42 C.F.R. Subpart B—Private Practice Special Loans for Former Corps Members
Title 42 - Public Health
Source: 51 FR 31948, Sept. 8, 1986, unless otherwise noted.
As used in this subpart, terms have the same meanings as those given to them in subpart A, §23.2. In addition: National Health Service Corps scholarship recipient means an individual receiving a scholarship under the Public Health and National Health Service Corps Scholarship Training Program authorized by section 225 of the Act as in effect on September 30, 1977, and repealed on October 1, 1977, or a scholarship under the NHSC Scholarship Program authorized by section 338A of the Act, formerly section 751 of the Act. Private full-time clinical practice means the provision of ambulatory clinical services for a minimum of 40 hours per week for at least 45 weeks a year, including the provision of hospital coverage services appropriate to meet the needs of patients treated and to assure continuity of care. The 40 hours per week must be performed in no less than 4 days per week with no more than 12 hours of work being performed in any 24-hour period. The purpose of the private practice loan is to assist NHSC scholarship recipients in establishing private full-time clinical practices in designated health manpower shortage areas. (a) Eligibility for loans is limited to NHSC scholarship recipients who have completed at least 2 years of their service obligations at a NHSC site. NHSC scholarship recipients remain eligible for loans under this subpart for 1 year after they have completed their service obligations at a NHSC site. (b) Scholarship recipients who are in arrears 31 days or more on a Health Professions Student Loan (42 U.S.C. 294m et seq.), Health Education Assistance Loan (42 U.S.C. 294, et seq.), Nursing Student Loan (42 U.S.C. 297a et seq.), or any other Federally guaranteed or direct student loan are ineligible for this loan program. (c) NHSC scholarship recipients who have received loans under either this subpart or subpart C of this part are ineligible for loans under this subpart. The Secretary may make loans either in the amount of $12,500, if the recipient agrees to practice in accordance with the loan agreement for a period of at least 1 year but less than 2 years, or $25,000, if the recipient agrees to practice in accordance with the loan agreement for a period of at least 2 years. Interest will be charged at the Treasury Current Value of Funds (CVF) rate in effect on April 1 immediately preceding the date on which the loan is approved and will accrue from the date the loan funds are disbursed to the borrower. Payments shall be made at monthly intervals, beginning 1 month from the date of the loan disbursement, in accordance with the repayment schedule established by the Secretary and set forth in the loan agreement. Only interest payments are required during the first 2 years. The repayment schedule may be extended in accordance with §23.31(a). (a) Failure to make full payment of principal and/or interest when due will subject the borrower to the assessment of administrative costs and penalty charges, in addition to the regular interest charge, in accordance with 45 CFR part 30. (b) Failure to make full payment of principal and/or interest when due may result in the Secretary placing the borrower in default of the loan. See §23.28(a). The following events will constitute defaults of the loan agreement: (a) Failure to make full payment of principal and/or interest when due, and continuance of that failure for a period of sixty (60) days, or a lesser period of time if the Secretary determines that more immediate action is necessary in order to protect the interests of the Government. (b) Failure to perform or observe any of the terms and conditions of the loan agreement and continuance of that failure for a period of sixty (60) days. (c) The institution of bankruptcy proceedings, either voluntary or involuntary, under any State or Federal statute, which may adversely affect the borrower's ability to comply with the terms and conditions of the agreement or the promissory note. (a) In the event of default, the Secretary may declare the entire amount owed (including principal, accrued interest and any applicable charges) immediately due and payable. Collection of the amount owed will be made in accordance with 45 CFR part 30. (b) The borrower is not entitled to written notice of any default and the failure to deliver written notice of default in no way affects the Secretary's right to declare the loan in default and take any appropriate action under the loan agreement or the promissory note. (c) The failure of the Secretary to exercise any remedy available under law or regulation shall in no event be construed as a waiver of his or her right to exercise that remedy if any subsequent or continued default or breach occurs. The borrower shall have the option to prepay the balance of any part of the loan, together with accrued interest, at any time without prepayment penalty. (a) Whenever health, economic, or other personal problems affect the borrower's ability to make scheduled payments on the loan, the Secretary may allow the borrower an extension of time or allow the borrower to make smaller payments than were previously scheduled; however, interest will continue to accrue at the rate specified in the promissory note until the loan is repaid in full. The loan must be fully repaid within 10 years after it was made. (b) No waiver, full or partial, of repayment of the loan will be granted; except that the obligation of a borrower to repay a loan shall be cancelled upon the death or total and permanent disability of the borrower, as determined by the Secretary. (c) In order to make a determination under paragraph (a) or (b) of this section, the Secretary may require supporting medical, financial, or other documentation. (a) The borrower must use the total amount of the loan to purchase or lease, or both, equipment and supplies, to hire authorized personnel to assist in providing health services and/or to renovate facilities for use in providing health services in his or her private practice. Equipment and supplies purchased and/or leased, personnel hired and facilities renovated shall be limited to the items requested in the loan application and approved by the Secretary. (b) The borrower must expend the loan funds within 6 months from the date of the loan or within such other time as the Secretary may approve. Documentation of the expenditure of funds must be furnished to the Secretary upon request. The Secretary may require the borrower to pledge to the Secretary a security interest in specified collateral. (a) The borrower must sign a loan agreement describing the loan and practice conditions, and a promissory note agreeing to repay the loan plus interest. (b) The borrower must agree to enter into private full-time clinical practice in a HMSA for the time period specified in the loan agreement. (c) The borrower must accept assignment, for the time period specified in the loan agreement, under section 1842(b)(3)(B)(ii) of the Social Security Act as full payment for all services for which payment may be made under part B of title XVIII of that Act. (d) The borrower must enter into an appropriate agreement, for the time period specified in the loan agreement, with the State agency which administers the State plan for medical assistance under title XIX of the Social Security Act to provide services to individuals entitled to medical assistance under the plan. (e) During the time period specified in the loan agreement, the borrower must provide health services to individuals at the usual and customary rate prevailing in the HMSA in which services are provided; however, services must be provided at no charge or at a nominal charge to those persons unable to pay for these services. (f) The borrower must keep and preserve all documents, including bills, receipts, checks, and correspondence which affect the operation of the private practice and the expenditure of loan funds for the period of the practice obligation specified in the loan agreement plus 3 years. Accounts will be maintained under one of the accounting principles identified by the Secretary in the loan agreement. (g) The borrower must provide the Secretary and the Controller General of the United States, or their representatives, access during normal working hours to accounts, documents, and records for the purposes of audit or evaluation; and must permit the Secretary or his or her representative to inspect the private practice at reasonable times during the period of the practice obligation specified in the loan agreement plus 3 years. All information as to personal facts and circumstances about recipients of services shall be held confidential, and shall not be divulged without the individual's consent except as may be required by law or as may be necessary to provide medical service to the individual or to provide for medical or fiscal audits by the Secretary or his or her designee with appropriate safeguards for confidentiality of records. (h) For the entire period of loan repayment, the borrower must acquire, maintain, and when requested, must provide the Secretary with copies of policies of insurance on equipment and supplies in amounts adequate to reasonably protect the borrower from risk, including public liability, fire, theft, and worker's compensation. (i) If the Secretary retains a security interest pursuant to §23.33, the borrower must keep and preserve all documents which affect that security interest for the period of the loan repayment and allow the Secretary or his or her designee access, during normal working hours, to those documents. (j) The borrower must maintain the loan proceeds in a separate account from his or her other transactions and must agree to draw upon this account and expend the loan proceeds in accordance with §23.32. (k) The Secretary may impose other conditions which he or she deems appropriate under law or regulation to protect the Government's interests. Approval of loan applications will be based on the criteria set forth below: (a) The need in the HMSA for the applicant's health profession as determined under section 332 of the Act; (b) The applicant's need for the loan funds; and (c) The comments from State or local health professional societies on the appropriateness of the applicant's intended private practice; and (d) The applicant's credit worthiness and projected financial ability to repay the loan.
Title 42: Public Health
PART 23—NATIONAL HEALTH SERVICE CORPS
Subpart B—Private Practice Special Loans for Former Corps Members
§ 23.21 Definitions.
§ 23.22 What is the purpose of a private practice loan?
§ 23.23 Who is eligible to receive a private practice option loan?
§ 23.24 In what amounts are loans made?
§ 23.25 How will interest rates for loans be determined?
§ 23.26 How is the loan repaid?
§ 23.27 What happens if scheduled payments are late?
§ 23.28 What events constitute default?
§ 23.29 What happens in the case of a default?
§ 23.30 May the loan be prepaid?
§ 23.31 May loan payments be postponed or waived?
§ 23.32 What conditions are imposed on the use of the loan funds?
§ 23.33 What security must be given for these loans?
§ 23.34 What other conditions are imposed?
§ 23.35 What criteria are used in making loans?
