Loans and loan guarantees

Part P of title III of the Public Health Service Act is amended by inserting after section 399V–6 of such Act (42 U.S.C. 280g–17) the following:

399V–7.

Loans and loan guarantees for constructing or renovating, or planning construction or renovation of, certain qualified psychiatric and substance abuse treatment facilities

(a)

In general

The Secretary may— (1)make loans and loan guarantees for the purpose of constructing or renovating, including planning the construction or renovation of, a qualified psychiatric treatment facility or a qualified substance abuse treatment facility to public, private for-profit, or private not-for-profit— (A)psychiatric treatment facilities; (B)substance abuse treatment facilities; (C)psychiatric hospitals; and (D)alliances of such facilities or hospitals; and (2)subject to subsection (d), make loans and loan guarantees for refinancing loans that were made for such purpose to an entity listed in paragraph (1). (b)

Preference

In making loans and loan guarantees under this section, the Secretary shall give preference to psychiatric treatment facilities and substance abuse treatment facilities that propose to construct or renovate a qualified psychiatric treatment facility or qualified substance abuse treatment facility in a county that has insufficient inpatient psychiatric or substance abuse treatment capacity. (c)

Terms and conditions

Loans and loan guarantees under this section shall be made on such terms and conditions as the Secretary may prescribe, subject to the provisions of this section including the following: (1)The Secretary may allow credit to a prospective borrower only where— (A)it is necessary to increase the number of psychiatric or substance use disorder treatment beds to enhance the public’s access to acute inpatient mental health and substance abuse services; and (B)a credit subsidy is the most efficient way to achieve such increase (on a borrower-by-borrower basis). (2)The final maturity of loans made or guaranteed under this section shall not exceed a period of 20 years, or the period of 50 percent of the useful life of any physical asset to be financed by the loan, whichever is less as determined by the Secretary. (3)The Secretary may not make a loan guarantee under this section, with respect to any borrower, in excess of 80 percent of any potential loss on the loan. (4)The Secretary may not make any loan or loan guarantee under this section if the loan will be subordinated— (A)to another debt contracted by the borrower; or (B)to any other claims against the borrower in the case of default. (5)The Secretary may not make any loan guarantee under this section unless the Secretary determines that— (A)the lender is responsible; and (B)adequate provision is made for servicing the loan on reasonable terms and protecting the financial interest of the United States. (6)The Secretary may not make any loan guarantee under this section if the income from the loan will be excluded from gross income for purposes of chapter 1 of the Internal Revenue Code of 1986. (7)The Secretary may not make any loan or loan guarantee under this section unless— (A)the loan and interest supplements on any loan guarantee will be at an interest rate that is set by reference to a benchmark interest rate on marketable Treasury securities with a similar maturity to the loan being made or guaranteed; and (B)the minimum interest rate on the loan— (i)will be no less than the estimated cost to the Government of making the loan plus 1 percent, with the goal of keeping the interest rate below the interest rate of a comparable and competitive private sector benchmark financial instrument; and (ii)will be adjusted, as determined by the Secretary, every quarter to take account of changes in the interest rate of the benchmark financial instrument. (8)The Secretary may not make any loan or loan guarantee under this section unless— (A)fees or premiums on the loan or loan guarantee and corresponding insurance coverage will be set at levels that minimize the cost to the Government (as defined in section 502(5) of the Federal Credit Reform Act of 1990) of insuring such loan or loan guarantee, while supporting achievement of increasing the inpatient psychiatric and substance abuse bed count, as applicable, to enhance the public’s access to acute inpatient mental health and substance abuse services; (B)the minimum guarantee fee or insurance premium imposed by the Government will be no less than the level sufficient to cover all of the estimated costs to the Government of the expected default claims, plus one percent; and (C)loan guarantee fees imposed by the Government will be reviewed every six months to ensure that the fees imposed on new loan guarantees are at a level sufficient to satisfy subparagraph (B) based on the most recent estimates of such costs. (9)The provisions of any loan guarantee under this section shall state that the guarantee is conclusive evidence that— (A)the guarantee has been properly obtained; (B)the underlying loan qualified for the guarantee; and (C)except in the case of fraud or material misrepresentation by the holder of the loan, the guarantee will be presumed to be valid, legal, and enforceable. (10)The Secretary may not make any loan or loan guarantee under this section unless— (A)the borrower finances at least 25 percent of the funded project from other sources; and (B)the borrower uses funds that were not derived from Federal loans or loan guarantees to pay the fees or premiums on the loan or loan guarantee under this section. (11)The Secretary— (A)shall prescribe explicit standards for use in periodically assessing the credit risk of new and existing direct loans and guaranteed loans; and (B)shall not make a loan or loan guarantee under this section unless the Secretary finds that there is a reasonable assurance of repayment. (d)

Limitation on refinancing

The authority vested by subsection (a)(2)— (1)authorizes making loans and loan guarantees only for refinancing loans that were entered into on or before the date that is 24 months before the date of enactment of the Mental Health and Substance Abuse Treatment Accessibility Act of 2017; and (2)terminates on the date that is 24 months after such date of enactment. (e)

Payment of losses

(1)

Default on guaranteed loans

If, as a result of a default by a borrower under a loan guaranteed under this section, after the holder thereof has made such further collection efforts and instituted such enforcement proceedings as the Secretary may require, the Secretary determines that the holder has suffered a loss— (A)the Secretary shall pay to such holder 75 percent of such loss, as specified in the guarantee contract; (B)upon making any such payment, the Secretary shall be subrogated to all the rights of the recipient of the payment; and (C)the Secretary shall be entitled to recover from the borrower the amount of any payments made pursuant to the guarantee contract. (2)

Required enforce of Federal rights

The Attorney General of the United States shall take such action as may be appropriate to enforce any right accruing to the United States as a result of the issuance of any guarantee under this section. (3)

Forbearance

Nothing in this section precludes any forbearance for the benefit of the borrower of a loan that is made or guaranteed under this section which is agreed upon by the parties to the loan and approved by the Secretary, provided that budget authority for any resulting cost to the Government (as defined in section 502(5) of the Federal Credit Reform Act of 1990) is available. (f)

Definitions

In this section: (1)The term qualified psychiatric treatment facility— (A)means a psychiatric hospital (or other qualified treatment facility, as determined appropriate by the Secretary) that is able to serve patients ages 21 and older that— (i)will provide acute, short-term inpatient psychiatric treatment services for such patients; (ii)will provide outpatient services; and (iii)may include a military services program to meet the needs of active and retired military servicemembers; and (B)excludes a facility that— (i)provides long-term inpatient care; (ii)is a health center (as defined in section 330); and (iii)is part of or affiliated with a prison (as defined in section 2246 of title 18, United States Code). (2)The term qualified substance abuse treatment facility— (A)means a psychiatric hospital (or other qualified treatment facility, as determined appropriate by the Secretary) that is able to serve patients ages 21 and older that— (i)will provide acute, short-term inpatient substance abuse treatment services for such patients; (ii)will provide outpatient services; and (iii)may include a military services program to meet the needs of active and retired military servicemembers; and (B)excludes any facility described in paragraph (1)(B). (3)The term psychiatric hospital means— (A)an institution that— (i)is primarily engaged in providing, by or under the supervision of one or more physicians, psychiatric services for the diagnosis and treatment of mentally ill persons or those suffering from substance abuse disorders; (ii)satisfies the requirements of paragraphs (3) through (9) of subsection (e) of section 1861 of the Social Security Act; (iii)maintains clinical records on all patients and maintains such records as the Secretary finds to be necessary to determine the degree and intensity of the treatment provided to individuals entitled to hospital insurance benefits under part A of title XVIII of the Social Security Act; and (iv)meets such staffing requirements as the Secretary finds necessary for the institution to carry out an active program of treatment for individuals who are furnished services in the institution; or (B)a distinct part of an institution that satisfies clauses (i) and (ii) of subparagraph (A) if such distinct part satisfies clauses (iii) and (iv) of subparagraph (A). (g)

Funding limitations

The Secretary may provide loans and loan guarantees under this section— (1)only to the extent or in the amounts provided in advance in appropriation Acts; and (2)totaling not more than $200,000,000 in each of fiscal years 2018 through 2022.