II

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.

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.

4 This Act may be cited as the ‘‘Rural Primary Care

5 Act of 1993’’.
2

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1 TITLE I—TAX PROVISIONS

2 SEC. 101. NONREFUNDABLE CREDIT FOR CERTAIN PRI3 MARY HEALTH SERVICES PROVIDERS.

4 (a) IN GENERAL.—Subpart A of part IV of sub5 chapter A of chapter 1 of the Internal Revenue Code of

6 1986 (relating to nonrefundable personal credits) is

7 amended by inserting after section 25 the following new

8 section:

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

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

11 qualified primary health services provider, there is allowed

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

13 any taxable year in a mandatory service period an amount

14 equal to the product of—

15 ‘‘(1) the lesser of—

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

17 occurring in such taxable year, or

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

19 months taken into account under this para20 graph with respect to such provider for all pre21 ceding taxable years (whether or not in the

22 same mandatory service period), multiplied by

23 ‘‘(2) $1,000 ($500 in the case of a qualified

24 health services provider who is a physician assistant

25 or a nurse practitioner).
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1 ‘‘(b) QUALIFIED PRIMARY HEALTH SERVICES PRO2 VIDER.—For purposes of this section, the term ‘qualified

3 primary health services provider’ means any physician,

4 physician assistant, or nurse practitioner who for any

5 month during a mandatory service period is certified by

6 the Bureau to be a primary health services provider who—

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

8 ‘‘(A) full time, and

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

10 whom reside in a rural health professional

11 shortage area,

12 ‘‘(2) is not receiving during such year a scholar13 ship under the National Health Service Corps Schol14 arship Program or a loan repayment under the

15 National Health Service Corps Loan Repayment

16 Program,

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

18 such Programs, and

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

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

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

22 the period of 60 consecutive calendar months beginning

23 with the first month the taxpayer is a qualified primary

24 health services provider.
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1 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur2 poses of this section—

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

4 Bureau of Health Care Delivery and Assistance,

5 Health Resources and Services Administration of the

6 United States Public Health Service.

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

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

9 the Social Security Act.

10 ‘‘(3) PHYSICIAN ASSISTANT; NURSE PRACTI11 TIONER.—The terms ‘physician assistant’ and ‘nurse

12 practitioner’ have the meanings given to such terms

13 by section 1861(aa)(5) of the Social Security Act.

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

15 The term ‘primary health services provider’ means a

16 provider of primary health services (as defined in

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

18 ‘‘(5) RURAL HEALTH PROFESSIONAL SHORTAGE

19 AREA.—The term ‘rural health professional shortage

20 area’ means—

21 ‘‘(A) a class 1 or class 2 health profes22 sional shortage area (as defined in section

23 332(a)(1)(A) of the Public Health Service Act)

24 in a rural area (as determined under section

25 1886(d)(2)(D) of the Social Security Act), or
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1 ‘‘(B) an area which is determined by the

2 Secretary of Health and Human Services as

3 equivalent to an area described in subparagraph

4 (A) and which is designated by the Bureau of

5 the Census as not urbanized.

6 ‘‘(e) RECAPTURE OF CREDIT.—

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

8 there is a recapture event, then the tax of the tax9 payer under this chapter for such taxable year shall

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

11 ‘‘(A) the applicable percentage, and

12 ‘‘(B) the aggregate unrecaptured credits

13 allowed to such taxpayer under this section for

14 all prior taxable years.

15 ‘‘(2) APPLICABLE RECAPTURE PERCENTAGE.—

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

17 subsection, the applicable recapture percentage

18 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.

19 ‘‘(B) TIMING.—For purposes of subpara20 graph (A), month 1 shall begin on the first day

21 of the mandatory service period.

22 ‘‘(3) RECAPTURE EVENT DEFINED.—
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1 ‘‘(A) IN GENERAL.—For purposes of this

2 subsection, the term ‘recapture event’ means

3 the failure of the taxpayer to be a qualified pri4 mary health services provider for any month

5 during any mandatory service period.

6 ‘‘(B) CESSATION OF DESIGNATION.—The

7 cessation of the designation of any area as a

8 rural health professional shortage area after the

9 beginning of the mandatory service period for

10 any taxpayer shall not constitute a recapture

11 event.

12 ‘‘(C) SECRETARIAL WAIVER.—The Sec13 retary may waive any recapture event caused by

14 extraordinary circumstances.

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

16 in tax under this subsection shall not be treated as

17 a tax imposed by this chapter for purposes of deter18 mining the amount of any credit under subpart A,

19 B, or D of this part.’’.

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

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

22 of the Internal Revenue Code of 1986 is amended by in23 serting after the item relating to section 25 the following

24 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 December 31, 1993.

4 SEC. 102. 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) CLERICAL AMENDMENT.—The table of sections

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

22 Revenue Code of 1986 is amended by striking the item

23 relating to section 137 and inserting the following:

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

‘‘Sec. 138. Cross references to other Acts.’’.
8

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

2 this section shall apply to payments made under section

3 338B(g) of the Public Health Service Act after the date

4 of the enactment of this Act.

5 SEC. 103. EXPENSING OF MEDICAL EQUIPMENT.

6 (a) IN GENERAL.—Section 179 of the Internal Reve7 nue Code of 1986 (relating to election to expense certain

8 depreciable business assets) is amended—

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

10 and inserting the following:

11 ‘‘(1) DOLLAR LIMITATION.—

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

13 which may be taken into account under sub14 section (a) for any taxable year shall not exceed

15 $10,000.

16 ‘‘(B) RURAL HEALTH CARE PROPERTY.—

17 In the case of rural health care property, the

18 aggregate cost which may be taken into account

19 under subsection (a) for any taxable year shall

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

21 otherwise taken into account under subsection

22 (a) for such year.’’; and

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

24 following new paragraph:
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1 ‘‘(11) RURAL HEALTH CARE PROPERTY.—For

2 purposes of this section, the term ‘rural health care

3 property’ means section 179 property used by a phy4 sician (as defined in section 1861(r) of the Social

5 Security Act) in the active conduct of such physi6 cian’s full-time trade or business of providing pri7 mary health services (as defined in section 330(b)(1)

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

9 professional shortage area (as defined in section

10 25A(d)(5)).’’.

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

12 this section shall apply to property placed in service after

13 December 31, 1993, in taxable years ending after such

14 date.

15 SEC. 104. STUDY OF EXPANSION OF CREDIT TO CERTAIN

16 URBAN AREAS.

17 (a) STUDY.—The Secretary of Health and Human

18 Services or the Secretary’s delegate shall determine the

19 present number of, and future need for, physician and

20 nonphysician primary care providers in medically under21 served urban areas. Such determination shall form the

22 basis for a study of the feasibility (including cost esti23 mates) of extending the tax credit provided by the amend24 ments made by section 101 of this title to such providers.
10

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1 (b) REPORTS.—An interim report of the study de2 scribed in paragraph (1) shall be submitted by the Sec3 retary of Health and Human Services to the Congress 1

4 year after the date of the enactment of this Act. A final

5 report of such study shall be submitted to the Congress

6 within 2 years of such date of enactment.

7 TITLE II—PUBLIC HEALTH

8 SERVICE PROVISIONS

9 SEC. 201. PREVENTATIVE HEALTH SERVICES.

10 Part A of title XIX of the Public Health Service Act

11 (42 U.S.C. 300w et seq.) is amended—

12 (1) in section 1901, by adding at the end there13 of the following new subsection:

14 ‘‘(c) Of the amounts appropriated for each fiscal year

15 under subsection (a), the Secretary shall make available

16 not less than $5,000,000 in each such fiscal year to carry

17 out section 1910A.’’; and

18 (2) by adding at the end thereof the following

19 new section:

20 ‘‘SEC. 1910A. PREVENTATIVE GRANTS FOR COUNTY HEALTH

21 DEPARTMENTS.

22 ‘‘(a) IN GENERAL.—From amounts made available

23 under section 1901(c), the Secretary shall make grants to

24 county health departments to enable such departments to

25 provide preventative health services in areas within the
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1 county which the Bureau of the Census determines to be

2 not urbanized.

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

4 under subsection (a), a county health department shall

5 prepare and submit, to the Secretary, an application at

6 such time, in such form, and containing such information

7 as the Secretary shall require.

8 ‘‘(c) USE OF FUNDS.—A county health department

9 shall use amounts provided through a grant received under

10 this section to—

11 ‘‘(1) provide immunization services to control

12 the spread of infectious diseases;

13 ‘‘(2) improve maternal and infant health;

14 ‘‘(3) reduce adolescent pregnancy and improve

15 reproductive health; and

16 ‘‘(4) provide such other services as the Sec17 retary determines appropriate.

18 ‘‘(d) DEFINITION.—Not later than 30 days after the

19 date of enactment of this section, the Secretary shall pro20 mulgate regulations that define ‘county health depart21 ment’ for purposes of this section.’’.
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1 TITLE III—STATE HEALTH

2 SERVICE CORPS DEMON3 STRATION PROJECTS

4 SEC. 301. SHORT TITLE.

5 This title may be cited as the ‘‘State Health Service

6 Corps Demonstration Act’’.

7 SEC. 302. PURPOSE.

8 It is the purpose of this title—

9 (1) to promote recruitment and training of

10 physicians and other primary care providers from

11 among the poor and from disadvantaged

12 populations;

13 (2) to place physicians from health professional

14 shortage areas into similar areas in order to encour15 age retention of physicians in health professional

16 shortage areas; and

17 (3) to provide flexibility to States in filling posi18 tions in health professional shortage areas.

19 SEC. 303. STATE HEALTH SERVICE CORPS DEMONSTRA20 TION PROJECTS.

21 The Public Health Service Act is amended by insert22 ing after section 338L (42 U.S.C. 254t) the following new

23 sections:
13

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1 ‘‘SEC. 338M. STATE HEALTH SERVICE CORPS DEMONSTRA2 TION PROJECTS.

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

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

5 term ‘area health education center’ means—

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

7 medical schools (or the parent institutions of

8 such schools) and one or more nonprofit private

9 or public area health education centers; or

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

11 the cooperative programs described in subpara12 graph (A).

13 ‘‘(2) HEALTH PROFESSIONAL SHORTAGE

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

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

16 ‘‘(3) MEDICAL SCHOOL.—The term ‘medical

17 school’ means a school conferring the degree of Doc18 tor of Medicine or Doctor of Osteopathy.

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

20 ‘nonphysician provider’ means an occupational ther21 apist, physical therapist, nurse, nurse midwife, nurse

22 practitioner, social worker, or optometrist.

23 ‘‘(5) NURSE.—The term ‘nurse’ means a reg24 istered nurse, or an individual with a baccalaureate

25 or master’s degree in nursing.
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1 ‘‘(6) PARENT INSTITUTION.—The term ‘parent

2 institution’ means any health sciences university

3 housing a medical school and one or more other

4 health professions schools.

5 ‘‘(7) PHYSICIAN PROVIDER.—The term ‘physi6 cian provider’ means—

7 ‘‘(A) a physician specializing in general

8 practice, family medicine, general internal medi9 cine, pediatrics, obstetrics and gynecology, gen10 eral surgery, psychiatry, preventive medicine

11 and public health, or physiatry; or

12 ‘‘(B) a dentist.

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

14 State Health Service Corps Demonstration Project

15 established under subsection (b).

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

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

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

19 Health Service Corps Demonstration Project under which

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

21 for the Federal share of the costs of conducting Projects

22 for the training and employment of eligible participants

23 as physician and nonphysician providers serving health

24 professional shortage areas.

25 ‘‘(c) STATE PARTICIPATION.—
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1 ‘‘(1) REQUIREMENTS.—In order for a State to

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

3 State shall—

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

5 health education center to administer the

6 Project in accordance with subsection (d);

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

8 in accordance with subsection (e);

9 ‘‘(C) establish a State Health Service

10 Corps Scholarship Program in accordance with

11 section 338N; and

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

13 Secretary may establish for the proper and effi14 cient implementation of the Project.

15 ‘‘(2) GRANT AWARDS.—In allocating grants

16 under subsection (b), the Secretary shall give prior17 ity to States that have demonstrated a commitment

18 to developing and funding area health education cen19 ter programs.

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

21 grant under this section, the State shall submit an

22 application at such time, in such manner and con23 taining such agreements, assurances, and informa24 tion as the Secretary determines to be necessary to
16

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1 carry out this section. At a minimum, the applica2 tion shall contain—

3 ‘‘(A) information specifying the actions the

4 State will take against individuals, and the

5 methods the State will use to recover all funds

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

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

8 and

9 ‘‘(B) assurances that the State will reim10 burse the Secretary for all funds recovered from

11 individuals who breach contracts described in

12 section 338N(g).

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

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

15 to 6 months for final evaluation and reporting.

16 ‘‘(d) STATE AGREEMENTS WITH AREA HEALTH

17 EDUCATION CENTERS.—

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

19 under this section, a State shall enter into an agree20 ment with an area health education center for the

21 planning, development, and operation of a program

22 to train and employ eligible participants as physician

23 and nonphysician providers.
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1 ‘‘(2) REQUIREMENTS.—Under an agreement

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

3 education center shall agree to—

4 ‘‘(A) designate a health professional short5 age area or areas as the service area for the

6 area health education center;

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

8 health education services in the service area;

9 ‘‘(C) assess the health professional needs

10 of the service area and assist in the planning

11 and development of training programs to meet

12 the needs;

13 ‘‘(D) provide for or conduct a rotating in14 ternship or residency training program in the

15 service area;

16 ‘‘(E) provide opportunities for continuing

17 education to physician and nonphysician provid18 ers practicing within the service area;

19 ‘‘(F) conduct interdisciplinary training and

20 practice involving physician and nonphysician

21 providers in the service area;

22 ‘‘(G) arrange and support educational op23 portunities for students studying to become

24 physician or nonphysician providers at health
18

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1 facilities, ambulatory care centers, and health

2 agencies throughout the service area;

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

4 the Project by individuals who are associated

5 with the administration of the sponsoring

6 health professions and each of the departments

7 or specialties of physician or nonphysician pro8 viders (if any) which are offered under the

9 Project; and

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

11 least 75 percent of the members shall be indi12 viduals, including both health service providers

13 and consumers, from the service area.

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

15 and March 30, 2002, each State receiving a grant under

16 this section shall, through grants to or contracts with pub17 lic and private entities, provide for—

18 ‘‘(1) an evaluation of Projects—

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

20 this section during any fiscal year preceding the

21 fiscal year in which such date occurs, and

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

23 this subsection was made, and

24 ‘‘(2) a review of the area health education cen25 ter providing services under the Projects. The eval-
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1 uation shall include an evaluation of the effective2 ness of the Projects in increasing the recruitment

3 and retention of physician and nonphysician provid4 ers in health professional shortage areas.

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

6 costs of any program established under this section with

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

8 equal to the Federal medical assistance percentage appli9 cable to such State under section 1905(b) of the Social

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

11 the non-Federal share of grants—

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

13 education centers, and

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

15 the State, including tuition remission and other ben16 efits for students participating in the State Health

17 Service Corps Scholarship Program established

18 under section 338N.

19 ‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—

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

21 appropriated for each of the 1994 through 2001 fis22 cal years to carry out the purposes of this section an

23 amount equal to the product of—

24 ‘‘(A) $250,000, multiplied by
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1 ‘‘(B) the number of States receiving grants

2 under this section for such fiscal year.

3 Any amount appropriated under this section shall be

4 available without fiscal year limitation.

5 ‘‘(2) COST RECOVERY.—No more than 10 per6 cent of the funds spent under paragraph (1) may be

7 used for purposes of recovering funds or taking

8 other action against individuals who breach the pro9 visions of a contract entered into under section

10 338N(g).

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

12 PROGRAMS.

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

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

15 term ‘area health education center’ means—

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

17 medical schools (or the parent institutions (as

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

19 and one or more nonprofit private or public

20 area health education centers; or

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

22 the cooperative programs described in subpara23 graph (A).

24 ‘‘(2) GRADUATE EDUCATION.—The term ‘grad25 uate education’ means a course of study at a medi-
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1 cal school or other health professions school leading

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

3 nonphysician provider.

4 ‘‘(3) HEALTH PROFESSIONAL SHORTAGE

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

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

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

8 school’ means a school conferring the degree of Doc9 tor of Medicine or Doctor of Osteopathy.

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

11 ‘nonphysician provider’ means an occupational ther12 apist, physical therapist, nurse, nurse midwife, nurse

13 practitioner, social worker, or optometrist.

14 ‘‘(6) NURSE.—The term ‘nurse’ means a reg15 istered nurse, or an individual with a baccalaureate

16 or master’s degree in nursing.

17 ‘‘(7) PHYSICIAN PROVIDER.—The term ‘physi18 cian provider’ means—

19 ‘‘(A) a physician specializing in family

20 medicine, general internal medicine, pediatrics,

21 obstetrics and gynecology, general surgery, psy22 chiatry, preventive medicine, or physiatry; or

23 ‘‘(B) a dentist.
22

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

2 State Health Service Corps Scholarship Program es3 tablished under subsection (b).

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

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

6 ‘‘(10) STATE OFFICIAL.—The term ‘State offi7 cial’ means an individual designated by the head of

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

9 out the Program in the State.

10 ‘‘(11) UNDERGRADUATE EDUCATION.—The

11 term ‘undergraduate education’ means a course of

12 study at a health sciences university or a 4-year col13 lege that affords an appropriate basis for profes14 sional training or graduate education to become a

15 physician or nonphysician provider.

16 ‘‘(b) ESTABLISHMENT.—

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

18 State Health Services Corps Demonstration Project

19 established under section 338M shall establish a

20 State Health Service Corps Scholarship Program, in

21 accordance with this section, to ensure an adequate

22 supply of trained physician or nonphysician provid23 ers in health professional shortage areas in the

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

2 the Program shall designate a State agency to ad3 minister or be responsible for the administration of

4 the Program within the State.

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

6 the Program, an individual must—

7 ‘‘(1)(A) be accepted for enrollment, or be en8 rolled, as a full-time student in a health professions

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

10 college; or

11 ‘‘(B) be accepted to participate in, or be partici12 pating in, a professional internship or residency as

13 preparation to become a physician or nonphysician

14 provider;

15 ‘‘(2) reside within a health professional short16 age area;

17 ‘‘(3) submit an application to participate in the

18 Program; and

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

20 of submission of the application, a written contract

21 containing the information specified in subsection

22 (g) to accept payment of a scholarship and, if appro23 priate, of loans, and to serve in the service area.

24 ‘‘(d) SELECTION.—Individuals described in sub25 section (c)(1)(B)—
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1 ‘‘(1) shall comprise not more than 50 percent

2 of all individuals selected to participate in the Pro3 gram during fiscal year 1994;

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

5 of all individuals selected to participate in the Pro6 gram during fiscal year 1995;

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

8 of all individuals selected to participate in the Pro9 gram during fiscal year 1996;

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

11 of all individuals selected to participate in the Pro12 gram during fiscal year 1997;

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

14 of all individuals selected to participate in the Pro15 gram during fiscal year 1998; and

16 ‘‘(6) shall not be selected to participate in the

17 Program during fiscal years 1999 through 2001.

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

19 disseminating application forms and contract forms to in20 dividuals desiring to participate in the Program, the State

21 official shall include with the forms—

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

23 of an individual whose application is approved (and

24 whose contract is accepted) by the State official, in25 cluding in the summary a clear explanation of the
25

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1 remedies to which the State is entitled in the case

2 of breach of the contract by the individual; and

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

4 the individual to understand the prospective partici5 pation of the individual in the Program and the

6 service obligation of the individual.

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

8 contract form, and all other information furnished by the

9 Secretary under this section shall be written in a manner

10 calculated to be understood by the average individual ap11 plying to participate in the Program. The State official

12 shall make the application forms, contract forms, and

13 other information available to individuals desiring to par14 ticipate in the Program on a date sufficiently early to en15 sure that the individuals have adequate time to carefully

16 review and evaluate the forms and information.

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

18 State official and an individual shall contain—

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

20 agrees—

21 ‘‘(A) to provide the individual with a schol22 arship for a period of up to 8 years, during

23 which period the individual is—

24 ‘‘(i) pursuing an undergraduate edu25 cation described in subsection (a)(11);
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1 ‘‘(ii) pursuing graduate education; or

2 ‘‘(iii) participating in an internship or

3 residency program as preparation to be4 come a physician or nonphysician provider;

5 and

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

7 service, taking into account the specialization of

8 the individual and the needs of health profes9 sional shortage areas for service, in—

10 ‘‘(i) a rural health professional short11 age area, if the individual resided in a

12 rural health professional shortage area at

13 the time of acceptance into the Program;

14 or

15 ‘‘(ii) an urban health professional

16 shortage area, if the individual resided in

17 an urban health professional shortage area

18 at the time of acceptance into the

19 Program;

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

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

22 and if appropriate, loans, to the individual;

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

24 of undergraduate or graduate education or par25 ticipation in an internship or residency de-
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1 scribed in subsection (c)(1)(B) until the individ2 ual completes the program, internship, or resi3 dency;

4 ‘‘(C) while enrolled in a program of under5 graduate or graduate education, to maintain an

6 acceptable level of academic standing (as deter7 mined under regulations of the State by the

8 educational institution offering the course of

9 study); and

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

11 clinical staff of the area health education center

12 or the medical school for a time period equal to

13 the shorter of—

14 ‘‘(i)(I) 1 year for each year in which

15 the individual received a scholarship under

16 the Program; and

17 ‘‘(II) 1 month for each $1,000 in

18 loans that the individual received under the

19 Program; or

20 ‘‘(ii) 6 years;

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

22 State is entitled for breach of contract by the indi23 vidual; and
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1 ‘‘(4) other statements of the rights and liabil2 ities of the State and of the individual, not inconsist3 ent with this section.

4 ‘‘(h) ACCEPTANCE.—

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

6 participant in the Program only on approval by the

7 State official of the application submitted by the in8 dividual under subsection (c)(3) and acceptance of

9 the contract submitted by the individual under sub10 section (c)(4).

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

12 provide written notice to an individual of participa13 tion in the Program promptly on acceptance of the

14 individual into the Program.

15 ‘‘(i) SCHOLARSHIP AND LOANS.—

16 ‘‘(1) PAYMENT.—In providing a loan to an indi17 vidual under subsection (g)(1)(A) or a scholarship to

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

19 official shall pay—

20 ‘‘(A) to an individual undertaking a pro21 gram of undergraduate or graduate education,

22 or on behalf of the individual in accordance

23 with paragraph (2)—

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

25 individual in the school year;
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1 ‘‘(ii) the amount of all other reason2 able educational expenses, including fees,

3 books, and laboratory expenses, incurred

4 by the individual in the school year; and

5 ‘‘(iii) a stipend; and

6 ‘‘(B) to an individual described in sub7 section (c)(1)(B)—

8 ‘‘(i) the amount of expenses for medi9 cal equipment necessary to the practice of

10 a physician or nonphysician provider;

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

12 to and from clinical sites; and

13 ‘‘(iii) a stipend.

14 ‘‘(2) PAYMENT TO AN EDUCATIONAL INSTITU15 TION.—The State official may contract with an edu16 cational institution, in which a participant in the

17 Program is enrolled, for the payment to the edu18 cational institution of the amounts of tuition and

19 other reasonable educational expenses described in

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

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

22 Secretary on January 1 of each year—

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

24 training, of students receiving scholarships under

25 the Program in the preceding year;
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1 ‘‘(2) the educational institutions at which the

2 students are receiving their training;

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

4 section in the school year in the preceding year and

5 in prior school years; and

6 ‘‘(4) the amount of tuition paid in the aggre7 gate and at each educational institution for the

8 school year in the preceding year and in prior school

9 years.’’.

Æ

S 241 IS——2

S 241 IS——3