[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4377 Introduced in House (IH)]
103d CONGRESS
2d Session
H. R. 4377
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
May 10, 1994
Mr. Clinger (for himself, Mr. Hughes, Mr. McHugh, Mr. Minge, Mr.
Parker, and Mr. Oberstar) 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.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Rural Health
Professional Shortage Act of 1994''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings.
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--PROVISIONS RELATING TO THE MEDICARE PROGRAM
Sec. 301. Elimination of application of geographic adjustment indices
in determining payments for physicians'
services.
Sec. 302. Exemption from anti-kickback penalties for certain financial
incentives provided to physicians by rural
hospitals.
Sec. 303. Extension of bonus payment for physician services provided in
health professional shortage areas to
certain nonphysician providers and other
medicare-dependent providers.
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.
SEC. 2. FINDINGS.
The Congress finds as follows:
(1) For the 27 percent of Americans living in rural areas,
access to adequate medical care is sometimes limited by the
lack of health professionals serving in rural areas.
(2) The maldistribution of health professionals is
reflected by the shortages in rural areas of primary care
physicians, nurse practitioners, physician assistants, nurse
midwives, registered nurses, dentists, mental health
practitioners, and allied health professionals.
(3) Average per capita incomes for health professionals
practicing in rural areas fall below those of professionals in
urban areas.
(4) The high costs of graduate medical education and
malpractice insurance make health professionals very sensitive
to income considerations, and the lower earnings potential in
rural areas discourages graduates with high debt loads from
settling in rural areas.
(5) Rural physicians generally serve a higher ratio of
medicare, medicaid, and uninsured patients, and consequently
must rely on often inadequate reimbursements from the Federal
Government.
(6) Medicare reimburses rural physicians less than urban
physicians for the same services, which is a disincentive for
young physicians contemplating moving to and practicing in
rural areas.
(7) Because rural providers are often isolated from
colleagues, they cannot rely on them for consultations and
second opinions, and must work long hours, many of which are
``on call'', often with little professional support.
(8) Health professionals tend to practice in areas close to
where they were trained, and most academic medical institutions
and teaching hospitals are located in urban and suburban
locales.
(9) Health professionals prefer working with emerging,
state-of-the-art technology that many rural hospitals cannot
afford.
(10) Health professionals serving in remote rural
communities do not have access to medical libraries or
continuing medical education.
(11) Any health care reform package adopted by the Congress
must include provisions that improve the supply and
distribution of health professionals in rural areas.
TITLE I--TAX INCENTIVES REGARDING RURAL HEALTH CARE
SEC. 101. 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) Conforming Amendment.--Paragraph (3) of section 338B(g) of the
Public Health Service Act is amended by striking ``Federal, State, or
local'' and inserting ``State or local''.
(c) 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.''.
(d) 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. 102. DEDUCTION FOR MEDICAL EDUCATION LOAN INTEREST INCURRED BY
HEALTH PROFESSIONALS SERVING IN MEDICALLY UNDERSERVED
RURAL AREAS.
(a) In General.--Paragraph (1) of section 163(h) of the Internal
Revenue Code of 1986 (relating to disallowance of deduction for
personal interest) is amended by striking ``and'' at the end of
subparagraph (D), by redesignating subparagraph (E) as subparagraph
(F), and by inserting after subparagraph (D) the following new
subparagraph:
``(E) any qualified medical education loan interest
(within the meaning of paragraph (5)), and''.
(b) Qualified Medical Education Loan Interest Defined.--Subsection
(h) of section 163 of such Code is amended by redesignating paragraph
(5) as paragraph (6) and by inserting after paragraph (4) the following
new paragraph:
``(5) Qualified medical education loan interest.--
``(A) In general.--The term `qualified medical
education loan interest' means interest--
``(i) which is on a medical education loan
of a health professional,
``(ii) which is paid or accrued by such
health professional, and
``(iii) which accrues during the period--
``(I) such health professional is
providing care to residents of a
medically underserved rural area, and
``(II) such health professional's
principal place of abode is in such
area.
In the case of a health professional who is a
physician, the requirement of clause (iii)(I) shall be
met only if such physician is providing primary care
(including internal medicine, pediatrics, obstetrics/
gynecology, family medicine, and osteopathy) to such
residents.
``(B) Medical education loan.--For purposes of
subparagraph (A), the term `medical education loan'
means indebtedness incurred to pay the individual's--
``(i) qualified tuition and related
expenses (as defined in section 117(b))
incurred for the medical education of such
individual, or
``(ii) reasonable living expenses while
away from home in order to attend an
educational institution described in section
170(b)(1)(A)(ii) for the medical education of
such individual.
``(C) Health professional.--For purposes of
subparagraph (A), the term `health professional' means
any physician, physician assistant, nurse practitioner,
nurse clinician, nurse midwife, and allied health
professional.
``(D) Physician.--For purposes of this paragraph,
the term `physician' has the meaning given such term by
section 1861(r)(1) of the Social Security Act.
``(E) Physician assistant; nurse practitioner.--For
purposes of this paragraph, the terms `physician
assistant' and `nurse practitioner' have the meanings
given to such terms by section 1861(aa)(3) of the
Social Security Act.
``(F) Allied health professional.--For purposes of
this paragraph, the term `allied health professional'
has the meaning given such term by section 799(5) of
the Public Health Service Act.
``(G) Medically underserved rural area.--For
purposes of subparagraph (A), the term `medically
underserved rural area' means any rural area which is a
medically underserved area (as defined in section
330(b) or 1302(7) of the Public Health Service Act).''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years ending after the date of the enactment of this
Act.
SEC. 103. 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 primary
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, nurse practitioner, nurse
clinician, or nurse midwife 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)(3) 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 rural 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),
``(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, or
``(C) a community that is certified as underserved
by the Secretary for purposes of participation in the
rural health clinic program under title XVIII of the
Social Security Act.
``(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 such Code 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 the date of the enactment of
this Act.
SEC. 104. 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 $17,500.
``(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 subsection shall
apply to property placed in service in taxable years beginning after
the date of the enactment of this Act.
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.
Section 332(b) of the Public Health Service Act (42 U.S.C. 254e(b))
is amended by adding at the end the following paragraph:
``(4) With respect to determining the need for health
services through the indicators of need under paragraphs (1)
and (2), consideration of the following:
``(A) The number of individuals in the population
involved whose means of payment for health services is
the program under title XVIII of the Social Security
Act.
``(B) The number of individuals in the population
who means of payment for health services is the program
under title XIX of such Act.
``(C) The number of individuals in the population
who are uninsured with respect to health policies or
plans.
``(D) The percentage of the population constituted
by the aggregate number of individuals under
subparagraphs (A) through (C).
``(E) In the case of community-based physicians who
provide primary health services and who are accepting
additional patients whose means of payment is through
the program established in title XVIII or XIX of the
Social Security Act, the percentage constituted by the
ratio of the number of such physicians to the number of
individuals in the population.''.
SEC. 202. FUNDING FOR SPECIAL LOANS FOR FORMER CORPS MEMBERS TO ENTER
PRIVATE PRACTICE IN HEALTH PROFESSIONAL SHORTAGE AREAS.
(a) In General.--
(1) Allocation.--Section 338(a) of the Public Health
Service Act (42 U.S.C. 254k(a)) is amended by adding at the end
the following paragraph:
``(3) Of the amounts appropriated under paragraph (1) for a fiscal
year, the Secretary shall reserve not less than 5 percent for carrying
out section 338G.''.
(2) Conforming amendment.--Section 338G(a) of the Public
Health Service Act (42 U.S.C. 254p(a)) is amended in the matter
preceding paragraph (1) by striking ``authorized under section
338'' and inserting ``reserved under section 338(a)(3)''.
(b) Study.--
(1) In general.--During the fiscal years 1996 through 2000,
the Secretary shall conduct a study for the purpose of
determining the extent to which the program under section 338G
of the Public Health Service Act has been effective in
increasing the number of health professionals who begin private
practice in health professional shortage areas after
terminating the membership of the individuals in the National
Health Service Corps. The study shall separately state the
number of such individuals who have completed a period of
obligated service under the scholarship or loan repayment
program under section 338A or 338B of such Act, respectively.
(2) Date certain for completion.--Not later than February
1, 2001, the Secretary shall complete the study required in
paragraph (1) and submit to the Congress a report describing
the findings made in the study.
(3) Definitions.--For purposes of this subsection:
(A) The term ``health professional shortage area''
has the meaning given such term in section 331(a)(3) of
the Public Health Service Act.
(B) The term ``Secretary'' means the Secretary of
Health and Human Services.
SEC. 203. ASSIGNMENT OF CORPS PERSONNEL; PRIORITY FOR RURAL MEDICAL
FACILITIES PROVIDING EXPERIENCE REGARDING HEALTH
PROFESSIONS AS CAREER CHOICE.
Section 333A(a)(1)(B) of the Public Health Service Act (42 U.S.C.
254f-1(a)(1)(B)) is amended--
(1) in clause (iii), by striking ``and'' after the
semicolon at the end;
(2) in clause (iv), by adding ``and'' after the semicolon
at the end; and
(3) by adding at the end the following clause:
``(v) in the case of entities providing
health services in rural areas, is operating a
program for students of rural secondary schools
or institutions of higher education under which
program the students are provided with
opportunities to visit or work at rural
hospitals (or other rural health facilities)
for the purpose of gaining experience regarding
a career in a field of primary health care;''.
PART 2--SCHOLARSHIP AND LOAN REPAYMENT PROGRAMS
SEC. 211. PROVISION REGARDING INCREASE IN FUNDING.
Section 338H(b)(1) of the Public Health Service Act (42 U.S.C.
254q(b)(1)) is amended--
(1) by striking ``and'' after ``1991,'';
(2) by striking ``through 2000'' and inserting ``through
1994,''; and
(3) by inserting before the period the following:
``$150,000,000 for fiscal year 1995, and such sums as may be
necessary for each of the fiscal years 1996 through 2000''.
SEC. 212. PRIORITY FOR CERTAIN INDIVIDUALS FROM RURAL BACKGROUNDS.
(a) Scholarship Program.--Section 338A(d) of the Public Health
Service Act (42 U.S.C. 254l(d)) is amended--
(1) in paragraph (2), in the matter preceding subparagraph
(A), by inserting ``, subject to paragraph (3),'' after
``shall''; and
(2) by adding at the end the following paragraph:
``(3)(A) Of individuals receiving priority under paragraph (2)(B),
the Secretary shall give further priority to any individual who has
resided in a rural area for a significant number of years and who has
characteristics indicating the individual will, after the period of
obligated service, serve in a rural health professional shortage area.
``(B) Factors considered by the Secretary in determining priorities
for purposes of subparagraph (A) shall include consideration of whether
the health professions school attended (or to be attended) by the
individual involved is a school whose graduates include a significant
number of health professionals who are serving in rural areas.''.
(b) Loan Repayment Program.--Section 338B(d) of the Public Health
Service Act (42 U.S.C. 254l-1(d)) is amended--
(1) in paragraph (2), in the matter preceding subparagraph
(A), by inserting ``, subject to paragraph (3),'' after
``shall''; and
(2) by adding at the end the following paragraph:
``(3)(A) Of individuals receiving priority under paragraph (2)(B),
the Secretary shall give further priority to any individual who has
resided in a rural area for a significant number of years and who has
characteristics indicating the individual will, after the period of
obligated service, serve in a rural health professional shortage area.
``(B) Factors considered by the Secretary in determining priorities
for purposes of subparagraph (A) may include consideration of whether
the health professions school attended by the individual involved is a
school whose graduates include a significant number of health
professionals who are serving in rural areas.''.
PART 3--LOW-INTEREST LOANS REGARDING OBLIGATED SERVICE IN UNDERSERVED
RURAL AREAS
SEC. 221. ESTABLISHMENT OF PROGRAM OF LOANS.
Subpart III of part D of title III of the Public Health Service Act
(42 U.S.C. 254l et seq.) is amended by adding at the end the following
section:
``SEC. 338M. LOAN FUND REGARDING OBLIGATED SERVICE IN UNDERSERVED RURAL
AREAS.
``(a) Establishment of Rural Primary Health Care Fund.--There is
established in the Treasury of the United States a fund to be known as
the Rural Primary Health Care Fund (in this section referred to as the
`Fund'). The Fund shall consist of such amounts as may be appropriated
under subsection (f) (and such amounts as may be appropriated in
subsections (d) and (e)(3)). Amounts appropriated to the Fund are
available until expended.
``(b) Expenditures From Fund.--Amounts in the Fund are available to
the Secretary for the purpose of carrying out subsection (c), subject
to the extent of amounts made available in advance in appropriations
Acts.
``(c) Low-Interest Loans for Attendance at Health Professions
Schools; Obligated Service Regarding Underserved Rural Areas.--
``(1) In general.--
``(A) Subject to the provisions of this subsection,
the Secretary may, from amounts available under
subsection (b), make loans to assist individuals with
the costs of attending health professions schools if
the individuals agree to provide primary health
services in an underserved rural area.
``(B) For purposes of this subsection, the term
`underserved rural area' means a rural area with a
shortage of personal health services, except that such
term does not include any health professional shortage
area.
``(C) The Secretary shall issue criteria for
determining whether an area is an underserved rural
area.
``(2) Certain requirements.--The Secretary may make a loan
under paragraph (1) to an individual only if the following
conditions are met:
``(A) The individual is enrolled (or accepted for
enrollment) as a full-time student in a course of study
or program leading to a degree in medicine, osteopathic
medicine, dentistry, or other health profession, and
such course or program is offered by an accredited
educational institution (as determined by the
Secretary) and is approved by the Secretary.
``(B) The individual is eligible for, or holds, an
appointment as a commissioned officer in the Regular or
Reserve Corps of the Service or is eligible for
selection for civilian service in the Corps.
``(C) The individual and the Secretary enter into
the contract described in paragraph (3).
``(3) Loan contract.--For purposes of paragraph (2)(C), the
contract described in this paragraph is a written contract
containing provisions as follows:
``(A) The Secretary agrees to provide the
individual involved with loans under paragraph (1) for
a number of academic years (not to exceed 4 academic
years) determined by the individual, during which
period the individual is pursuing a course of study or
program described in paragraph (2)(A).
``(B) The Secretary agrees to accept the individual
into the Corps (or for equivalent service as otherwise
provided in this subpart), subject to the availability
of funds for carrying out sections 331 through 335.
``(C) The individual agrees as follows:
``(i) To accept the loan.
``(ii) To maintain enrollment in the course
or program involved until the individual
completes the course or program.
``(iii) While enrolled in the course or
program, to maintain an acceptable level of
academic standing (as determined under
regulations of the Secretary by the educational
institution offering the course or program).
``(iv) To provide obligated service for
purposes of paragraph (5).
``(v) To other provisions of this
subsection that are applicable to the
individual, including paragraph (8) (relating
to the breach of the obligations of the
individual under this subsection).
``(D) A provision specifying the purposes for which
the loan will be expended, subject to paragraph (6)(A),
and the amount to be expended for each of the purposes.
``(E) A provision that any financial obligation of
the United States arising out of the contract, and any
obligation of the individual under the contract, is
contingent upon funds being available under subsection
(b) for loans under paragraph (1) and upon funds being
available to carry out the purposes of sections 331
through 335.
``(4) Amount of loan; interest rate.--The amount of a loan
under paragraph (1) for an academic year may not exceed
$35,000. The rate of interest on the unpaid principal balance
of such a loan may not exceed 4 percent annually, and may not
be less than 2 percent annually.
``(5) Period of obligated service.--For purposes of
paragraph (3)(C)(iv), the obligated service of an individual is
as follows:
``(A) The service to be provided is the provision
of primary health services.
``(B) The service is to be provided in an
underserved rural area to which the individual is
assigned pursuant to paragraph (10).
``(C) The period of service is the greater of the
following periods:
``(i) 1 year.
``(ii) 1 year for each 2 academic years for
which loans under paragraph (1) are provided to
the individual.
``(iii) 1 year for each $35,000 provided in
such loans to the individual.
``(6) Expenditure of loan.--
``(A) A loan under paragraph (1) to an individual
may be expended only for the following purposes:
``(i) The tuition of the individual for the
course or program involved for the academic
year involved.
``(ii) Any other reasonable educational
expense, including fees, books, and laboratory
expenses, incurred by the individual in the
academic year.
``(iii) Reasonable living expenses incurred
in attending the educational institution
involved, not to exceed the amount in effect
under section 338A(g)(1)(B) for stipends.
``(B) In the case of an educational institution
offering a course or program for which a loan under
paragraph (1) is made, the Secretary may contract with
the institution to make payments to the institution of
the amounts provided for the purposes specified in
clauses (i) and (ii) of subparagraph (A). The payments
may be made to the institution without regard to
section 3648 of the Revised Statutes (31 U.S.C. 529).
``(7) Repayment of loan; deferments.--The provisions of
subparagraphs (B) and (C) of section 705(a)(2) apply to loans
under paragraph (1) to the same extent and in the same manner
as such provisions apply to loans under subpart I of part A of
title VII.
``(8) Breach of loan contract.--With respect to an
individual who has entered into a written contract under
paragraph (3) and who breaches the contract, an agreement under
paragraph (3)(C)(v) is as follows:
``(A) If, for any reason other than a reason
specified in subparagraph (B), the individual fails to
provide obligated service under paragraph (5)--
``(i) the balance due on the loan involved
will be immediately recomputed from the date of
issuance at an interest rate of 12 percent per
year, compounded annually; and
``(ii) the recomputed balance will be paid
not later than the expiration of the 3-year
period beginning on the date on which the
individual breaches the contract.
``(B) The individual is liable to the United States
for the amount which has been paid to or on behalf of
the individual under paragraph (1) if the individual--
``(i) fails to maintain an acceptable level
of academic standing for purposes of paragraph
(3)(C)(iii);
``(ii) is dismissed from the educational
institution involved for disciplinary reasons;
``(iii) voluntarily terminates the course
or program involved before the completion of
the course or program; or
``(iv) fails to accept payment under the
loan under paragraph (1), or instructs the
educational institution not to accept payment,
in whole or in part, of payments under the
loan.
``(9) Waiver of obligations; limitation regarding
bankruptcy.--
``(A) With respect to the obligation of an
individual under a contract under paragraph (3), the
Secretary shall provide for the partial or total waiver
or suspension of the obligation whenever compliance by
the individual is impossible, or would involve extreme
hardship to the individual, and if enforcement of the
obligation with respect to the individual would be
unconscionable.
``(B) An obligation of an individual under the
contract under paragraph (3) to make payments may be
released by a discharge in bankruptcy under title 11,
United States Code, only if such discharge is granted
after the expiration of the 5-year period beginning on
the first date that such payment is required (exclusive
of any period in which in which the obligation to make
payments is suspended), and only if the bankruptcy
court finds that nondischarge of the obligation would
be unconscionable.
``(10) Assignment of corps personnel pursuant to obligated
service.--The provisions of section 333 apply to the obligated
service of individuals under paragraph (5) with respect to
underserved rural areas to the same extent and in the same
manner as such provisions apply to the obligated service of
individuals under section 338A with respect to health
professional shortage areas.
``(11) Priorities in making loans.--
``(A) In making loans under paragraph (1), the
Secretary shall give priority to any individual (if
otherwise a qualified applicant) who has resided in a
rural area for a significant number of years and who
has characteristics indicating the individual will,
after the period of obligated service under paragraph
(5), continue to serve in an underserved rural area.
``(B) Factors considered by the Secretary in
determining priorities for purposes of subparagraph (A)
shall include consideration of whether the health
professions school attended (or to be attended) by the
individual involved is a school whose graduates include
a significant number of health professionals who serve
in rural areas.
``(12) Miscellaneous provisions.--Individuals who have
entered into written contracts with the Secretary under this
subsection, while undergoing academic training, shall not be
counted against any employment ceiling affecting the Department
of Health and Human Services.
``(d) Availability of Repayments.--Payments of principal and
interest by (or on behalf of) recipients of loans under subsection
(c)(1) are hereby appropriated to the Fund.
``(e) Investment.--
``(1) In general.--The Secretary of the Treasury shall
invest such amounts of the Fund as such Secretary determines
are not required to meet current withdrawals from the Fund.
Such investments may be made only in interest-bearing
obligations of the United States. For such purpose, such
obligations may be acquired on original issue at the issue
price, or by purchase of outstanding obligations at the market
price.
``(2) Sale of obligations.--Any obligation acquired by the
Fund may be sold by the Secretary of the Treasury at the market
price.
``(3) Availability of income.--Any interest derived from
obligations acquired by the Fund, and proceeds from any sale or
redemption of such obligations, are hereby appropriated to the
Fund.
``(f) Authorization of Appropriations.--For the purpose of
providing amounts for the Fund, there are authorized to be appropriated
$20,000,000 for fiscal year 1995, and such sums as may be necessary for
each of the fiscal years 1996 and 1997.''.
Subtitle B--Other Programs Regarding Rural Health Care
SEC. 231. STATE OFFICES OF RURAL HEALTH.
(a) Requirement Regarding Recruitment of Physicians.--Section
338J(c) of the Public Health Service Act (42 U.S.C. 254r(c)) is
amended--
(1) in paragraph (2), by striking ``and'' after the
semicolon at the end;
(2) in paragraph (3), by striking the period and inserting
``; and''; and
(3) by adding at the end the following paragraph:
``(4) activities to recruit and retain physicians to serve
in rural areas of the State.''.
(b) Authorizations of Appropriations.--
(1) In general.--Section 338J(j)(1) of the Public Health
Service Act (42 U.S.C. 254r(j)(1)) is amended--
(A) by striking ``and'' after ``1992,''; and
(B) by inserting before the period the following:
``, and $1,500,000 for each of the fiscal years 1995
through 1998''.
(2) Conforming amendment.--Section 338J(k) of the Public
Health Service Act (42 U.S.C. 254r(k)) is amended by striking
``$10,000,000'' and inserting ``$16,000,000''.
SEC. 232. AREA HEALTH EDUCATION CENTER PROGRAMS; AUTHORIZATION OF
APPROPRIATIONS.
Section 746(i)(1) of the Public Health Service Act (42 U.S.C.
293j(i)(1) is amended--
(1) by striking ``is authorized'' and inserting ``are
authorized'';
(2) by striking ``through 1995'' and inserting ``and
1994''; and
(3) by inserting before the period the following: ``, and
$50,000,000 for each of the fiscal years 1995 through 1997''.
TITLE III--PROVISIONS RELATING TO THE MEDICARE PROGRAM
SEC. 301. ELIMINATION OF APPLICATION OF GEOGRAPHIC ADJUSTMENT INDICES
IN DETERMINING PAYMENTS FOR PHYSICIANS' SERVICES.
(a) Elimination of Adjustment Beginning in 1999.--Section 1848 of
the Social Security Act (42 U.S.C. 1395w-4) is amended--
(1) in subsection (b)(1)(C), by striking ``the geographic''
and inserting ``with respect to services furnished before 1999,
the geographic''; and
(2) in subsection (e)(1)(A), by striking ``the Secretary''
and inserting ``with respect to services furnished before 1999,
the Secretary''; and
(3) in subsection (e)(2), by inserting ``furnished in years
before 1999'' after ``physicians' services''.
(b) Increase in Payments for Services in Rural Areas During
Transition Period.--Section 1848(e) of such Act (42 U.S.C. 1395w-4(e))
is amended by adding at the end the following new paragraph:
``(6) Increase in values for services in rural areas.--
``(A) In general.--During each transition year (as
described in subparagraph (B)), the Secretary shall--
``(i) increase the geographic index values
otherwise established under this subsection for
physicians' services furnished during the year
in any fee schedule area that is located in a
rural area (as defined in section
1886(d)(2)(D)) by such equivalent percentage as
the Secretary determines necessary to assure
that, effective with the first year that
follows the final transition year, the index
values established under this subsection shall
be the same for all fee schedule areas; and
``(ii) decrease the geographic index values
otherwise established under this subsection for
physicians' services furnished during the year
in any other fee schedule area by such
percentage as the Secretary determines
necessary to assure that the aggregate amount
of payments made for physicians' services under
this section during the year does not exceed
the amount that would have been made if this
paragraph had not been in effect.
``(B) Transition years described.--In this
paragraph, the `transition years' are 1995, 1996, 1997,
and 1998.''.
SEC. 302. EXEMPTION FROM ANTI-KICKBACK PENALTIES FOR CERTAIN FINANCIAL
INCENTIVES PROVIDED TO PHYSICIANS BY RURAL HOSPITALS.
(a) In General.--Section 1128B(b)(3) of the Social Security Act (42
U.S.C. 1320a-7b(b)(3)) is amended--
(1) by striking ``and'' at the end of subparagraph (D);
(2) by striking the period at the end of subparagraph (E)
and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(F) any payment made by a hospital located in a rural
area (as defined in section 1886(d)(2)(D)) to or on behalf of a
physician as repayment of the physician's medical education
loans or as a subsidy to enable the physician to start a
medical practice, but only if the payment is contingent upon
the physician--
``(i) joining the hospital's medical staff,
``(ii) relocating to the area, or
``(iii) providing physicians' services to residents
of the area.''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply to payments made on or after January 1, 1995.
SEC. 303. EXTENSION OF BONUS PAYMENT FOR PHYSICIAN SERVICES PROVIDED IN
HEALTH PROFESSIONAL SHORTAGE AREAS TO CERTAIN
NONPHYSICIAN PROVIDERS AND OTHER MEDICARE-DEPENDENT
PROVIDERS.
(a) Bonus Payment for Services Provided in Health Professional
Shortage Areas.--Section 1833(m) of the Social Security Act (42 U.S.C.
1395l(m)) is amended--
(1) by striking ``(m)'' and inserting ``(m)(1)'';
(2) by inserting ``described in paragraph (2)'' after
``physicians' services'';
(3) by striking ``in an area'' and all that follows through
``shortage area,'';
(4) by striking ``the physician'' and inserting ``the
provider of the service''; and
(5) by adding at the end the following new paragraph:
``(2) In paragraph (1), physicians' services described in this
paragraph are services--
``(A) furnished in an area designated (under section
332(a)(1)(A) of the Public Health Service Act) as a health
professional shortage area; or
``(B) furnished during a year by a provider with respect to
whom not less than 75 percent of the patients for whom the
provider furnishes such services during the year are
individuals--
``(i) who are entitled to benefits under this
title;
``(ii) who are eligible for medical assistance
under a State plan approved under title XIX; or
``(iii) with respect to whom the provider did not
receive any payment for the service.''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply to services furnished on or after January 1, 1995.
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.
(a) Stafford Loans.--
(1) GSL loans.--Section 428(b)(1)(M) of the Higher
Education Act of 1965 (20 U.S.C. 1078(b)(1)(M)) is amended--
(A) in clause (ii), by striking ``or'' at the end;
(B) in clause (iii), by adding ``or'' after the
semicolon at the end; and
(C) by adding at the end the following clause:
``(iv) during which the borrower is serving
in an internship or residency program, in a
health facility in a rural area, in preparation
for practice in an area of primary care
(including internal medicine, pediatrics,
obstetrics/gynecology, family medicine, and
osteopathy);''.
(2) FISL loans.--Section 427(a)(2)(C) of the Higher
Education Act of 1965 (20 U.S.C. 1077(a)(2)(C)) is amended--
(A) in clause (ii), by striking ``or'' at the end;
(B) in clause (iii), by adding ``or'' after the
semicolon at the end; and
(C) by inserting after clause (iii) the following
clause:
``(iv) during which the borrower is serving
in an internship or residency program, in a
health facility in a rural area, in preparation
for practice in an area of primary care
(including internal medicine, pediatrics,
obstetrics/gynecology, family medicine, and
osteopathy);''.
(b) Perkins Loans.--Section 464(c)(2)(A) of the Higher Education
Act of 1965 (20 U.S.C. 1087dd(c)(2)(A)) is amended--
(1) in clause (iii), by striking ``or'' at the end;
(2) in clause (iv), by adding ``or'' after the semicolon at
the end; and
(3) by inserting after clause (iv) the following clause:
``(v) during which the borrower is serving
in an internship or residency program, in a
health facility in a rural area, in preparation
for practice in an area of primary care
(including internal medicine, pediatrics,
obstetrics/gynecology, family medicine, and
osteopathy);''.
(c) Effective Date.--The amendments made by this section shall
apply on and after the date of the enactment of this Act with respect
to loans made under the Higher Education Act of 1965 before, on, or
after such date.
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