ASSEMBLY, No. 1269

STATE OF NEW JERSEY

215th LEGISLATURE

 

PRE-FILED FOR INTRODUCTION IN THE 2012 SESSION

 


 

Sponsored by:

Assemblyman  CRAIG J. COUGHLIN

District 19 (Middlesex)

Assemblywoman  PAMELA R. LAMPITT

District 6 (Burlington and Camden)

Assemblywoman  CAROLINE CASAGRANDE

District 11 (Monmouth)

 

Co-Sponsored by:

Assemblywoman Handlin

 

 

 

 

SYNOPSIS

     Provides loan redemption for certain physician specialists who work in State 10 years; appropriates $2 million.

 

CURRENT VERSION OF TEXT

     Introduced Pending Technical Review by Legislative Counsel

  


An Act concerning loan redemption for certain physicians, supplementing chapter 71C of Title 18A of the New Jersey Statutes and making an appropriation.

 

     Be It Enacted by the Senate and General Assembly of the State of New Jersey:

 

     1.    There is established a Physician Loan Redemption Program within the Higher Education Student Assistance Authority to provide for the redemption of eligible qualifying loan expenses of program participants who work in the State for ten years of service at an approved site in the State.

 

     2.    As used in this act:

     "Approved site" means a site located within a State designated underserved area or a physician shortage area, or a site that has been determined by the Higher Education Student Assistance Authority, in consultation with the Department of Health and Senior Services, to serve medically underserved populations according to criteria determined by the authority, including, but not limited to, the percentage of medically underserved patients served.

     "Authority" means the Higher Education Student Assistance Authority.

     "Eligible qualifying loan expenses" means the cumulative outstanding balance of student loans covering the cost of attendance at undergraduate and graduate institutions of medical professional education at the time an applicant is selected for the program.  Interest paid or due on qualifying loans that an applicant has taken out for use in paying the costs of undergraduate and graduate medical care professional education shall be considered eligible for reimbursement under the program.  The total amount of qualifying loans which may be redeemed for participants under the program shall not exceed the maximum amount authorized by the federal government, either in State funds or the sum of federal, State, and other non-federal matching funds, pursuant to section 338I of the Public Health Service Act (42 U.S.C.s.254q-1), whichever is applicable.

     "Executive director" means the executive director of the Higher Education Student Assistance Authority.

     "Physician" means a State-licensed professional who has obtained a degree in allopathic or osteopathic medicine.

     "Program" means the Physician Loan Redemption Program established pursuant to this act.

     "Program participant" means a physician who contracts with the authority to engage in the clinical practice of primary care or in the clinical practice of specialized care if the specialty is projected to experience a significant shortage, as determined by the commissioner in consultation with the State Board of Medical Examiners, the New Jersey Council of Teaching Hospitals, and the Medical Society of New Jersey. 

     “Projected physician specialty shortage” means those medical specialties for which a shortage of practitioners in New Jersey is projected by the Advisory Graduate Medical Education Council, in consultation with the New Jersey Council of Teaching Hospitals, pursuant to this act.

     "Qualifying loan" means a government or commercial loan for the actual costs paid for tuition and reasonable education and living expenses relating to the obtaining of a degree in allopathic or osteopathic medicine.

     "State designated underserved area" means a geographic area in this State which has been ranked by the Commissioner of Health and Senior Services on the basis of health status and economic indicators as reflecting a physician shortage pursuant to N.J.S.18A:71C-35, and which has a projected physician specialty shortage, as determined by the Advisory Graduate Medical Education Council, in consultation with the New Jersey Council of Teaching Hospitals.

     "Total and permanent disability" means a physical or mental disability that is expected to continue indefinitely or result in death and renders a participant in the program unable to perform that person's service obligation, as determined by the executive director or his designee.

     "Undergraduate medical education" means the period of time between entry into medical school and the award of a degree in allopathic or osteopathic medicine.

 

     3.    To be eligible to participate in the program, an applicant shall:

     a.    be a resident of the State;

     b.    be a graduate of a medical school approved by the State Board of Medical Examiners for the purpose of licensure and receive a recommendation from the school’s medical staff concerning participation in the loan redemption program;

     c.    have completed an accredited residency training program and received a recommendation from the director of the training program concerning participation in the loan redemption program; and

     d.    agree to practice at an approved site under the terms and conditions provided in section 4 of this act.

 

     4.    a. In administering the program, the authority or its designated agent shall contract only with a physician.

     b.    The contract shall require a program participant to:

     (1)   serve at least a 10-year period at an approved site in the full-time clinical practice, the first four years of which shall be full-time;

     (2)   charge for professional services at the usual and customary rate prevailing in the area in which the approved site is located, but allow a patient who is unable to pay that charge to pay at a reduced rate or receive care at no charge;

     (3)   not discriminate against any patient in the provision of health care services on the basis of that person's ability to pay or source of payment; and

     (4)   agree not to impose any charge in excess of the limiting fee for a service, as determined by the United States Secretary of Health and Human Services, to a recipient of benefits under the federal Medicare program established pursuant to Pub.L.89-97 (42 U.S.C.s.1395 et seq.).

     c.    The contract shall also specify the applicant's dates of required service and the total amount of eligible qualifying loan expenses to be redeemed by the State in return for service, and stipulate that the applicant has knowledge of and agrees to the six-month probationary period required prior to final acceptance into the program pursuant to section 6 of this act.

 

     5.    Maximum redemption of a loan under the loan redemption program shall be 100% of the eligible qualifying loan expenses, subject to the maximum amount authorized by the federal government pursuant to section 338I of the Public Health Service Act (42 U.S.C.s.254q-1) in return for each year of service, to be reimbursed as follows:

     (1)   first year of service, 5% of principal and interest;

     (2)   second year of service, 5% of principal and interest;

     (3)   third year of service, 10% of principal and interest;

     (4)   fourth year of service, 10%of principal and interest;

     (5)   fifth year of service, 10% of principal and interest;

     (6)   sixth year of service, 10% of principal and interest;

     (7)   seventh year of service, 10% of principal and interest;

     (8)   eighth year of service, 10% of principal and interest;

     (9)   ninth year of service, 10% of principal and interest; and

     (10) tenth year of service, 20% of principal and interest.

     No amount of eligible qualifying loan expenses shall be redeemed for services performed for less than a full year.

 

     6.    Each program participant shall serve a six-month probationary period upon initial placement at an approved site. During that period, the primary care staff of the approved site, together with the program participant and the executive director or his designee, shall evaluate the suitability of the placement for the program participant.  At the end of the probationary period, the primary care staff shall recommend the continuation of the program participant's present placement, a change in placement, or its determination that the program participant is an unsuitable candidate for the program.  If the primary care staff of the approved site recommends a change in placement, the executive director or a designee shall approve an alternate placement at an approved site.  If the primary care staff determines that the program participant is not a suitable candidate for the program, the executive director or his designee shall take this recommendation into consideration in regard to the program participant's final acceptance into the program.  No loan redemption payment shall be made during the six-month probationary period; however, a program participant shall receive credit for the six-month period in calculating the first year of required service under the loan redemption contract.

 

     7.    The executive director or his designee, in consultation with the Commissioner of Health and Senior Services, shall match program participants to State designated underserved areas.

 

     8.    The executive director or his designee shall select the program participants from among those applicants who meet the eligibility criteria established pursuant to section 3 of  this act, subject to available funds and available approved sites.  In the event that there are insufficient funds or approved sites to select all of the applicants who meet the eligibility criteria, the executive director or his designee shall accord priority to applicants in the following manner:

     a.    first, to any applicant who is closest to completing the loan redemption contract;

     b.    second, to any applicant according to the severity of the physician shortage in the area or specialty selected by the applicant; and

     c.    third, to any applicant whose residence in the State at the time of entry into postsecondary education was within a State designated underserved area.

     In the event that there are more applicants who have the same priority than there are program positions, the executive director or his designee shall select program participants by means of a lottery or other form of random selection.

 

     9.    a. A program participant, as a condition of participation, shall be required to adhere to performance standards established by the executive director or his designee.

     b.    The standards shall include, but not be limited to, requirements that a participant:

     (1)   maintain residency in the State;

     (2)   maintain a license or certification to practice medicine in the State;

     (3)   remain current with payments on student loans;

     (4)   enter into a mutually acceptable contract with an approved site;

     (5)   maintain satisfactory performance of services rendered at an approved site; and

     (6)   report to the authority or its designee, on a form and in a manner prescribed by the authority or its designee, on the program participant's performance of services rendered at an approved site prior to repayment of the annual amount eligible for redemption.

 

     10.  A program participant who has previously entered into a contract with the authority may nullify the agreement by notifying the authority in writing and reassuming full responsibility for the remaining outstanding balance of the loan debt.  In no event shall service at an approved site for less than the full calendar year of each period of service entitle the program participant to any benefits under the program.  A program participant seeking to nullify the contract before completing the fourth full year of service shall be required to pay 50% of the redeemed portion of indebtedness in not more than one year following nullification of the agreement.

 

     11.  In case of a program participant's death or total and permanent disability, the authority or its designee shall nullify the service obligation of the program participant.  The nullification shall terminate the authority's obligations under the loan redemption contract, except in the event that a program participant's death or total and permanent disability occurs during the second year of service, the authority shall not require repayment of the prior redeemed portion of indebtedness.  When continued enforcement of the contract may result in extreme hardship, the authority or its designee may nullify or suspend the service obligation of the program participant.

 

     12.  A person who knowingly or willfully furnishes any false or misleading information for the purpose of receiving loan redemption benefits under the program is guilty of a crime of the fourth degree.

 

     13.  a.  The executive director or his designee is authorized to terminate the program participant's service in the program in the case of:

     (1)   a program participant's conviction of a crime or an act of gross negligence in the performance of service obligations;

     (2)   suspension or revocation of the program participant's license or certification to practice; or

     (3)   a program participant's breach of the performance standards established pursuant to section 9 of this act.

     b.    A program participant who fails to repay an amount due the authority under the program may be subject to actions initiated by the authority or its designee, which may include, but are not limited to, recovery of the amount due by an action brought in a court of competent jurisdiction or through the offset of State tax refunds or rebates, making this information available to credit reporting agencies, and exclusion from eligibility for any student assistance benefits administered by the authority, as well as action by the federal government, to the extent that loan redemption benefits are federally funded, to recover any amount due it as permitted by federal law.  In any action brought by the authority or its designee in a court of competent jurisdiction pursuant to this subsection, the program participant shall be liable for: the debt incurred, interest on the debt at the maximum legal prevailing rate as determined by the United States Treasurer, and the administrative and court costs associated with collection of the debt.

 

     14.  A student who is participating in the federally administered National Health Service Corps Loan Repayment Program, section 338B of the Public Health Service Act (42 U.S.C.s.254 l-1), or in the Primary Care Practitioner Loan Redemption Program, N.J.S.18A:71C-32 et seq., shall not be eligible to participate simultaneously in the Physician Loan Redemption Program.

 

     15.  The executive director or his designee may, within the limits of available funds and in accordance with eligibility criteria determined by the executive director or his designee, make payments in a reasonable amount, as determined by the executive director or his designee, to reimburse a program participant for all or part of any increased tax liability incurred by the participant, pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., which results from the redemption of eligible qualifying loan expenses under the program.

 

     16.  There is appropriated from the General Fund to the Higher Education Student Assistance Authority the sum of $2,000,000 to establish the Physician Loan Redemption Program.

 

     17.  This act shall take effect immediately, except that the Higher Education Student Assistance Authority may take such anticipatory administrative action in advance as shall be necessary for the implementation of the act.

 

 

STATEMENT

 

     This bill establishes a Physician Loan Redemption Program to address the current and worsening  physician shortage in this State, and is based on a recommendation in the report recently issued by the New Jersey Council of Teaching Hospitals to target specialties with the most significant shortages and provide loan redemption incentives.  According to a survey cited in the report, loan forgiveness is one of the top factors that medical residents look for in determining a practice.

     The bill provides for redemption of qualifying loan expenses for physicians in specialties that are projected to experience a significant shortage in the State, if they work in the State for 10 years in designated underserved areas.  The Advisory Graduate Medical Education Council, in consultation with the New Jersey Council of Teaching Hospitals, would determine which specialties are projected to have a significant shortage.  Underserved areas are those which have been ranked by the Commissioner of Health and Senior Services on the basis of health status and economic indicators as reflecting a physician shortage pursuant to N.J.S.18A:71C-35.

     Program participants must be State residents, must have graduated from a medical school approved by the State Board of Medical Examiners, and have completed an accredited residency training program.  Program participants must agree to practice in a full-time clinical practice in the State for the first four of the ten-year commitment at an approved site in an underserved area.  In return for this commitment, the participant’s eligible qualifying loan expenses will be reimbursed, subject to the maximum amount authorized by federal law, as follows:

·       first year of service, 5% of principal and interest;

·       second year of service, 5% of principal and interest;

·       third year of service, 10% of principal and interest;

·       fourth year of service, 10%of principal and interest;

·       fifth year of service, 10% of principal and interest;

·       sixth year of service, 10% of principal and interest;

·       seventh year of service, 10% of principal and interest;

·       eighth year of service, 10% of principal and interest;

·       ninth year of service, 10% of principal and interest; and

·       tenth year of service, 20% of principal and interest.

     A physician who is a participant in the National Health Service Corps Loan Repayment Program, or in the State’s Primary Care Practitioner Loan Redemption Program, would not be eligible to participate in the program established by this bill.

     The bill appropriates $2 million from the General Fund to establish this loan redemption program.