating in the consortium)
   must retain ownership of the excess capacity facilities. It may make the
   facilities available to third parties only under an indefeasible right of
   use (IRU) or lease arrangement. The lease or IRU between the participant and
   the third party must be an arm's length transaction. To ensure that this is
   an arm's length transaction, neither the vendor that installs the excess
   capacity facilities nor its affiliate is eligible to enter into an IRU or
   lease with the participant.

   (6) Any amount prepaid for use of the excess capacity facilities (IRU or
   lease) must be placed in an escrow account. The participant can then use the
   escrow account as an eligible source of funds for the participant's 35
   percent contribution to the project.

   (7) All revenues from use of the excess capacity facilities by the third
   party  must  be  used for the health care provider contribution or for
   sustainability  of the health care network supported by the Healthcare
   Connect Fund. Network costs that may be funded with any additional revenues
   that remain include administration, equipment, software, legal fees, or
   other costs not covered by the Healthcare Connect Fund, as long as they are
   relevant to sustaining the network.

   [ 78 FR 13985 , Mar. 1, 2013]

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