§  54.611   Health care provider contribution.

   (a) Health care provider contribution. All health care providers
   receiving support under the Healthcare Connect Fund Program 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, appropriations, or other sources
   of state funding; federal grants, loans, appropriations except for
   other federal universal service funding, or other sources of federal
   funding; Tribal government funding; and other grants, including private
   grants.

   (2) Ineligible sources include (but are not limited to) in-kind or
   implied contributions from health care providers; direct payments from
   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 § 54.614 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 § 54.622(g)(1), 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 service provider 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; and

   (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 the sustainability of the health care network supported by the
   Healthcare Connect Fund Program. Network costs that may be funded with
   any additional revenues that remain will include: Administration costs,
   equipment, software, legal fees, or other costs not covered by the
   Healthcare Connect Fund Program, as long as they are relevant to
   sustaining the network.