About Urban Rates

The Rural Health Care Support Mechanism calculates telecommunications support using one of two methods: using only a mileage-based calculation, or by comparing the differences between urban and rural rates. Applicants may choose the method based on which is easier, or which provides the most support, according to their own circumstances. Those who choose urban/rural rate comparison will receive support equal to the difference between what they pay (the rural rate) and what they would pay if they were receiving the service in any city in their state with a population of 50,000 or more (the urban rate). Support based on this calculation is requested by completing Block 6 in Form 466.

To better assist applicants in completing Form 466, RHCD has obtained the rates for the most common telecommunications services in large cities across the country, using tariffs filed by telecommunications carriers. These rates can be used to complete Line 40 in Block 6.

The posted urban rates are for Health Care Providers who do not have a contract with their telecommunications provider. If you do not see a rate listed for your state, please contact RHCD Customer Service at 1-800-229-5476.

RHCD has also compiled contract based discounted urban rates for health care providers who demonstrate that they are paying a discounted contract based rural rate. In most cases these rates are lower than the month-to-month rates posted on RHCD’s website. To use these rates, please submit your contract with your completed Form 466. RHCD will validate your contract and use the lower rate if applicable. In the event that your service is not listed, or you believe that you can document a lower urban rate (thereby increasing the supportable urban/rural difference), such as a multi-year discounted urban rate, please follow these guidelines in documenting a comparable urban rate. (If the urban rate you document is higher than the applicable urban rate in RHCD’s database, RHCD will automatically use the lowest applicable urban rate.) Your documented urban rate must resemble your rural rate as closely as possible, in terms of length of service agreement, circuit type, bandwidth, and rate elements associated with the circuit. The urban rate must be one that is available to a comparable health care provider located in the urban area. The urban rate must be in use in an urban area in the HCP’s state.

To minimize the disparity in comparing rates available in rural and urban areas, the FCC’s Order of November 2003 allowed HCPs to compare rates for functionally similar services as viewed from the end user’s perspective. Services are considered functionally similar when operated at advertised speeds within the same category (see below) and when the nature of the service is the same (symmetrical or asymmetrical). The FCC created the following “safe harbor” categories of functionally equivalent services based on the advertised speed and nature of the service:

Examples:

• A state entity that can purchase from a state master contract may use the contract rates for an urban area under that master contract as a comparison. Likewise, a rural health care provider not eligible to purchase from the state master contract could not use those contract rates for its urban comparison.
• If a rural health care provider has a term or volume discounted service agreement, then the urban rate should also reflect a term or volume discount. (Evidence of the rural multi-year or volume service agreement, such as a contract, bill, or other document that shows the term or volume requirement must be submitted.)
• A percentage discount of a rural rate does not apply to the urban rate, only the term or volume requirement. For example, a rural carrier might have a 30% discount for a 5-year term, while the comparison urban provider has only a 20% discount for a 5-year term. The urban rate would use the 20% discount. The reverse is also true if the rural carrier offers a 20% discounted 5-year term, but the urban 5-year rate has a 30% discount.
• Using the rate bands above, a symmetrical fractional T-1 service operating at an advertised speed of 144 kbps would be considered functionally similar to a symmetrical DSL transmission service with an advertised symmetrical speed of 256 kbps.

If you have questions about the similarities between rural and urban circuits, please contact RHCD’s Customer Service Support Center at 1-800-229-5476.

Documentation must be submitted to RHCD if you are providing your own urban rate. Documentation may include tariff pages, contracts, a letter on company letterhead from the urban service provider, rate pricing information printed from the urban service provider’s web site, or similar documentation showing how the urban rate was obtained. Tariff pages should include annotations and carrier identification. Please include only summary pages, if possible. Documentation should identify the type of service and bandwidth and the urban area. The date on the documentation should indicate that the rate is provided in the current funding year.

For purposes of urban rate calculation, assume that the urban circuit is equal to the Standard Urban Distance (SUD, see RHCD website) of the HCP’s state. RHCD must be able to verify the urban service provider, the type of service, and use of the Standard Urban Distance from the documentation provided. If you have reason to believe that the service provider in the urban location would construct the urban rate differently, contact the Customer Service Support Center.