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1992.05.04 :  Regulation -- National Health Service Corps

Contact: Bob Hardy (202) 245-6145
May 4, 1992

        HHS Secretary Louis W. Sullivan, M.D., today announced
procedures to recover funds from health care providers who have
failed to comply with conditions under which they received
federal scholarships and loans from Public Health Service
programs.
        Under the final regulation published in the Federal
Register, the affected providers would be required to repay the
funds through offsets from Medicare reimbursements or face
exclusion from Medicare participation and action by the Justice
Department to compel repayment.
        The regulation is directed at health providers who fail
to comply with educational assistance repayment requirements.
National Health Service Corps (NHSC) scholarship recipients are
required to serve in designated health professional shortage
areas in return for educational support or repay triple the
scholarship amounts plus interest.  The Physician Shortage Area
scholarship program requires similar service or repayment at the
prevailing interest rate. The Health Education Assistance Loan
(HEAL) program requires direct repayment of student loans or
scholarships.
        Ninety-six percent of NHSC scholars honor their
commitments to practice medicine in underserved areas in exchange
for educational 
assistance or choose to repay.  Approximately four percent - 1,200 - 
have been slow to pay, and 550 of those have not made a payment.

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        "The intent of the NHSC is to assure health care where it's
needed most, not to provide student loans," Secretary Sullivan
said. "Our choice is for scholars to serve, but if they will not,
then we must seek repayment."
        "With the HEAL program, approximately 7 percent (7,500) of
the 105,000 health practitioners who have received student loans on
which payments are due have not repaid their government 
assistance," HHS Assistant Secretary for Health James Mason, M.D.,
said in speaking for the Public Health Service.

        The regulation requires health providers who have breached
their contracts under those programs to enter agreements with HHS
to have the sums they owe deducted from their Medicare payments.
They will be required to accept assignment for all services to
Medicare beneficiaries, which means they may not impose extra
charges on beneficiaries to recover amounts deducted for debt
payments.

        If an individual refuses to enter into such an agreement or
fails to fulfill the agreement, or the Medicare payments are not
sufficient to meet the obligation, the individual will be excluded
from participation in Medicare and the case will be referred to the
U.S. attorney general to collect the funds that are owed.

        William Toby Jr., who directs the Medicare program as the
acting administrator of the Health Care Financing Administration,
said, "We will vigorously pursue the collection of funds owed by
the providers referred to us by the Public Health Service."

        He explained that deductions will also be taken from
Medicare payments to group practices and other providers when
practitioners employed by or affiliated with them have failed to
meet their obligations under the scholarship and loan programs. 
The procedure to recover the funds through the Medicare program was
authorized by the Omnibus Budget Reconciliation Act of 1987.



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