To amend the Public Health Service Act and the Internal Revenue Code of 1986 with respect to the National Health Service Corps.

Summary: National Health Service Corps Reinvestment Act of 2001 - Amends the Public Health Service Act to extend from FY 2001 through FY 2006 the authorization of appropriations for certain programs of the National Health Service Corps.Requires the Secretary of Health and Human Services to consider certain grant-receiving health centers, federally-qualified health centers, and rural health clinics to be health professional shortage areas.Repeals cost-sharing requirements that entities approved for assignment of Corps members: (1) charge for their health services; and (2) make certain payments to the United States.Authorizes the Secretary to carry out demonstration projects allowing individuals to satisfy obligated service requirements through part-time clinical service, but not less than 20 hours per week.Amends the Internal Revenue Code to exclude from gross income certain scholarship and loan repayment amounts under the National Health Services Corps Program.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``National Health Service Corps 
Reinvestment Act of 2001''.

TITLE I--REVISION AND EXTENSION OF PROGRAM FOR NATIONAL HEALTH SERVICE 
                                 CORPS

SEC. 101. GENERAL PROGRAM.

    (a) Additional Authorizations of Appropriations.--Section 338(a)(1) 
of the Public Health Service Act (42 U.S.C. 254k(a)(1)) is amended by 
inserting before the period the following: ``, $62,284,500 for fiscal 
year 2002, and such sums as may be necessary for each of the fiscal 
years 2003 through 2006''.
    (b) Designation of Health Professional Shortage Areas.--Section 332 
of the Public Health Service Act (42 U.S.C. 254e) is amended by adding 
at the end the following subsection:
    ``(i)(1) Notwithstanding any other provision of this subpart, the 
Secretary shall consider facilities described in paragraph (2) to be 
health professional shortage areas within the meaning of subsection 
(a)(1)(C).
    ``(2) The facilities referred to in paragraph (1) are public or 
nonprofit private facilities that are any of the following:
            ``(A) A health center receiving a grant under section 330.
            ``(B) A Federally-qualified health center as defined in 
        section 1905(l)(2)(B) of the Social Security Act.
            ``(C) A rural health clinic under section 1861(aa)(2) of 
        the Social Security Act.''.
    (c) Striking of Provisions Regarding Cost Sharing.--Subpart II of 
part D of title III of the Public Health Service Act (42 U.S.C. 254d et 
seq.) is amended by striking section 334.

SEC. 102. SCHOLARSHIP AND LOAN REPAYMENT PROGRAMS.

    (a) Additional Authorizations of Appropriations.--Section 
338H(b)(1) of the Public Health Service Act (42 U.S.C. 254q(b)(1)) is 
amended--
            (1) by striking ``and'' after ``1991,''; and
            (2) by inserting before the period the following: ``, 
        $131,886,000 for fiscal year 2002, and such sums as may be 
        necessary for each of the fiscal years 2003 through 2006''.
    (b) Demonstration Program Regarding Part-Time Performance of 
Obligated Service.--Section 338C (42 U.S.C. 254m) of the Public Health 
Service Act is amended by adding at the end the following subsection:
    ``(f)(1) In carrying out this subpart, the Secretary may in 
accordance with this subsection carry out demonstration projects in 
which individuals who have entered into contracts under section 338A or 
338B receive a waiver under which the individuals are authorized, 
notwithstanding subsection (a), to satisfy the requirement of obligated 
service through providing clinical service that is not full-time 
(referred to in this subsection as `part-time service').
    ``(2) A waiver under paragraph (1) may be provided by the Secretary 
only if the following conditions are met:
            ``(A) An entity approved under section 333 for the 
        assignment of a Corps member has requested in writing that the 
        Corps member assigned to the entity provide part-time service.
            ``(B) The Secretary has determined that part-time service 
        by a Corp member is appropriate for the health professional 
        shortage area in which the entity is located.
            ``(C) A Corps member who is required to perform obligated 
        service has agreed in writing to be assigned, for part-time 
        service, to an entity described in subparagraph (A).
            ``(D) The entity and the Corps member agree in writing that 
        the part-time service provided by the Corps member will be not 
        less than 20 hours per week.
            ``(E) The Corps member agrees in writing that the period of 
        time over which the Corps member would otherwise have performed 
        obligated service pursuant to section 338A or 338B (as 
        applicable) will be extended so that the aggregate amount of 
        part-time service provided by the Corps member will equal the 
        period of obligated service that otherwise would have applied 
        pursuant to such section.
            ``(F) The Corps member agrees in writing that, if the Corps 
        member begins providing part-time service but fails to complete 
        the period of obligated service, the method of determining the 
        amount of damages described in subsection (b) or (c) of section 
        338E, as applicable, will be applied by using the full-time 
        equivalent of the part-time service provided by the Corp 
        member.''.

TITLE II--EXCLUSION FROM GROSS INCOME FOR CERTAIN SCHOLARSHIPS AND LOAN 
          PAYMENTS UNDER NATIONAL HEALTH SERVICE CORPS PROGRAM

SEC. 201. EXCLUSION OF AMOUNTS RECEIVED UNDER THE NATIONAL HEALTH 
              SERVICE CORPS SCHOLARSHIP PROGRAM.

    (a) In General.--Section 117(c) of the Internal Revenue Code of 
1986 (relating to the exclusion from gross income amounts received as a 
qualified scholarship) is amended--
            (1) by striking ``Subsections (a)'' and inserting the 
        following:
            ``(1) In general.--Except as provided in paragraph (2), 
        subsections (a)''; and
            (2) by adding at the end the following new paragraph:
            ``(2) Exception.--Paragraph (1) shall not apply to any 
        amount received by an individual under the National Health 
        Service Corps Scholarship Program under section 338A(g)(1)(A) 
        of the Public Health Service Act.''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to amounts received in taxable years beginning after December 31, 
2001.

SEC. 202. EXCLUSION FOR LOAN PAYMENTS UNDER NATIONAL HEALTH SERVICE 
              CORPS LOAN REPAYMENT PROGRAM.

    (a) In General.--Section 117 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsection:
    ``(e) Loan Payments Under National Health Service Corps Loan 
Repayment Program.--Gross income shall not include any amount received 
under section 338B(g) of the Public Health Service Act.''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to amounts received by an individual in taxable years beginning 
after December 31, 2001.

                     TITLE III--GENERAL PROVISIONS

SEC. 301. CONFORMING AMENDMENT REGARDING REIMBURSEMENT OF TAX LIABILITY 
              FOR LOAN PAYMENTS.

    Section 338B(g) of the Public Health Service Act (42 U.S.C. 254l-
1(g)) is amended--
            (1) by striking paragraph (3); and
            (2) by redesignating paragraph (4) as paragraph (3).

SEC. 302. EFFECTIVE DATE.

    Except as provided otherwise in this Act, this Act and the 
amendments made by this Act take effect October 1, 2001, or upon the 
date of the enactment of this Act, whichever occurs later.