A reduction in federal subsidy payments for internet services essential to rural health care providers could shift almost $500,000 in costs this year to the Kenai Peninsula’s biggest health care providers.

The $400 million annual cap on the nationwide payment plan — the Rural Health Care program at the Federal Communications Commission — is overwhelmed by a growing number of participants with an increasing reliance on telecommunications to move ever-larger amounts of data and images.

The cap has not changed in 20 years “despite two decades of inflation, advances in technology and increased demand for services,” the South Peninsula Hospital wrote the FCC earlier this year.

Because of more providers needing more money than the program has available, the office that administers the program for the FCC has alerted health care providers that the reimbursement rate will drop to 84.4 percent this year. It’s the second year in a row of prorated payments. Last year was the first such reduction for the 20-year-old program.

Raising the program’s funding cap could roll back the reduction, which is what Alaska’s congressional delegation is asking the FCC — and they are not alone. Alaska Sens. Lisa Murkowski and Dan Sullivan joined with 29 other senators in a May 14 letter to the FCC chairman, urging an increase in the $400 million cap.

The senators are clearly aware of the problem, said Bruce Richards, director of governmental affairs at Central Peninsula Hospital in Soldotna. It was the first question Sullivan asked when Richards was visiting the senator’s office in Washington, D.C., earlier this month.

The prorated reimbursement of internet services could cost Central Peninsula Hospital more than $100,000 this year, Richards said.

The reduction could cost South Peninsula Hospital $220,000 this year, reported Derotha Ferraro, the hospital’s public relations director.

Before the latest reduction to 84.4 percent funding, the subsidy rate was 90 percent for the Central Peninsula Hospital, Richards said. It was 98 percent for South Peninsula Hospital in Homer, Derotha Ferraro reported

The cost shift would impose an additional $150,000 burden on Peninsula Community Health Services of Alaska, said Alan Kasdorf, director of information technology at the health care provider.

“It’s not a sustainable model,” Kasdorf said. Not for health care providers or internet service providers.

“Hopefully, some type of emergency funding” will be approved this year, with a long-term answer to follow, he said.

Smaller health care providers are not immune. The lower federal reimbursement would shift $17,000 a year in costs to the Providence Seward Medical Center, said Mikal Canfield, a spokesman for Providence in Anchorage.

“For some providers, it could be a substantial problem,” said Becky Hultberg, president of the Alaska State Hospital and Nursing Home Association.

The federal agency’s website explains that the Rural Health Care program covers hospitals, rural health clinics, skilled-nursing homes and other facilities. “The goal of the program is to improve the quality of health care available to patients in rural communities by ensuring that eligible health care providers have access to telecommunications and broadband services.”

For Central Peninsula Hospital, its internet service provides two direct links to Providence Hospital in Anchorage, including a direct line for video, Richards said. The hospital routinely sends out “huge, huge files” files of MRI and CT scans, requiring high-speed and high-capacity internet service.

Alaska internet providers Alaska Communications and GCI have been working with the FCC and the state’s congressional delegation to help resolve the funding issue.