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[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 241 Introduced in Senate (IS)]

103d CONGRESS
  1st Session
                                 S. 241

To provide incentives to health care providers serving rural areas, to 
  provide grants to county health departments providing preventative 
 health services within rural areas, to establish State health service 
         corps demonstration projects, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

             January 27 (legislative day, January 5), 1993

Mr. Pryor (for himself, Mr. Packwood, Mr. Boren, Mr. Cohen, Mr. Glenn, 
 Mr. Bryan, Mr. Conrad, and Mr. Leahy) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
To provide incentives to health care providers serving rural areas, to 
  provide grants to county health departments providing preventative 
 health services within rural areas, to establish State health service 
         corps demonstration projects, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Rural Primary Care Act of 1993''.

                        TITLE I--TAX PROVISIONS

SEC. 101. NONREFUNDABLE CREDIT FOR CERTAIN PRIMARY HEALTH SERVICES 
              PROVIDERS.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to nonrefundable 
personal credits) is amended by inserting after section 25 the 
following new section:

``SEC. 25A. PRIMARY HEALTH SERVICES PROVIDERS.

    ``(a) Allowance of Credit.--In the case of a qualified primary 
health services provider, there is allowed as a credit against the tax 
imposed by this chapter for any taxable year in a mandatory service 
period an amount equal to the product of--
            ``(1) the lesser of--
                    ``(A) the number of months of such period occurring 
                in such taxable year, or
                    ``(B) 36 months, reduced by the number of months 
                taken into account under this paragraph with respect to 
                such provider for all preceding taxable years (whether 
                or not in the same mandatory service period), 
                multiplied by
            ``(2) $1,000 ($500 in the case of a qualified health 
        services provider who is a physician assistant or a nurse 
        practitioner).
    ``(b) Qualified Primary Health Services Provider.--For purposes of 
this section, the term `qualified primary health services provider' 
means any physician, physician assistant, or nurse practitioner who for 
any month during a mandatory service period is certified by the Bureau 
to be a primary health services provider who--
            ``(1) is providing primary health services--
                    ``(A) full time, and
                    ``(B) to individuals at least 80 percent of whom 
                reside in a rural health professional shortage area,
            ``(2) is not receiving during such year a scholarship under 
        the National Health Service Corps Scholarship Program or a loan 
        repayment under the National Health Service Corps Loan 
        Repayment Program,
            ``(3) is not fulfilling service obligations under such 
        Programs, and
            ``(4) has not defaulted on such obligations.
    ``(c) Mandatory Service Period.--For purposes of this section, the 
term `mandatory service period' means the period of 60 consecutive 
calendar months beginning with the first month the taxpayer is a 
qualified primary health services provider.
    ``(d) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Bureau.--The term `Bureau' means the Bureau of Health 
        Care Delivery and Assistance, Health Resources and Services 
        Administration of the United States Public Health Service.
            ``(2) Physician.--The term `physician' has the meaning 
        given to such term by section 1861(r) of the Social Security 
        Act.
            ``(3) Physician assistant; nurse practitioner.--The terms 
        `physician assistant' and `nurse practitioner' have the 
        meanings given to such terms by section 1861(aa)(5) of the 
        Social Security Act.
            ``(4) Primary health services provider.--The term `primary 
        health services provider' means a provider of primary health 
        services (as defined in section 330(b)(1) of the Public Health 
        Service Act).
            ``(5) Rural health professional shortage area.--The term 
        `rural health professional shortage area' means--
                    ``(A) a class 1 or class 2 health professional 
                shortage area (as defined in section 332(a)(1)(A) of 
                the Public Health Service Act) in a rural area (as 
                determined under section 1886(d)(2)(D) of the Social 
                Security Act), or
                    ``(B) an area which is determined by the Secretary 
                of Health and Human Services as equivalent to an area 
                described in subparagraph (A) and which is designated 
                by the Bureau of the Census as not urbanized.
    ``(e) Recapture of Credit.--
            ``(1) In general.--If, during any taxable year, there is a 
        recapture event, then the tax of the taxpayer under this 
        chapter for such taxable year shall be increased by an amount 
        equal to the product of--
                    ``(A) the applicable percentage, and
                    ``(B) the aggregate unrecaptured credits allowed to 
                such taxpayer under this section for all prior taxable 
                years.
            ``(2) Applicable recapture percentage.--
                    ``(A) In general.--For purposes of this subsection, 
                the applicable recapture percentage shall be determined 
                from the following table:

                    ``If the recapture
                                                  The applicable recap-
                      event 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.    
                    ``(B) Timing.--For purposes of subparagraph (A), 
                month 1 shall begin on the first day of the mandatory 
                service period.
            ``(3) Recapture event defined.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `recapture event' means the failure of the 
                taxpayer to be a qualified primary health services 
                provider for any month during any mandatory service 
                period.
                    ``(B) Cessation of designation.--The cessation of 
                the designation of any area as a rural health 
                professional shortage area after the beginning of the 
                mandatory service period for any taxpayer shall not 
                constitute a recapture event.
                    ``(C) Secretarial waiver.--The Secretary may waive 
                any recapture event caused by extraordinary 
                circumstances.
            ``(4) No credits against tax.--Any increase in tax under 
        this subsection shall not be treated as a tax imposed by this 
        chapter for purposes of determining the amount of any credit 
        under subpart A, B, or D of this part.''.
    (b) Clerical Amendment.--The table of sections for subpart A of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after the item relating to section 25 the 
following new item:

                              ``Sec. 25A. Primary health services 
                                        providers.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1993.

SEC. 102. NATIONAL HEALTH SERVICE CORPS LOAN REPAYMENTS EXCLUDED FROM 
              GROSS INCOME.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to items specifically excluded 
from gross income) is amended by redesignating section 137 as section 
138 and by inserting after section 136 the following new section:

``SEC. 137. NATIONAL HEALTH SERVICE CORPS LOAN REPAYMENTS.

    ``(a) General Rule.--Gross income shall not include any qualified 
loan repayment.
    ``(b) Qualified Loan Repayment.--For purposes of this section, the 
term `qualified loan repayment' means any payment made on behalf of the 
taxpayer by the National Health Service Corps Loan Repayment Program 
under section 338B(g) of the Public Health Service Act.''.
    (b) Clerical Amendment.--The table of sections for part III of 
subchapter B of chapter 1 of the Internal Revenue Code of 1986 is 
amended by striking the item relating to section 137 and inserting the 
following:

                              ``Sec. 137. National Health Service Corps 
                                        loan repayments.
                              ``Sec. 138. Cross references to other 
                                        Acts.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to payments made under section 338B(g) of the Public Health 
Service Act after the date of the enactment of this Act.

SEC. 103. EXPENSING OF MEDICAL EQUIPMENT.

    (a) In General.--Section 179 of the Internal Revenue Code of 1986 
(relating to election to expense certain depreciable business assets) 
is amended--
            (1) by striking paragraph (1) of subsection (b) and 
        inserting the following:
            ``(1) Dollar limitation.--
                    ``(A) General rule.--The aggregate cost which may 
                be taken into account under subsection (a) for any 
                taxable year shall not exceed $10,000.
                    ``(B) Rural health care property.--In the case of 
                rural health care property, the aggregate cost which 
                may be taken into account under subsection (a) for any 
                taxable year shall not exceed $25,000, reduced by the 
                amount otherwise taken into account under subsection 
                (a) for such year.''; and
            (2) by adding at the end of subsection (d) the following 
        new paragraph:
            ``(11) Rural health care property.--For purposes of this 
        section, the term `rural health care property' means section 
        179 property used by a physician (as defined in section 1861(r) 
        of the Social Security Act) in the active conduct of such 
        physician's full-time trade or business of providing primary 
        health services (as defined in section 330(b)(1) of the Public 
        Health Service Act) in a rural health professional shortage 
        area (as defined in section 25A(d)(5)).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 1993, in taxable 
years ending after such date.

SEC. 104. STUDY OF EXPANSION OF CREDIT TO CERTAIN URBAN AREAS.

    (a) Study.--The Secretary of Health and Human Services or the 
Secretary's delegate shall determine the present number of, and future 
need for, physician and nonphysician primary care providers in 
medically underserved urban areas. Such determination shall form the 
basis for a study of the feasibility (including cost estimates) of 
extending the tax credit provided by the amendments made by section 101 
of this title to such providers.
    (b) Reports.--An interim report of the study described in paragraph 
(1) shall be submitted by the Secretary of Health and Human Services to 
the Congress 1 year after the date of the enactment of this Act. A 
final report of such study shall be submitted to the Congress within 2 
years of such date of enactment.

               TITLE II--PUBLIC HEALTH SERVICE PROVISIONS

SEC. 201. PREVENTATIVE HEALTH SERVICES.

    Part A of title XIX of the Public Health Service Act (42 U.S.C. 
300w et seq.) is amended--
            (1) in section 1901, by adding at the end thereof the 
        following new subsection:
    ``(c) Of the amounts appropriated for each fiscal year under 
subsection (a), the Secretary shall make available not less than 
$5,000,000 in each such fiscal year to carry out section 1910A.''; and
            (2) by adding at the end thereof the following new section:

``SEC. 1910A. PREVENTATIVE GRANTS FOR COUNTY HEALTH DEPARTMENTS.

    ``(a) In General.--From amounts made available under section 
1901(c), the Secretary shall make grants to county health departments 
to enable such departments to provide preventative health services in 
areas within the county which the Bureau of the Census determines to be 
not urbanized.
    ``(b) Application.--To be eligible to receive a grant under 
subsection (a), a county health department shall prepare and submit, to 
the Secretary, an application at such time, in such form, and 
containing such information as the Secretary shall require.
    ``(c) Use of Funds.--A county health department shall use amounts 
provided through a grant received under this section to--
            ``(1) provide immunization services to control the spread 
        of infectious diseases;
            ``(2) improve maternal and infant health;
            ``(3) reduce adolescent pregnancy and improve reproductive 
        health; and
            ``(4) provide such other services as the Secretary 
        determines appropriate.
    ``(d) Definition.--Not later than 30 days after the date of 
enactment of this section, the Secretary shall promulgate regulations 
that define `county health department' for purposes of this section.''.

      TITLE III--STATE HEALTH SERVICE CORPS DEMONSTRATION PROJECTS

SEC. 301. SHORT TITLE.

    This title may be cited as the ``State Health Service Corps 
Demonstration Act''.

SEC. 302. PURPOSE.

    It is the purpose of this title--
            (1) to promote recruitment and training of physicians and 
        other primary care providers from among the poor and from 
        disadvantaged populations;
            (2) to place physicians from health professional shortage 
        areas into similar areas in order to encourage retention of 
        physicians in health professional shortage areas; and
            (3) to provide flexibility to States in filling positions 
        in health professional shortage areas.

SEC. 303. STATE HEALTH SERVICE CORPS DEMONSTRATION PROJECTS.

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

``SEC. 338M. STATE HEALTH SERVICE CORPS DEMONSTRATION PROJECTS.

    ``(a) Definitions.--For purposes of this section:
            ``(1) Area health education center.--The term `area health 
        education center' means--
                    ``(A) a cooperative program of one or more medical 
                schools (or the parent institutions of such schools) 
                and one or more nonprofit private or public area health 
                education centers; or
                    ``(B) a regional or statewide network of the 
                cooperative programs described in subparagraph (A).
            ``(2) Health professional shortage area.--The term `health 
        professional shortage area' has the meaning provided in section 
        332(a)(1).
            ``(3) Medical school.--The term `medical school' means a 
        school conferring the degree of Doctor of Medicine or Doctor of 
        Osteopathy.
            ``(4) Nonphysician provider.--The term `nonphysician 
        provider' means an occupational therapist, physical therapist, 
        nurse, nurse midwife, nurse practitioner, social worker, or 
        optometrist.
            ``(5) Nurse.--The term `nurse' means a registered nurse, or 
        an individual with a baccalaureate or master's degree in 
        nursing.
            ``(6) Parent institution.--The term `parent institution' 
        means any health sciences university housing a medical school 
        and one or more other health professions schools.
            ``(7) Physician provider.--The term `physician provider' 
        means--
                    ``(A) a physician specializing in general practice, 
                family medicine, general internal medicine, pediatrics, 
                obstetrics and gynecology, general surgery, psychiatry, 
                preventive medicine and public health, or physiatry; or
                    ``(B) a dentist.
            ``(8) Project.--The term `Project' means a State Health 
        Service Corps Demonstration Project established under 
        subsection (b).
            ``(9) Service area.--The term `service area' means an area 
        designated in subsection (d)(2)(A).
    ``(b) Grants.--The Secretary shall establish a State Health Service 
Corps Demonstration Project under which the Secretary shall make grants 
to up to 10 States to pay for the Federal share of the costs of 
conducting Projects for the training and employment of eligible 
participants as physician and nonphysician providers serving health 
professional shortage areas.
    ``(c) State Participation.--
            ``(1) Requirements.--In order for a State to be eligible to 
        receive a grant under this section, the State shall--
                    ``(A) enter into an agreement with an area health 
                education center to administer the Project in 
                accordance with subsection (d);
                    ``(B) provide for evaluation of the Project in 
                accordance with subsection (e);
                    ``(C) establish a State Health Service Corps 
                Scholarship Program in accordance with section 338N; 
                and
                    ``(D) meet such other requirements as the Secretary 
                may establish for the proper and efficient 
                implementation of the Project.
            ``(2) Grant awards.--In allocating grants under subsection 
        (b), the Secretary shall give priority to States that have 
        demonstrated a commitment to developing and funding area health 
        education center programs.
            ``(3) Application.--To be eligible to receive a grant under 
        this section, the State shall submit an application at such 
        time, in such manner and containing such agreements, 
        assurances, and information as the Secretary determines to be 
        necessary to carry out this section. At a minimum, the 
        application shall contain--
                    ``(A) information specifying the actions the State 
                will take against individuals, and the methods the 
                State will use to recover all funds paid under section 
                338N(i) to individuals, who breach contracts described 
                in section 338N(g); and
                    ``(B) assurances that the State will reimburse the 
                Secretary for all funds recovered from individuals who 
                breach contracts described in section 338N(g).
            ``(4) Duration.--A Project under this section shall be for 
        a maximum duration of 8 years, plus up to 6 months for final 
        evaluation and reporting.
    ``(d) State Agreements With Area Health Education Centers.--
            ``(1) In general.--To be eligible for a grant under this 
        section, a State shall enter into an agreement with an area 
        health education center for the planning, development, and 
        operation of a program to train and employ eligible 
        participants as physician and nonphysician providers.
            ``(2) Requirements.--Under an agreement entered into under 
        paragraph (1), an area health education center shall agree to--
                    ``(A) designate a health professional shortage area 
                or areas as the service area for the area health 
                education center;
                    ``(B) provide for or conduct training in health 
                education services in the service area;
                    ``(C) assess the health professional needs of the 
                service area and assist in the planning and development 
                of training programs to meet the needs;
                    ``(D) provide for or conduct a rotating internship 
                or residency training program in the service area;
                    ``(E) provide opportunities for continuing 
                education to physician and nonphysician providers 
                practicing within the service area;
                    ``(F) conduct interdisciplinary training and 
                practice involving physician and nonphysician providers 
                in the service area;
                    ``(G) arrange and support educational opportunities 
                for students studying to become physician or 
                nonphysician providers at health facilities, ambulatory 
                care centers, and health agencies throughout the 
                service area;
                    ``(H) provide for the active participation in the 
                Project by individuals who are associated with the 
                administration of the sponsoring health professions and 
                each of the departments or specialties of physician or 
                nonphysician providers (if any) which are offered under 
                the Project; and
                    ``(I) have an advisory board of which at least 75 
                percent of the members shall be individuals, including 
                both health service providers and consumers, from the 
                service area.
    ``(e) Evaluation.--Not later than March 30, 1998, and March 30, 
2002, each State receiving a grant under this section shall, through 
grants to or contracts with public and private entities, provide for--
            ``(1) an evaluation of Projects--
                    ``(A) which were carried out pursuant to this 
                section during any fiscal year preceding the fiscal 
                year in which such date occurs, and
                    ``(B) for which no prior evaluation under this 
                subsection was made, and
            ``(2) a review of the area health education center 
        providing services under the Projects. The evaluation shall 
        include an evaluation of the effectiveness of the Projects in 
        increasing the recruitment and retention of physician and 
        nonphysician providers in health professional shortage areas.
    ``(f) Federal Share.--The Federal share of the costs of any program 
established under this section with respect to any State shall be the 
percentage of such costs equal to the Federal medical assistance 
percentage applicable to such State under section 1905(b) of the Social 
Security Act. The State may include as a part or all of the non-Federal 
share of grants--
            ``(1) any State funds supporting area health education 
        centers, and
            ``(2) the value of in-kind contributions made by the State, 
        including tuition remission and other benefits for students 
        participating in the State Health Service Corps Scholarship 
        Program established under section 338N.
    ``(g) Authorization of Appropriations.--
            ``(1) In general.--There are authorized to be appropriated 
        for each of the 1994 through 2001 fiscal years to carry out the 
        purposes of this section an amount equal to the product of--
                    ``(A) $250,000, multiplied by
                    ``(B) the number of States receiving grants under 
                this section for such fiscal year.
        Any amount appropriated under this section shall be available 
        without fiscal year limitation.
            ``(2) Cost recovery.--No more than 10 percent of the funds 
        spent under paragraph (1) may be used for purposes of 
        recovering funds or taking other action against individuals who 
        breach the provisions of a contract entered into under section 
        338N(g).

``SEC. 338N. STATE HEALTH SERVICE CORPS SCHOLARSHIP PROGRAMS.

    ``(a) Definitions.--For purposes of this section:
            ``(1) Area health education center.--The term `area health 
        education center' means--
                    ``(A) a cooperative program of one or more medical 
                schools (or the parent institutions (as defined in 
                section 338M(a)(6)) of such schools) and one or more 
                nonprofit private or public area health education 
                centers; or
                    ``(B) a regional or statewide network of the 
                cooperative programs described in subparagraph (A).
            ``(2) Graduate education.--The term `graduate education' 
        means a course of study at a medical school or other health 
        professions school leading to a degree in a field practiced by 
        a physician or nonphysician provider.
            ``(3) Health professional shortage area.--The term `health 
        professional shortage area' has the meaning provided in section 
        332(a)(1).
            ``(4) Medical school.--The term `medical school' means a 
        school conferring the degree of Doctor of Medicine or Doctor of 
        Osteopathy.
            ``(5) Nonphysician provider.--The term `nonphysician 
        provider' means an occupational therapist, physical therapist, 
        nurse, nurse midwife, nurse practitioner, social worker, or 
        optometrist.
            ``(6) Nurse.--The term `nurse' means a registered nurse, or 
        an individual with a baccalaureate or master's degree in 
        nursing.
            ``(7) Physician provider.--The term `physician provider' 
        means--
                    ``(A) a physician specializing in family medicine, 
                general internal medicine, pediatrics, obstetrics and 
                gynecology, general surgery, psychiatry, preventive 
                medicine, or physiatry; or
                    ``(B) a dentist.
            ``(8) Program.--The term `Program' means a State Health 
        Service Corps Scholarship Program established under subsection 
        (b).
            ``(9) Service area.--The term `service area' means an area 
        designated in section 338M(d)(2)(A).
            ``(10) State official.--The term `State official' means an 
        individual designated by the head of the agency designated in 
        subsection (b)(2) to carry out the Program in the State.
            ``(11) Undergraduate education.--The term `undergraduate 
        education' means a course of study at a health sciences 
        university or a 4-year college that affords an appropriate 
        basis for professional training or graduate education to become 
        a physician or nonphysician provider.
    ``(b) Establishment.--
            ``(1) In general.--Each State carrying out a State Health 
        Services Corps Demonstration Project established under section 
        338M shall establish a State Health Service Corps Scholarship 
        Program, in accordance with this section, to ensure an adequate 
        supply of trained physician or nonphysician providers in health 
        professional shortage areas in the State.
            ``(2) State agency.--A State participating in the Program 
        shall designate a State agency to administer or be responsible 
        for the administration of the Program within the State.
    ``(c) Eligibility.--To be eligible to participate in the Program, 
an individual must--
            ``(1)(A) be accepted for enrollment, or be enrolled, as a 
        full-time student in a health professions program in a health 
        sciences university or a 4-year college; or
            ``(B) be accepted to participate in, or be participating 
        in, a professional internship or residency as preparation to 
        become a physician or nonphysician provider;
            ``(2) reside within a health professional shortage area;
            ``(3) submit an application to participate in the Program; 
        and
            ``(4) sign and submit to the State, at the time of 
        submission of the application, a written contract containing 
        the information specified in subsection (g) to accept payment 
        of a scholarship and, if appropriate, of loans, and to serve in 
        the service area.
    ``(d) Selection.--Individuals described in subsection (c)(1)(B)--
            ``(1) shall comprise not more than 50 percent of all 
        individuals selected to participate in the Program during 
        fiscal year 1994;
            ``(2) shall comprise not more than 40 percent of all 
        individuals selected to participate in the Program during 
        fiscal year 1995;
            ``(3) shall comprise not more than 30 percent of all 
        individuals selected to participate in the Program during 
        fiscal year 1996;
            ``(4) shall comprise not more than 20 percent of all 
        individuals selected to participate in the Program during 
        fiscal year 1997;
            ``(5) shall comprise not more than 10 percent of all 
        individuals selected to participate in the Program during 
        fiscal year 1998; and
            ``(6) shall not be selected to participate in the Program 
        during fiscal years 1999 through 2001.
    ``(e) Information on Service Obligation.--In disseminating 
application forms and contract forms to individuals desiring to 
participate in the Program, the State official shall include with the 
forms--
            ``(1) a fair summary of the rights and liabilities of an 
        individual whose application is approved (and whose contract is 
        accepted) by the State official, including in the summary a 
        clear explanation of the remedies to which the State is 
        entitled in the case of breach of the contract by the 
        individual; and
            ``(2) such information as may be necessary for the 
        individual to understand the prospective participation of the 
        individual in the Program and the service obligation of the 
        individual.
    ``(f) Application Forms.--The application form, contract form, and 
all other information furnished by the Secretary under this section 
shall be written in a manner calculated to be understood by the average 
individual applying to participate in the Program. The State official 
shall make the application forms, contract forms, and other information 
available to individuals desiring to participate in the Program on a 
date sufficiently early to ensure that the individuals have adequate 
time to carefully review and evaluate the forms and information.
    ``(g) Contract.--The written contract between the State official 
and an individual shall contain--
            ``(1) a statement that the State official agrees--
                    ``(A) to provide the individual with a scholarship 
                for a period of up to 8 years, during which period the 
                individual is--
                            ``(i) pursuing an undergraduate education 
                        described in subsection (a)(11);
                            ``(ii) pursuing graduate education; or
                            ``(iii) participating in an internship or 
                        residency program as preparation to become a 
                        physician or nonphysician provider; and
                    ``(B) to place the individual into obligated 
                service, taking into account the specialization of the 
                individual and the needs of health professional 
                shortage areas for service, in--
                            ``(i) a rural health professional shortage 
                        area, if the individual resided in a rural 
                        health professional shortage area at the time 
                        of acceptance into the Program; or
                            ``(ii) an urban health professional 
                        shortage area, if the individual resided in an 
                        urban health professional shortage area at the 
                        time of acceptance into the Program;
            ``(2) a statement that the individual agrees--
                    ``(A) to accept provision of the scholarship, and 
                if appropriate, loans, to the individual;
                    ``(B) to maintain enrollment in a program of 
                undergraduate or graduate education or participation in 
                an internship or residency described in subsection 
                (c)(1)(B) until the individual completes the program, 
                internship, or residency;
                    ``(C) while enrolled in a program of undergraduate 
                or graduate education, to maintain an acceptable level 
                of academic standing (as determined under regulations 
                of the State by the educational institution offering 
                the course of study); and
                    ``(D) to serve in the service area or on the 
                clinical staff of the area health education center or 
                the medical school for a time period equal to the 
                shorter of--
                            ``(i)(I) 1 year for each year in which the 
                        individual received a scholarship under the 
                        Program; and
                            ``(II) 1 month for each $1,000 in loans 
                        that the individual received under the Program; 
                        or
                            ``(ii) 6 years;
            ``(3) a statement of the damages to which the State is 
        entitled for breach of contract by the individual; and
            ``(4) other statements of the rights and liabilities of the 
        State and of the individual, not inconsistent with this 
        section.
    ``(h) Acceptance.--
            ``(1) Approval.--An individual shall become a participant 
        in the Program only on approval by the State official of the 
        application submitted by the individual under subsection (c)(3) 
        and acceptance of the contract submitted by the individual 
        under subsection (c)(4).
            ``(2) Notification.--The State official shall provide 
        written notice to an individual of participation in the Program 
        promptly on acceptance of the individual into the Program.
    ``(i) Scholarship and Loans.--
            ``(1) Payment.--In providing a loan to an individual under 
        subsection (g)(1)(A) or a scholarship to an individual under 
        subsection (g)(1)(B), the State official shall pay--
                    ``(A) to an individual undertaking a program of 
                undergraduate or graduate education, or on behalf of 
                the individual in accordance with paragraph (2)--
                            ``(i) the amount of the tuition of the 
                        individual in the school year;
                            ``(ii) the amount of all other reasonable 
                        educational expenses, including fees, books, 
                        and laboratory expenses, incurred by the 
                        individual in the school year; and
                            ``(iii) a stipend; and
                    ``(B) to an individual described in subsection 
                (c)(1)(B)--
                            ``(i) the amount of expenses for medical 
                        equipment necessary to the practice of a 
                        physician or nonphysician provider;
                            ``(ii) the amount of expenses for travel to 
                        and from clinical sites; and
                            ``(iii) a stipend.
            ``(2) Payment to an educational institution.--The State 
        official may contract with an educational institution, in which 
        a participant in the Program is enrolled, for the payment to 
        the educational institution of the amounts of tuition and other 
        reasonable educational expenses described in clauses (i) and 
        (ii) of paragraph (1)(A).
    ``(j) Report.--The State official shall report to the Secretary on 
January 1 of each year--
            ``(1) the number, and type of health profession training, 
        of students receiving scholarships under the Program in the 
        preceding year;
            ``(2) the educational institutions at which the students 
        are receiving their training;
            ``(3) the number of applications filed under this section 
        in the school year in the preceding year and in prior school 
        years; and
            ``(4) the amount of tuition paid in the aggregate and at 
        each educational institution for the school year in the 
        preceding year and in prior school years.''.

                                 <all>

S 241 IS----2
S 241 IS----3
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