I

103D CONGRESS

2D SESSION H. R. 4688

To amend the Internal Revenue Code of 1986, the Public Health Service

Act, and certain other Acts to provide for an increase in the number

of health professionals serving in rural areas.

IN THE HOUSE OF REPRESENTATIVES

JUNE 30, 1994

Ms. LAMBERT introduced the following bill; which was referred jointly to the

Committees on Energy and Commerce, Ways and Means, and Education

and Labor

A BILL

To amend the Internal Revenue Code of 1986, the Public

Health Service Act, and certain other Acts to provide

for an increase in the number of health professionals

serving in rural areas.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Rural Health Care Practitioners Revitalization Act of

6 1994’’.

7 (b) TABLE OF CONTENTS.—The table of contents for

8 this Act is as follows:
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Sec. 1. Short title; table of contents.

TITLE I—TAX INCENTIVES REGARDING RURAL HEALTH

CARE

Sec. 101. National Health Service Corps loan repayments excluded from gross

income.

Sec. 102. Deduction for medical school education loan interest incurred by

health professionals serving in medically underserved rural

areas.

Sec. 103. Nonrefundable credit for certain primary health services providers.

Sec. 104. Expensing of medical equipment.

TITLE II—PUBLIC HEALTH SERVICE PROGRAMS

REGARDING RURAL HEALTH CARE

Subtitle A—National Health Service Corps

PART 1—GENERAL CORPS PROGRAM

Sec. 201. Designation of health professional shortage areas.

Sec. 202. Funding for special loans for former Corps members to enter private

practice in health professional shortage areas.

Sec. 203. Assignment of Corps personnel; priority for rural medical facilities

providing experience regarding health professions as career

choice.

PART 2—SCHOLARSHIP AND LOAN REPAYMENT PROGRAMS

Sec. 211. Provision regarding increase in funding.

Sec. 212. Priority for certain individuals from rural backgrounds.

PART 3—LOW-INTEREST LOANS REGARDING OBLIGATED SERVICE IN

UNDERSERVED RURAL AREAS

Sec. 221. Establishment of program of loans.

Subtitle B—Other Programs Regarding Rural Health Care

Sec. 231. State offices of rural health.

Sec. 232. Area health education center programs; authorization of appropriations.

TITLE III—STATE HEALTH SERVICE CORPS

DEMONSTRATION PROJECTS

Sec. 301. Purpose.

Sec. 302. State health service corps demonstration projects.

TITLE IV—TREATMENT OF STUDENT LOANS FOR HEALTH

PROFESSIONALS

Sec. 401. Loans under Higher Education Act of 1965; deferments regarding

postgraduate primary-care programs in underserved rural

areas.
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1 TITLE I—TAX INCENTIVES RE2 GARDING RURAL HEALTH

3 CARE

4 SEC. 101. NATIONAL HEALTH SERVICE CORPS LOAN REPAY5 MENTS EXCLUDED FROM GROSS INCOME.

6 (a) IN GENERAL.—Part III of subchapter B of chap7 ter 1 of the Internal Revenue Code of 1986 (relating to

8 items specifically excluded from gross income) is amended

9 by redesignating section 137 as section 138 and by insert10 ing after section 136 the following new section:

11 ‘‘SEC. 137. NATIONAL HEALTH SERVICE CORPS LOAN RE12 PAYMENTS.

13 ‘‘(a) GENERAL RULE.—Gross income shall not in14 clude any qualified loan repayment.

15 ‘‘(b) QUALIFIED LOAN REPAYMENT.—For purposes

16 of this section, the term ‘qualified loan repayment’ means

17 any payment made on behalf of the taxpayer by the Na18 tional Health Service Corps Loan Repayment Program

19 under section 338B(g) of the Public Health Service Act.’’.

20 (b) CONFORMING AMENDMENT.—Paragraph (3) of

21 section 338B(g) of the Public Health Service Act is

22 amended by striking ‘‘Federal, State, or local’’ and insert23 ing ‘‘State or local’’.
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1 (c) CLERICAL AMENDMENT.—The table of sections

2 for part III of subchapter B of chapter 1 of the Internal

3 Revenue Code of 1986 is amended by striking the item

4 relating to section 137 and inserting the following:

‘‘Sec. 137. National Health Service Corps loan repayments.

‘‘Sec. 138. Cross references to other Acts.’’.

5 (d) EFFECTIVE DATE.—The amendments made by

6 this section shall apply to payments made under section

7 338B(g) of the Public Health Service Act after the date

8 of the enactment of this Act.

9 SEC. 102. DEDUCTION FOR MEDICAL EDUCATION LOAN IN10 TEREST INCURRED BY HEALTH PROFES11 SIONALS SERVING IN MEDICALLY UNDER12 SERVED RURAL AREAS.

13 (a) IN GENERAL.—Paragraph (1) of section 163(h)

14 of the Internal Revenue Code of 1986 (relating to dis15 allowance of deduction for personal interest) is amended

16 by striking ‘‘and’’ at the end of subparagraph (D), by re17 designating subparagraph (E) as subparagraph (F), and

18 by inserting after subparagraph (D) the following new

19 subparagraph:

20 ‘‘(E) any qualified medical education loan

21 interest (within the meaning of paragraph (5)),

22 and’’.

23 (b) QUALIFIED MEDICAL EDUCATION LOAN INTER24 EST DEFINED.—Subsection (h) of section 163 of such
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1 Code is amended by redesignating paragraph (5) as para2 graph (6) and by inserting after paragraph (4) the follow3 ing new paragraph:

4 ‘‘(5) QUALIFIED MEDICAL EDUCATION LOAN IN5 TEREST.—

6 ‘‘(A) IN GENERAL.—The term ‘qualified

7 medical education loan interest’ means inter8 est—

9 ‘‘(i) which is on a medical education

10 loan of a health professional,

11 ‘‘(ii) which is paid or accrued by such

12 health professional, and

13 ‘‘(iii) which accrues during the pe14 riod—

15 ‘‘(I) such health professional is

16 providing care to residents of a medi17 cally underserved rural area, and

18 ‘‘(II) such health professional’s

19 principal place of abode is in such

20 area.

21 In the case of a health professional who is a

22 physician, the requirement of clause (iii)(I)

23 shall be met only if such physician is providing

24 primary care (including internal medicine, pedi-
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1 atrics, obstetrics/gynecology, family medicine,

2 and osteopathy) to such residents.

3 ‘‘(B) MEDICAL EDUCATION LOAN.—For

4 purposes of subparagraph (A), the term ‘medi5 cal education loan’ means indebtedness incurred

6 to pay the individual’s—

7 ‘‘(i) qualified tuition and related ex8 penses (as defined in section 117(b)) in9 curred for the medical education of such

10 individual, or

11 ‘‘(ii) reasonable living expenses while

12 away from home in order to attend an edu13 cational institution described in section

14 170(b)(1)(A)(ii) for the medical education

15 of such individual.

16 ‘‘(C) HEALTH PROFESSIONAL.—For pur17 poses of subparagraph (A), the term ‘health

18 professional’ means any physician, physician as19 sistant, nurse practitioner, nurse clinician,

20 nurse midwife, and allied health professional.

21 ‘‘(C) PHYSICIAN.—For purposes of this

22 paragraph, the term ‘physician’ has the mean23 ing given such term by section 1861(r)(1) of

24 the Social Security Act.
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1 ‘‘(D) PHYSICIAN ASSISTANT; NURSE PRAC2 TITIONER.—For purposes of this paragraph,

3 the terms ‘physician assistant’ and ‘nurse prac4 titioner’ have the meanings given to such terms

5 by section 1861(aa)(3) of the Social Security

6 Act.

7 ‘‘(E) ALLIED HEALTH PROFESSIONAL.—

8 For purposes of this paragraph, the term ‘allied

9 health professional’ has the meaning given such

10 term by section 799(5) of the Public Health

11 Service Act.

12 ‘‘(F) MEDICALLY UNDERSERVED RURAL

13 AREA.—For purposes of subparagraph (A), the

14 term ‘medically underserved rural area’ means

15 any rural area which is a medically underserved

16 area (as defined in section 330(b) or 1302(7) of

17 the Public Health Service Act).’’.

18 (c) EFFECTIVE DATE.—The amendments made by

19 this section shall apply to taxable years ending after the

20 date of the enactment of this Act.

21 SEC. 103. NONREFUNDABLE CREDIT FOR CERTAIN PRI22 MARY HEALTH SERVICES PROVIDERS.

23 (a) IN GENERAL.—Subpart A of part IV of sub24 chapter A of chapter 1 of the Internal Revenue Code of

25 1986 (relating to nonrefundable personal credits) is
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1 amended by inserting after section 25 the following new

2 section:

3 ‘‘SEC. 25A. PRIMARY HEALTH SERVICES PROVIDERS.

4 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of a

5 qualified primary health services provider, there is allowed

6 as a credit against the tax imposed by this chapter for

7 any taxable year in a mandatory service period an amount

8 equal to the product of—

9 ‘‘(1) the lesser of—

10 ‘‘(A) the number of months of such period

11 occurring in such taxable year, or

12 ‘‘(B) 36 months, reduced by the number of

13 months taken into account under this para14 graph with respect to such provider for all pre15 ceding taxable years (whether or not in the

16 same mandatory service period), multiplied by

17 ‘‘(2) $1,000 ($500 in the case of a qualified

18 primary health services provider who is a physician

19 assistant or a nurse practitioner).

20 ‘‘(b) QUALIFIED PRIMARY HEALTH SERVICES PRO21 VIDER.—For purposes of this section, the term ‘qualified

22 primary health services provider’ means any physician,

23 physician assistant, nurse practitioner, nurse clinician, or

24 nurse midwife who for any month during a mandatory
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1 service period is certified by the Bureau to be a primary

2 health services provider who—

3 ‘‘(1) is providing primary health services—

4 ‘‘(A) full time, and

5 ‘‘(B) to individuals at least 80 percent of

6 whom reside in a rural health professional

7 shortage area,

8 ‘‘(2) is not receiving during such year a scholar9 ship under the National Health Service Corps Schol10 arship Program or a loan repayment under the Na11 tional Health Service Corps Loan Repayment Pro12 gram,

13 ‘‘(3) is not fulfilling service obligations under

14 such Programs, and

15 ‘‘(4) has not defaulted on such obligations.

16 ‘‘(c) MANDATORY SERVICE PERIOD.—For purposes

17 of this section, the term ‘mandatory service period’ means

18 the period of 60 consecutive calendar months beginning

19 with the first month the taxpayer is a qualified primary

20 health services provider.

21 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur22 poses of this section—

23 ‘‘(1) BUREAU.—The term ‘Bureau’ means the

24 Bureau of Health Care Delivery and Assistance,
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1 Health Resources and Services Administration of the

2 United States Public Health Service.

3 ‘‘(2) PHYSICIAN.—The term ‘physician’ has the

4 meaning given to such term by section 1861(r) of

5 the Social Security Act.

6 ‘‘(3) PHYSICIAN ASSISTANT; NURSE PRACTI7 TIONER.—The terms ‘physician assistant’ and ‘nurse

8 practitioner’ have the meanings given to such terms

9 by section 1861(aa)(3) of the Social Security Act.

10 ‘‘(4) PRIMARY HEALTH SERVICES PROVIDER.—

11 The term ‘primary health services provider’ means a

12 provider of primary health services (as defined in

13 section 330(b)(1) of the Public Health Service Act).

14 ‘‘(5) RURAL HEALTH PROFESSIONAL SHORTAGE

15 AREA.—The term ‘rural health professional shortage

16 area’ means—

17 ‘‘(A) a rural health professional shortage

18 area (as defined in section 332(a)(1)(A) of the

19 Public Health Service Act) in a rural area (as

20 determined under section 1886(d)(2)(D) of the

21 Social Security Act),

22 ‘‘(B) an area which is determined by the

23 Secretary of Health and Human Services as

24 equivalent to an area described in subparagraph
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1 (A) and which is designated by the Bureau of

2 the Census as not urbanized, or

3 ‘‘(C) a community that is certified as un4 derserved by the Secretary for purposes of par5 ticipation in the rural health clinic program

6 under title XVIII of the Social Security Act.

7 ‘‘(e) RECAPTURE OF CREDIT.—

8 ‘‘(1) IN GENERAL.—If, during any taxable year,

9 there is a recapture event, then the tax of the tax10 payer under this chapter for such taxable year shall

11 be increased by an amount equal to the product of—

12 ‘‘(A) the applicable percentage, and

13 ‘‘(B) the aggregate unrecaptured credits

14 allowed to such taxpayer under this section for

15 all prior taxable years.

16 ‘‘(2) APPLICABLE RECAPTURE PERCENTAGE.—

17 ‘‘(A) IN GENERAL.—For purposes of this

18 subsection, the applicable recapture percentage

19 shall be determined from the following table:

‘‘If the recapture The applicable recapevent occurs during: ture percentage is:

Months 1–24 .............................................. 100

Months 25–36 ............................................ 75

Months 37–48 ............................................ 50

Months 49–60 ............................................ 25

Months 61 and thereafter .......................... 0.

20 ‘‘(B) TIMING.—For purposes of subpara21 graph (A), month 1 shall begin on the first day

22 of the mandatory service period.
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1 ‘‘(3) RECAPTURE EVENT DEFINED.—

2 ‘‘(A) IN GENERAL.—For purposes of this

3 subsection, the term ‘recapture event’ means

4 the failure of the taxpayer to be a qualified pri5 mary health services provider for any month

6 during any mandatory service period.

7 ‘‘(B) CESSATION OF DESIGNATION.—The

8 cessation of the designation of any area as a

9 rural health professional shortage area after the

10 beginning of the mandatory service period for

11 any taxpayer shall not constitute a recapture

12 event.

13 ‘‘(C) SECRETARIAL WAIVER.—The Sec14 retary may waive any recapture event caused by

15 extraordinary circumstances.

16 ‘‘(4) NO CREDITS AGAINST TAX.—Any increase

17 in tax under this subsection shall not be treated as

18 a tax imposed by this chapter for purposes of deter19 mining the amount of any credit under subpart A,

20 B, or D of this part.’’.

21 (b) CLERICAL AMENDMENT.—The table of sections

22 for subpart A of part IV of subchapter A of chapter 1

23 of such Code is amended by inserting after the item relat24 ing to section 25 the following new item:

‘‘Sec. 25A. Primary health services providers.’’.
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 the date of the enactment of this Act.

4 SEC. 104. EXPENSING OF MEDICAL EQUIPMENT.

5 (a) IN GENERAL.—Section 179 of the Internal Reve6 nue Code of 1986 (relating to election to expense certain

7 depreciable business assets) is amended—

8 (1) by striking paragraph (1) of subsection (b)

9 and inserting the following:

10 ‘‘(1) DOLLAR LIMITATION.—

11 ‘‘(A) GENERAL RULE.—The aggregate cost

12 which may be taken into account under sub13 section (a) for any taxable year shall not exceed

14 $17,500.

15 ‘‘(B) RURAL HEALTH CARE PROPERTY.—

16 In the case of rural health care property, the

17 aggregate cost which may be taken into account

18 under subsection (a) for any taxable year shall

19 not exceed $25,000, reduced by the amount

20 otherwise taken into account under subsection

21 (a) for such year.’’; and

22 (2) by adding at the end of subsection (d) the

23 following new paragraph:

24 ‘‘(11) RURAL HEALTH CARE PROPERTY.—For

25 purposes of this section, the term ‘rural health care
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1 property’ means section 179 property used by a phy2 sician (as defined in section 1861(r) of the Social

3 Security Act) in the active conduct of such physi4 cian’s full-time trade or business of providing pri5 mary health services (as defined in section 330(b)(1)

6 of the Public Health Service Act) in a rural health

7 professional shortage area (as defined in section

8 25A(d)(5)).’’.

9 (b) EFFECTIVE DATE.—The amendments made by

10 this subsection shall apply to property placed in service

11 in taxable years beginning after the date of the enactment

12 of this Act.

13 TITLE II—PUBLIC HEALTH SERV14 ICE PROGRAMS REGARDING

15 RURAL HEALTH CARE

16 Subtitle A—National Health

17 Service Corps

18 PART 1—GENERAL CORPS PROGRAM

19 SEC. 201. DESIGNATION OF HEALTH PROFESSIONAL

20 SHORTAGE AREAS.

21 Section 332(b) of the Public Health Service Act (42

22 U.S.C. 254e(b)) is amended by adding at the end the fol23 lowing paragraph:

24 ‘‘(4) With respect to determining the need for

25 health services through the indicators of need under
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1 paragraphs (1) and (2), consideration of the follow2 ing:

3 ‘‘(A) The number of individuals in the pop4 ulation involved whose means of payment for

5 health services is the program under title XVIII

6 of the Social Security Act.

7 ‘‘(B) The number of individuals in the

8 population whose means of payment for health

9 services is the program under title XIX of such

10 Act.

11 ‘‘(C) The number of individuals in the pop12 ulation who are uninsured with respect to

13 health policies or plans.

14 ‘‘(D) The percentage of the population

15 constituted by the aggregate number of individ16 uals under subparagraphs (A) through (C).

17 ‘‘(E) In the case of community-based phy18 sicians who provide primary health services and

19 who are accepting additional patients whose

20 means of payment is through the program es21 tablished in title XVIII or XIX of the Social

22 Security Act, the percentage constituted by the

23 ratio of the number of such physicians to the

24 number of individuals in the population.’’.
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1 SEC. 202. FUNDING FOR SPECIAL LOANS FOR FORMER

2 CORPS MEMBERS TO ENTER PRIVATE PRAC3 TICE IN HEALTH PROFESSIONAL SHORTAGE

4 AREAS.

5 (a) IN GENERAL.—

6 (1) ALLOCATION.—Section 338(a) of the Public

7 Health Service Act (42 U.S.C. 254k(a)) is amended

8 by adding at the end the following paragraph:

9 ‘‘(3) Of the amounts appropriated under paragraph

10 (1) for a fiscal year, the Secretary shall reserve not less

11 than 5 percent for carrying out section 338G.’’.

12 (2) CONFORMING AMENDMENT.—Section

13 338G(a) of the Public Health Service Act (42

14 U.S.C. 254p(a)) is amended in the matter preceding

15 paragraph (1) by striking ‘‘authorized under section

16 338’’ and inserting ‘‘reserved under section

17 338(a)(3)’’.

18 (b) STUDY.—

19 (1) IN GENERAL.—During the fiscal years 1996

20 through 2000, the Secretary shall conduct a study

21 for the purpose of determining the extent to which

22 the program under section 338G of the Public

23 Health Service Act has been effective in increasing

24 the number of health professionals who begin private

25 practice in health professional shortage areas after

26 terminating the membership of the individuals in the
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1 National Health Service Corps. The study shall sep2 arately state the number of such individuals who

3 have completed a period of obligated service under

4 the scholarship or loan repayment program under

5 section 338A or 338B of such Act, respectively.

6 (2) DATE CERTAIN FOR COMPLETION.—Not

7 later than February 1, 2001, the Secretary shall

8 complete the study required in paragraph (1) and

9 submit to the Congress a report describing the find10 ings made in the study.

11 (3) DEFINITIONS.—For purposes of this sub12 section:

13 (A) The term ‘‘health professional shortage

14 area’’ has the meaning given such term in sec15 tion 331(a)(3) of the Public Health Service Act.

16 (B) The term ‘‘Secretary’’ means the Sec17 retary of Health and Human Services.

18 SEC. 203. ASSIGNMENT OF CORPS PERSONNEL; PRIORITY

19 FOR RURAL MEDICAL FACILITIES PROVIDING

20 EXPERIENCE REGARDING HEALTH PROFES21 SIONS AS CAREER CHOICE.

22 Section 333A(a)(1)(B) of the Public Health Service

23 Act (42 U.S.C. 254f–1(a)(1)(B)) is amended—

24 (1) in clause (iii), by striking ‘‘and’’ after the

25 semicolon at the end;
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1 (2) in clause (iv), by adding ‘‘and’’ after the

2 semicolon at the end; and

3 (3) by adding at the end the following clause:

4 ‘‘(v) in the case of entities providing

5 health services in rural areas, is operating

6 a program for students of rural secondary

7 schools or institutions of higher education

8 under which program the students are pro9 vided with opportunities to visit or work at

10 rural hospitals (or other rural health facili11 ties) for the purpose of gaining experience

12 regarding a career in a field of primary

13 health care;’’.

14 PART 2—SCHOLARSHIP AND LOAN REPAYMENT

15 PROGRAMS

16 SEC. 211. PROVISION REGARDING INCREASE IN FUNDING.

17 Section 338H(b)(1) of the Public Health Service Act

18 (42 U.S.C. 254q(b)(1)) is amended—

19 (1) by striking ‘‘and’’ after ‘‘1991,’’;

20 (2) by striking ‘‘through 2000’’ and inserting

21 ‘‘through 1994,’’; and

22 (3) by inserting before the period the following:

23 ‘‘$150,000,000 for fiscal year 1995, and such sums

24 as may be necessary for each of the fiscal years

25 1996 through 2000’’.
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1 SEC. 212. PRIORITY FOR CERTAIN INDIVIDUALS FROM

2 RURAL BACKGROUNDS.

3 (a) SCHOLARSHIP PROGRAM.—Section 338A(d) of

4 the Public Health Service Act (42 U.S.C. 254l(d)) is

5 amended—

6 (1) in paragraph (2), in the matter preceding

7 subparagraph (A), by inserting ‘‘, subject to para8 graph (3),’’ after ‘‘shall’’; and

9 (2) by adding at the end the following para10 graph:

11 ‘‘(3)(A) Of individuals receiving priority under para12 graph (2)(B), the Secretary shall give further priority to

13 any individual who has resided in a rural area for a signifi14 cant number of years and who has characteristics indicat15 ing the individual will, after the period of obligated service,

16 serve in a rural health professional shortage area.

17 ‘‘(B) Factors considered by the Secretary in deter18 mining priorities for purposes of subparagraph (A) shall

19 include consideration of whether the health professions

20 school attended (or to be attended) by the individual in21 volved is a school whose graduates include a significant

22 number of health professionals who are serving in rural

23 areas.’’.

24 (b) LOAN REPAYMENT PROGRAM.—Section 338B(d)

25 of the Public Health Service Act (42 U.S.C. 254l–1(d))

26 is amended—
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1 (1) in paragraph (2), in the matter preceding

2 subparagraph (A), by inserting ‘‘, subject to para3 graph (3),’’ after ‘‘shall’’; and

4 (2) by adding at the end the following para5 graph:

6 ‘‘(3)(A) Of individuals receiving priority under para7 graph (2)(B), the Secretary shall give further priority to

8 any individual who has resided in a rural area for a signifi9 cant number of years and who has characteristics indicat10 ing the individual will, after the period of obligated service,

11 serve in a rural health professional shortage area.

12 ‘‘(B) Factors considered by the Secretary in deter13 mining priorities for purposes of subparagraph (A) may

14 include consideration of whether the health professions

15 school attended by the individual involved is a school

16 whose graduates include a significant number of health

17 professionals who are serving in rural areas.’’.

18 PART 3—LOW-INTEREST LOANS REGARDING OB19 LIGATED SERVICE IN UNDERSERVED RURAL

20 AREAS

21 SEC. 221. ESTABLISHMENT OF PROGRAM OF LOANS.

22 Subpart III of part D of title III of the Public Health

23 Service Act (42 U.S.C. 254l et seq.) is amended by adding

24 at the end the following section:
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1 ‘‘SEC. 338M. LOAN FUND REGARDING OBLIGATED SERVICE

2 IN UNDERSERVED RURAL AREAS.

3 ‘‘(a) ESTABLISHMENT OF RURAL PRIMARY HEALTH

4 CARE FUND.—There is established in the Treasury of the

5 United States a fund to be known as the Rural Primary

6 Health Care Fund (in this section referred to as the

7 ‘Fund’). The Fund shall consist of such amounts as may

8 be appropriated under subsection (f) (and such amounts

9 as may be appropriated in subsections (d) and (e)(3)).

10 Amounts appropriated to the Fund are available until ex11 pended.

12 ‘‘(b) EXPENDITURES FROM FUND.—Amounts in the

13 Fund are available to the Secretary for the purpose of car14 rying out subsection (c), subject to the extent of amounts

15 made available in advance in appropriations Acts.

16 ‘‘(c) LOW-INTEREST LOANS FOR ATTENDANCE AT

17 HEALTH PROFESSIONS SCHOOLS; OBLIGATED SERVICE

18 REGARDING UNDERSERVED RURAL AREAS.—

19 ‘‘(1) IN GENERAL.—

20 ‘‘(A) Subject to the provisions of this sub21 section, the Secretary may, from amounts avail22 able under subsection (b), make loans to assist

23 individuals with the costs of attending health

24 professions schools if the individuals agree to

25 provide primary health services in an under26 served rural area.
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1 ‘‘(B) For purposes of this subsection, the

2 term ‘underserved rural area’ means a rural

3 area with a shortage of personal health services,

4 except that such term does not include any

5 health professional shortage area.

6 ‘‘(C) The Secretary shall issue criteria for

7 determining whether an area is an underserved

8 rural area.

9 ‘‘(2) CERTAIN REQUIREMENTS.—The Secretary

10 may make a loan under paragraph (1) to an individ11 ual only if the following conditions are met:

12 ‘‘(A) The individual is enrolled (or accept13 ed for enrollment) as a full-time student in a

14 course of study or program leading to a degree

15 in medicine, osteopathic medicine, dentistry, or

16 other health profession, and such course or pro17 gram is offered by an accredited educational in18 stitution (as determined by the Secretary) and

19 is approved by the Secretary.

20 ‘‘(B) The individual is eligible for, or

21 holds, an appointment as a commissioned offi22 cer in the Regular or Reserve Corps of the

23 Service or is eligible for selection for civilian

24 service in the Corps.
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1 ‘‘(C) The individual and the Secretary

2 enter into the contract described in paragraph

3 (3).

4 ‘‘(3) LOAN CONTRACT.—For purposes of para5 graph (2)(C), the contract described in this para6 graph is a written contract containing provisions as

7 follows:

8 ‘‘(A) The Secretary agrees to provide the

9 individual involved with loans under paragraph

10 (1) for a number of academic years (not to ex11 ceed 4 academic years) determined by the indi12 vidual, during which period the individual is

13 pursuing a course of study or program de14 scribed in paragraph (2)(A).

15 ‘‘(B) The Secretary agrees to accept the

16 individual into the Corps (or for equivalent

17 service as otherwise provided in this subpart),

18 subject to the availability of funds for carrying

19 out sections 331 through 335.

20 ‘‘(C) The individual agrees as follows:

21 ‘‘(i) To accept the loan.

22 ‘‘(ii) To maintain enrollment in the

23 course or program involved until the indi24 vidual completes the course or program.
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1 ‘‘(iii) While enrolled in the course or

2 program, to maintain an acceptable level of

3 academic standing (as determined under

4 regulations of the Secretary by the edu5 cational institution offering the course or

6 program).

7 ‘‘(iv) To provide obligated service for

8 purposes of paragraph (5).

9 ‘‘(v) To other provisions of this sub10 section that are applicable to the individ11 ual, including paragraph (8) (relating to

12 the breach of the obligations of the individ13 ual under this subsection).

14 ‘‘(D) A provision specifying the purposes

15 for which the loan will be expended, subject to

16 paragraph (6)(A), and the amount to be ex17 pended for each of the purposes.

18 ‘‘(E) A provision that any financial obliga19 tion of the United States arising out of the con20 tract, and any obligation of the individual under

21 the contract, is contingent upon funds being

22 available under subsection (b) for loans under

23 paragraph (1) and upon funds being available

24 to carry out the purposes of sections 331

25 through 335.
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1 ‘‘(4) AMOUNT OF LOAN; INTEREST RATE.—The

2 amount of a loan under paragraph (1) for an aca3 demic year may not exceed $35,000. The rate of in4 terest on the unpaid principal balance of such a loan

5 may not exceed 4 percent annually, and may not be

6 less than 2 percent annually.

7 ‘‘(5) PERIOD OF OBLIGATED SERVICE.—For

8 purposes of paragraph (3)(C)(iv), the obligated serv9 ice of an individual is as follows:

10 ‘‘(A) The service to be provided is the pro11 vision of primary health services.

12 ‘‘(B) The service is to be provided in an

13 underserved rural area to which the individual

14 is assigned pursuant to paragraph (10).

15 ‘‘(C) The period of service is the greater of

16 the following periods:

17 ‘‘(i) 1 year.

18 ‘‘(ii) 1 year for each 2 academic years

19 for which loans under paragraph (1) are

20 provided to the individual.

21 ‘‘(iii) 1 year for each $35,000 pro22 vided in such loans to the individual.

23 ‘‘(6) EXPENDITURE OF LOAN.—
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1 ‘‘(A) A loan under paragraph (1) to an in2 dividual may be expended only for the following

3 purposes:

4 ‘‘(i) The tuition of the individual for

5 the course or program involved for the aca6 demic year involved.

7 ‘‘(ii) Any other reasonable educational

8 expense, including fees, books, and labora9 tory expenses, incurred by the individual in

10 the academic year.

11 ‘‘(iii) Reasonable living expenses in12 curred in attending the educational institu13 tion involved, not to exceed the amount in

14 effect under section 338A(g)(1)(B) for sti15 pends.

16 ‘‘(B) In the case of an educational institu17 tion offering a course or program for which a

18 loan under paragraph (1) is made, the Sec19 retary may contract with the institution to

20 make payments to the institution of the

21 amounts provided for the purposes specified in

22 clauses (i) and (ii) of subparagraph (A). The

23 payments may be made to the institution with24 out regard to section 3648 of the Revised Stat25 utes (31 U.S.C. 529).
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1 ‘‘(7) REPAYMENT OF LOAN; DEFERMENTS.—

2 The provisions of subparagraphs (B) and (C) of sec3 tion 705(a)(2) apply to loans under paragraph (1) to

4 the same extent and in the same manner as such

5 provisions apply to loans under subpart I of part A

6 of title VII.

7 ‘‘(8) BREACH OF LOAN CONTRACT.—With re8 spect to an individual who has entered into a written

9 contract under paragraph (3) and who breaches the

10 contract, an agreement under paragraph (3)(C)(v) is

11 as follows:

12 ‘‘(A) If, for any reason other than a reason

13 specified in subparagraph (B), the individual

14 fails to provide obligated service under para15 graph (5)—

16 ‘‘(i) the balance due on the loan in17 volved will be immediately recomputed

18 from the date of issuance at an interest

19 rate of 12 percent per year, compounded

20 annually; and

21 ‘‘(ii) the recomputed balance will be

22 paid not later than the expiration of the 3-

23 year period beginning on the date on which

24 the individual breaches the contract.
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1 ‘‘(B) The individual is liable to the United

2 States for the amount which has been paid to

3 or on behalf of the individual under paragraph

4 (1) if the individual—

5 ‘‘(i) fails to maintain an acceptable

6 level of academic standing for purposes of

7 paragraph (3)(C)(iii);

8 ‘‘(ii) is dismissed from the educational

9 institution involved for disciplinary rea10 sons;

11 ‘‘(iii) voluntarily terminates the course

12 or program involved before the completion

13 of the course or program; or

14 ‘‘(iv) fails to accept payment under

15 the loan under paragraph (1), or instructs

16 the educational institution not to accept

17 payment, in whole or in part, of payments

18 under the loan.

19 ‘‘(9) WAIVER OF OBLIGATIONS; LIMITATION RE20 GARDING BANKRUPTCY.—

21 ‘‘(A) With respect to the obligation of an

22 individual under a contract under paragraph

23 (3), the Secretary shall provide for the partial

24 or total waiver or suspension of the obligation

25 whenever compliance by the individual is impos-
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1 sible, or would involve extreme hardship to the

2 individual, and if enforcement of the obligation

3 with respect to the individual would be uncon4 scionable.

5 ‘‘(B) An obligation of an individual under

6 the contract under paragraph (3) to make pay7 ments may be released by a discharge in bank8 ruptcy under title 11, United States Code, only

9 if such discharge is granted after the expiration

10 of the 5-year period beginning on the first date

11 that such payment is required (exclusive of any

12 period in which the obligation to make pay13 ments is suspended), and only if the bankruptcy

14 court finds that nondischarge of the obligation

15 would be unconscionable.

16 ‘‘(10) ASSIGNMENT OF CORPS PERSONNEL PUR17 SUANT TO OBLIGATED SERVICE.—The provisions of

18 section 333 apply to the obligated service of individ19 uals under paragraph (5) with respect to under20 served rural areas to the same extent and in the

21 same manner as such provisions apply to the obli22 gated service of individuals under section 338A with

23 respect to health professional shortage areas.

24 ‘‘(11) PRIORITIES IN MAKING LOANS.—
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1 ‘‘(A) In making loans under paragraph

2 (1), the Secretary shall give priority to any in3 dividual (if otherwise a qualified applicant) who

4 has resided in a rural area for a significant

5 number of years and who has characteristics in6 dicating the individual will, after the period of

7 obligated service under paragraph (5), continue

8 to serve in an underserved rural area.

9 ‘‘(B) Factors considered by the Secretary

10 in determining priorities for purposes of sub11 paragraph (A) shall include consideration of

12 whether the health professions school attended

13 (or to be attended) by the individual involved is

14 a school whose graduates include a significant

15 number of health professionals who serve in

16 rural areas.

17 ‘‘(12) MISCELLANEOUS PROVISIONS.—Individ18 uals who have entered into written contracts with

19 the Secretary under this subsection, while under20 going academic training, shall not be counted

21 against any employment ceiling affecting the De22 partment of Health and Human Services.

23 ‘‘(d) AVAILABILITY OF REPAYMENTS.—Payments of

24 principal and interest by (or on behalf of) recipients of
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1 loans under subsection (c)(1) are hereby appropriated to

2 the Fund.

3 ‘‘(e) INVESTMENT.—

4 ‘‘(1) IN GENERAL.—The Secretary of the

5 Treasury shall invest such amounts of the Fund as

6 such Secretary determines are not required to meet

7 current withdrawals from the Fund. Such invest8 ments may be made only in interest-bearing obliga9 tions of the United States. For such purpose, such

10 obligations may be acquired on original issue at the

11 issue price, or by purchase of outstanding obliga12 tions at the market price.

13 ‘‘(2) SALE OF OBLIGATIONS.—Any obligation

14 acquired by the Fund may be sold by the Secretary

15 of the Treasury at the market price.

16 ‘‘(3) AVAILABILITY OF INCOME.—Any interest

17 derived from obligations acquired by the Fund, and

18 proceeds from any sale or redemption of such obliga19 tions, are hereby appropriated to the Fund.

20 ‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—For the

21 purpose of providing amounts for the Fund, there are au22 thorized to be appropriated $20,000,000 for fiscal year

23 1995, and such sums as may be necessary for each of the

24 fiscal years 1996 and 1997.’’.
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1 Subtitle B—Other Programs

2 Regarding Rural Health Care

3 SEC. 231. STATE OFFICES OF RURAL HEALTH.

4 (a) REQUIREMENT REGARDING RECRUITMENT OF

5 PHYSICIANS.—Section 338J(c) of the Public Health Serv6 ice Act (42 U.S.C. 254r(c)) is amended—

7 (1) in paragraph (2), by striking ‘‘and’’ after

8 the semicolon at the end;

9 (2) in paragraph (3), by striking the period and

10 inserting ‘‘; and’’; and

11 (3) by adding at the end the following para12 graph:

13 ‘‘(4) activities to recruit and retain physicians

14 to serve in rural areas of the State.’’.

15 (b) AUTHORIZATIONS OF APPROPRIATIONS.—

16 (1) IN GENERAL.—Section 338J(j)(1) of the

17 Public Health Service Act (42 U.S.C. 254r(j)(1)) is

18 amended—

19 (A) by striking ‘‘and’’ after ‘‘1992,’’; and

20 (B) by inserting before the period the fol21 lowing: ‘‘, and $1,500,000 for each of the fiscal

22 years 1995 through 1998’’.

23 (2) CONFORMING AMENDMENT.—Section

24 338J(k) of the Public Health Service Act (42 U.S.C.
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1 254r(k)) is amended by striking ‘‘$10,000,000’’ and

2 inserting ‘‘$16,000,000’’.

3 SEC. 232. AREA HEALTH EDUCATION CENTER PROGRAMS;

4 AUTHORIZATION OF APPROPRIATIONS.

5 Section 746(i)(1) of the Public Health Service Act

6 (42 U.S.C. 293j(i)(1) is amended—

7 (1) by striking ‘‘is authorized’’ and inserting

8 ‘‘are authorized’’;

9 (2) by striking ‘‘through 1995’’ and inserting

10 ‘‘and 1994’’; and

11 (3) by inserting before the period the following:

12 ‘‘, and $50,000,000 for each of the fiscal years 1995

13 through 1997’’.

14 TITLE III—STATE HEALTH SERV15 ICE CORPS DEMONSTRATION

16 PROJECTS

17 SEC. 301. PURPOSE.

18 It is the purpose of this title—

19 (1) to promote recruitment and training of

20 physicians and other primary care providers from

21 among the poor and from disadvantaged

22 populations;

23 (2) to place physicians from health professional

24 shortage areas into similar areas in order to encour-
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1 age retention of physicians in health professional

2 shortage areas; and

3 (3) to provide flexibility to States in filling posi4 tions in health professional shortage areas.

5 SEC. 302. STATE HEALTH SERVICE CORPS DEMONSTRA6 TION PROJECTS.

7 The Public Health Service Act is amended by insert8 ing after section 338L (42 U.S.C. 254t) the following new

9 sections:

10 ‘‘SEC. 338M. STATE HEALTH SERVICE CORPS DEMONSTRA11 TION PROJECTS.

12 ‘‘(a) DEFINITIONS.—For purposes of this section:

13 ‘‘(1) AREA HEALTH EDUCATION CENTER.—The

14 term ‘area health education center’ means—

15 ‘‘(A) a cooperative program of one or more

16 medical schools (or the parent institutions of

17 such schools) and one or more nonprofit private

18 or public area health education centers; or

19 ‘‘(B) a regional or statewide network of

20 the cooperative programs described in subpara21 graph (A).

22 ‘‘(2) HEALTH PROFESSIONAL SHORTAGE

23 AREA.—The term ‘health professional shortage area’

24 has the meaning provided in section 332(a)(1).
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1 ‘‘(3) MEDICAL SCHOOL.—The term ‘medical

2 school’ means a school conferring the degree of Doc3 tor of Medicine or Doctor of Osteopathy.

4 ‘‘(4) NONPHYSICIAN PROVIDER.—The term

5 ‘nonphysician provider’ means an occupational ther6 apist, physical therapist, nurse, nurse midwife, nurse

7 practitioner, social worker, or optometrist.

8 ‘‘(5) NURSE.—The term ‘nurse’ means a reg9 istered nurse, or an individual with a baccalaureate

10 or master’s degree in nursing.

11 ‘‘(6) PARENT INSTITUTION.—The term ‘parent

12 institution’ means any health sciences university

13 housing a medical school and one or more other

14 health professions schools.

15 ‘‘(7) PHYSICIAN PROVIDER.—The term ‘physi16 cian provider’ means—

17 ‘‘(A) a physician specializing in general

18 practice, family medicine, general internal medi19 cine, pediatrics, obstetrics and gynecology, gen20 eral surgery, psychiatry, preventive medicine

21 and public health, or physiatry; or

22 ‘‘(B) a dentist.

23 ‘‘(8) PROJECT.—The term ‘Project’ means a

24 State Health Service Corps Demonstration Project

25 established under subsection (b).
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1 ‘‘(9) SERVICE AREA.—The term ‘service area’

2 means an area designated in subsection (d)(2)(A).

3 ‘‘(b) GRANTS.—The Secretary shall establish a State

4 Health Service Corps Demonstration Project under which

5 the Secretary shall make grants to up to 10 States to pay

6 for the Federal share of the costs of conducting Projects

7 for the training and employment of eligible participants

8 as physician and nonphysician providers serving health

9 professional shortage areas.

10 ‘‘(c) STATE PARTICIPATION.—

11 ‘‘(1) REQUIREMENTS.—In order for a State to

12 be eligible to receive a grant under this section, the

13 State shall—

14 ‘‘(A) enter into an agreement with an area

15 health education center to administer the

16 Project in accordance with subsection (d);

17 ‘‘(B) provide for evaluation of the Project

18 in accordance with subsection (e);

19 ‘‘(C) establish a State Health Service

20 Corps Scholarship Program in accordance with

21 section 338N; and

22 ‘‘(D) meet such other requirements as the

23 Secretary may establish for the proper and effi24 cient implementation of the Project.
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1 ‘‘(2) GRANT AWARDS.—In allocating grants

2 under subsection (b), the Secretary shall give prior3 ity to States that have demonstrated a commitment

4 to developing and funding area health education cen5 ter programs.

6 ‘‘(3) APPLICATION.—To be eligible to receive a

7 grant under this section, the State shall submit an

8 application at such time, in such manner and con9 taining such agreements, assurances, and informa10 tion as the Secretary determines to be necessary to

11 carry out this section. At a minimum, the applica12 tion shall contain—

13 ‘‘(A) information specifying the actions the

14 State will take against individuals, and the

15 methods the State will use to recover all funds

16 paid under section 338N(i) to individuals, who

17 breach contracts described in section 338N(g);

18 and

19 ‘‘(B) assurances that the State will reim20 burse the Secretary for all funds recovered from

21 individuals who breach contracts described in

22 section 338N(g).

23 ‘‘(4) DURATION.—A Project under this section

24 shall be for a maximum duration of 8 years, plus up

25 to 6 months for final evaluation and reporting.
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1 ‘‘(d) STATE AGREEMENTS WITH AREA HEALTH

2 EDUCATION CENTERS.—

3 ‘‘(1) IN GENERAL.—To be eligible for a grant

4 under this section, a State shall enter into an agree5 ment with an area health education center for the

6 planning, development, and operation of a program

7 to train and employ eligible participants as physician

8 and nonphysician providers.

9 ‘‘(2) REQUIREMENTS.—Under an agreement

10 entered into under paragraph (1), an area health

11 education center shall agree to—

12 ‘‘(A) designate a health professional short13 age area or areas as the service area for the

14 area health education center;

15 ‘‘(B) provide for or conduct training in

16 health education services in the service area;

17 ‘‘(C) assess the health professional needs

18 of the service area and assist in the planning

19 and development of training programs to meet

20 the needs;

21 ‘‘(D) provide for or conduct a rotating in22 ternship or residency training program in the

23 service area;
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1 ‘‘(E) provide opportunities for continuing

2 education to physician and nonphysician provid3 ers practicing within the service area;

4 ‘‘(F) conduct interdisciplinary training and

5 practice involving physician and nonphysician

6 providers in the service area;

7 ‘‘(G) arrange and support educational op8 portunities for students studying to become

9 physician or nonphysician providers at health

10 facilities, ambulatory care centers, and health

11 agencies throughout the service area;

12 ‘‘(H) provide for the active participation in

13 the Project by individuals who are associated

14 with the administration of the sponsoring

15 health professions and each of the departments

16 or specialties of physician or nonphysician pro17 viders (if any) which are offered under the

18 Project; and

19 ‘‘(I) have an advisory board of which at

20 least 75 percent of the members shall be indi21 viduals, including both health service providers

22 and consumers, from the service area.

23 ‘‘(e) EVALUATION.—Not later than March 30, 1998,

24 and March 30, 2002, each State receiving a grant under
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1 this section shall, through grants to or contracts with pub2 lic and private entities, provide for—

3 ‘‘(1) an evaluation of Projects—

4 ‘‘(A) which were carried out pursuant to

5 this section during any fiscal year preceding the

6 fiscal year in which such date occurs, and

7 ‘‘(B) for which no prior evaluation under

8 this subsection was made, and

9 ‘‘(2) a review of the area health education cen10 ter providing services under the Projects. The eval11 uation shall include an evaluation of the effective12 ness of the Projects in increasing the recruitment

13 and retention of physician and nonphysician provid14 ers in health professional shortage areas.

15 ‘‘(f) FEDERAL SHARE.—The Federal share of the

16 costs of any program established under this section with

17 respect to any State shall be the percentage of such costs

18 equal to the Federal medical assistance percentage appli19 cable to such State under section 1905(b) of the Social

20 Security Act. The State may include as a part or all of

21 the non-Federal share of grants—

22 ‘‘(1) any State funds supporting area health

23 education centers, and

24 ‘‘(2) the value of in-kind contributions made by

25 the State, including tuition remission and other ben-
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1 efits for students participating in the State Health

2 Service Corps Scholarship Program established

3 under section 338N.

4 ‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—

5 ‘‘(1) IN GENERAL.—There are authorized to be

6 appropriated for each of the 1994 through 2001 fis7 cal years to carry out the purposes of this section an

8 amount equal to the product of—

9 ‘‘(A) $250,000, multiplied by

10 ‘‘(B) the number of States receiving grants

11 under this section for such fiscal year.

12 Any amount appropriated under this section shall be

13 available without fiscal year limitation.

14 ‘‘(2) COST RECOVERY.—No more than 10 per15 cent of the funds spent under paragraph (1) may be

16 used for purposes of recovering funds or taking

17 other action against individuals who breach the pro18 visions of a contract entered into under section

19 338N(g).

20 ‘‘SEC. 338N. STATE HEALTH SERVICE CORPS SCHOLARSHIP

21 PROGRAMS.

22 ‘‘(a) DEFINITIONS.—For purposes of this section:

23 ‘‘(1) AREA HEALTH EDUCATION CENTER.—The

24 term ‘area health education center’ means—
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1 ‘‘(A) a cooperative program of one or more

2 medical schools (or the parent institutions (as

3 defined in section 338M(a)(6)) of such schools)

4 and one or more nonprofit private or public

5 area health education centers; or

6 ‘‘(B) a regional or statewide network of

7 the cooperative programs described in subpara8 graph (A).

9 ‘‘(2) GRADUATE EDUCATION.—The term ‘grad10 uate education’ means a course of study at a medi11 cal school or other health professions school leading

12 to a degree in a field practiced by a physician or

13 nonphysician provider.

14 ‘‘(3) HEALTH PROFESSIONAL SHORTAGE

15 AREA.—The term ‘health professional shortage area’

16 has the meaning provided in section 332(a)(1).

17 ‘‘(4) MEDICAL SCHOOL.—The term ‘medical

18 school’ means a school conferring the degree of Doc19 tor of Medicine or Doctor of Osteopathy.

20 ‘‘(5) NONPHYSICIAN PROVIDER.—The term

21 ‘nonphysician provider’ means an occupational ther22 apist, physical therapist, nurse, nurse midwife, nurse

23 practitioner, social worker, or optometrist.
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1 ‘‘(6) NURSE.—The term ‘nurse’ means a reg2 istered nurse, or an individual with a baccalaureate

3 or master’s degree in nursing.

4 ‘‘(7) PHYSICIAN PROVIDER.—The term ‘physi5 cian provider’ means—

6 ‘‘(A) a physician specializing in family

7 medicine, general internal medicine, pediatrics,

8 obstetrics and gynecology, general surgery, psy9 chiatry, preventive medicine, or physiatry; or

10 ‘‘(B) a dentist.

11 ‘‘(8) PROGRAM.—The term ‘Program’ means a

12 State Health Service Corps Scholarship Program es13 tablished under subsection (b).

14 ‘‘(9) SERVICE AREA.—The term ‘service area’

15 means an area designated in section 338M(d)(2)(A).

16 ‘‘(10) STATE OFFICIAL.—The term ‘State offi17 cial’ means an individual designated by the head of

18 the agency designated in subsection (b)(2) to carry

19 out the Program in the State.

20 ‘‘(11) UNDERGRADUATE EDUCATION.—The

21 term ‘undergraduate education’ means a course of

22 study at a health sciences university or a 4-year col23 lege that affords an appropriate basis for profes24 sional training or graduate education to become a

25 physician or nonphysician provider.
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1 ‘‘(b) ESTABLISHMENT.—

2 ‘‘(1) IN GENERAL.—Each State carrying out a

3 State Health Services Corps Demonstration Project

4 established under section 338M shall establish a

5 State Health Service Corps Scholarship Program, in

6 accordance with this section, to ensure an adequate

7 supply of trained physician or nonphysician provid8 ers in health professional shortage areas in the

9 State.

10 ‘‘(2) STATE AGENCY.—A State participating in

11 the Program shall designate a State agency to ad12 minister or be responsible for the administration of

13 the Program within the State.

14 ‘‘(c) ELIGIBILITY.—To be eligible to participate in

15 the Program, an individual must—

16 ‘‘(1)(A) be accepted for enrollment, or be en17 rolled, as a full-time student in a health professions

18 program in a health sciences university or a 4-year

19 college; or

20 ‘‘(B) be accepted to participate in, or be partici21 pating in, a professional internship or residency as

22 preparation to become a physician or nonphysician

23 provider;

24 ‘‘(2) reside within a health professional short25 age area;
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1 ‘‘(3) submit an application to participate in the

2 Program; and

3 ‘‘(4) sign and submit to the State, at the time

4 of submission of the application, a written contract

5 containing the information specified in subsection

6 (g) to accept payment of a scholarship and, if appro7 priate, of loans, and to serve in the service area.

8 ‘‘(d) SELECTION.—Individuals described in sub9 section (c)(1)(B)—

10 ‘‘(1) shall comprise not more than 50 percent

11 of all individuals selected to participate in the Pro12 gram during fiscal year 1994;

13 ‘‘(2) shall comprise not more than 40 percent

14 of all individuals selected to participate in the Pro15 gram during fiscal year 1995;

16 ‘‘(3) shall comprise not more than 30 percent

17 of all individuals selected to participate in the Pro18 gram during fiscal year 1996;

19 ‘‘(4) shall comprise not more than 20 percent

20 of all individuals selected to participate in the Pro21 gram during fiscal year 1997;

22 ‘‘(5) shall comprise not more than 10 percent

23 of all individuals selected to participate in the Pro24 gram during fiscal year 1998; and
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1 ‘‘(6) shall not be selected to participate in the

2 Program during fiscal years 1999 through 2001.

3 ‘‘(e) INFORMATION ON SERVICE OBLIGATION.—In

4 disseminating application forms and contract forms to in5 dividuals desiring to participate in the Program, the State

6 official shall include with the forms—

7 ‘‘(1) a fair summary of the rights and liabilities

8 of an individual whose application is approved (and

9 whose contract is accepted) by the State official, in10 cluding in the summary a clear explanation of the

11 remedies to which the State is entitled in the case

12 of breach of the contract by the individual; and

13 ‘‘(2) such information as may be necessary for

14 the individual to understand the prospective partici15 pation of the individual in the Program and the

16 service obligation of the individual.

17 ‘‘(f) APPLICATION FORMS.—The application form,

18 contract form, and all other information furnished by the

19 Secretary under this section shall be written in a manner

20 calculated to be understood by the average individual ap21 plying to participate in the Program. The State official

22 shall make the application forms, contract forms, and

23 other information available to individuals desiring to par24 ticipate in the Program on a date sufficiently early to en-
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1 sure that the individuals have adequate time to carefully

2 review and evaluate the forms and information.

3 ‘‘(g) CONTRACT.—The written contract between the

4 State official and an individual shall contain—

5 ‘‘(1) a statement that the State official

6 agrees—

7 ‘‘(A) to provide the individual with a schol8 arship for a period of up to 8 years, during

9 which period the individual is—

10 ‘‘(i) pursuing an undergraduate edu11 cation described in subsection (a)(11);

12 ‘‘(ii) pursuing graduate education; or

13 ‘‘(iii) participating in an internship or

14 residency program as preparation to be15 come a physician or nonphysician provider;

16 and

17 ‘‘(B) to place the individual into obligated

18 service, taking into account the specialization of

19 the individual and the needs of health profes20 sional shortage areas for service, in—

21 ‘‘(i) a rural health professional short22 age area, if the individual resided in a

23 rural health professional shortage area at

24 the time of acceptance into the Program;

25 or
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1 ‘‘(ii) an urban health professional

2 shortage area, if the individual resided in

3 an urban health professional shortage area

4 at the time of acceptance into the

5 Program;

6 ‘‘(2) a statement that the individual agrees—

7 ‘‘(A) to accept provision of the scholarship,

8 and if appropriate, loans, to the individual;

9 ‘‘(B) to maintain enrollment in a program

10 of undergraduate or graduate education or par11 ticipation in an internship or residency de12 scribed in subsection (c)(1)(B) until the individ13 ual completes the program, internship, or resi14 dency;

15 ‘‘(C) while enrolled in a program of under16 graduate or graduate education, to maintain an

17 acceptable level of academic standing (as deter18 mined under regulations of the State by the

19 educational institution offering the course of

20 study); and

21 ‘‘(D) to serve in the service area or on the

22 clinical staff of the area health education center

23 or the medical school for a time period equal to

24 the shorter of—
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1 ‘‘(i)(I) 1 year for each year in which

2 the individual received a scholarship under

3 the Program; and

4 ‘‘(II) 1 month for each $1,000 in

5 loans that the individual received under the

6 Program; or

7 ‘‘(ii) 6 years;

8 ‘‘(3) a statement of the damages to which the

9 State is entitled for breach of contract by the indi10 vidual; and

11 ‘‘(4) other statements of the rights and liabil12 ities of the State and of the individual, not inconsist13 ent with this section.

14 ‘‘(h) ACCEPTANCE.—

15 ‘‘(1) APPROVAL.—An individual shall become a

16 participant in the Program only on approval by the

17 State official of the application submitted by the in18 dividual under subsection (c)(3) and acceptance of

19 the contract submitted by the individual under sub20 section (c)(4).

21 ‘‘(2) NOTIFICATION.—The State official shall

22 provide written notice to an individual of participa23 tion in the Program promptly on acceptance of the

24 individual into the Program.

25 ‘‘(i) SCHOLARSHIP AND LOANS.—
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1 ‘‘(1) PAYMENT.—In providing a loan to an indi2 vidual under subsection (g)(1)(A) or a scholarship to

3 an individual under subsection (g)(1)(B), the State

4 official shall pay—

5 ‘‘(A) to an individual undertaking a pro6 gram of undergraduate or graduate education,

7 or on behalf of the individual in accordance

8 with paragraph (2)—

9 ‘‘(i) the amount of the tuition of the

10 individual in the school year;

11 ‘‘(ii) the amount of all other reason12 able educational expenses, including fees,

13 books, and laboratory expenses, incurred

14 by the individual in the school year; and

15 ‘‘(iii) a stipend; and

16 ‘‘(B) to an individual described in sub17 section (c)(1)(B)—

18 ‘‘(i) the amount of expenses for medi19 cal equipment necessary to the practice of

20 a physician or nonphysician provider;

21 ‘‘(ii) the amount of expenses for travel

22 to and from clinical sites; and

23 ‘‘(iii) a stipend.

24 ‘‘(2) PAYMENT TO AN EDUCATIONAL INSTITU25 TION.—The State official may contract with an edu-
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1 cational institution, in which a participant in the

2 Program is enrolled, for the payment to the edu3 cational institution of the amounts of tuition and

4 other reasonable educational expenses described in

5 clauses (i) and (ii) of paragraph (1)(A).

6 ‘‘(j) REPORT.—The State official shall report to the

7 Secretary on January 1 of each year—

8 ‘‘(1) the number, and type of health profession

9 training, of students receiving scholarships under

10 the Program in the preceding year;

11 ‘‘(2) the educational institutions at which the

12 students are receiving their training;

13 ‘‘(3) the number of applications filed under this

14 section in the school year in the preceding year and

15 in prior school years; and

16 ‘‘(4) the amount of tuition paid in the aggre17 gate and at each educational institution for the

18 school year in the preceding year and in prior school

19 years.’’.
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1 TITLE IV—TREATMENT OF STU2 DENT LOANS FOR HEALTH

3 PROFESSIONALS

4 SEC. 401. LOANS UNDER HIGHER EDUCATION ACT OF 1965;

5 DEFERMENTS REGARDING POSTGRADUATE

6 PRIMARY-CARE PROGRAMS IN UNDER7 SERVED RURAL AREAS.

8 (a) STAFFORD LOANS.—

9 (1) GSL LOANS.—Section 428(b)(1)(M) of the

10 Higher Education Act of 1965 (20 U.S.C.

11 1078(b)(1)(M)) is amended—

12 (A) in clause (ii), by striking ‘‘or’’ at the

13 end;

14 (B) in clause (iii), by adding ‘‘or’’ after the

15 semicolon at the end; and

16 (C) by adding at the end the following

17 clause:

18 ‘‘(iv) during which the borrower is

19 serving in an internship or residency pro20 gram, in a health facility in a rural area,

21 in preparation for practice in an area of

22 primary care (including internal medicine,

23 pediatrics, obstetrics/gynecology, family

24 medicine, and osteopathy);’’.
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•HR 4688 IH

1 (2) FISL LOANS.—Section 427(a)(2)(C) of the

2 Higher Education Act of 1965 (20 U.S.C.

3 1077(a)(2)(C)) is amended—

4 (A) in clause (ii), by striking ‘‘or’’ at the

5 end;

6 (B) in clause (iii), by adding ‘‘or’’ after the

7 semicolon at the end; and

8 (C) by inserting after clause (iii) the fol9 lowing clause:

10 ‘‘(iv) during which the borrower is

11 serving in an internship or residency pro12 gram, in a health facility in a rural area,

13 in preparation for practice in an area of

14 primary care (including internal medicine,

15 pediatrics, obstetrics/gynecology, family

16 medicine, and osteopathy);’’.

17 (b) PERKINS LOANS.—Section 464(c)(2)(A) of the

18 Higher Education Act of 1965 (20 U.S.C.

19 1087dd(c)(2)(A)) is amended—

20 (1) in clause (iii), by striking ‘‘or’’ at the end;

21 (2) in clause (iv), by adding ‘‘or’’ after the

22 semicolon at the end; and

23 (3) by inserting after clause (iv) the following

24 clause:
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•HR 4688 IH

1 ‘‘(v) during which the borrower is

2 serving in an internship or residency pro3 gram, in a health facility in a rural area,

4 in preparation for practice in an area of

5 primary care (including internal medicine,

6 pediatrics, obstetrics/gynecology, family

7 medicine, and osteopathy);’’.

8 (c) EFFECTIVE DATE.—The amendments made by

9 this section shall apply on and after the date of the enact10 ment of this Act with respect to loans made under the

11 Higher Education Act of 1965 before, on, or after such

12 date.

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