ESTABLISHMENT OF PROGRAM FOR STATE LOAN REPAYMENTS REGARDING SERVICE IN HEALTH MANPOWER SHORTAGE AREAS.

SEC. 301. ESTABLISHMENT OF PROGRAM FOR STATE LOAN REPAYMENTS REGARDING SERVICE IN HEALTH MANPOWER SHORTAGE AREAS.Section 3381 of the Public Health Service Act, as redesignated by section 204 of this Act, is amended to read as follows: “SEC. 3381. GRANTS TO STATES FOR LOAN REPAYMENT PROGRAMS. “(a) In General.— “(1) Authority for grants.—The Secretary, acting through the Administrator of the Health Resources and Services Administration, may make grants to States for the purpose of assisting the States in operating programs described in paragraph (2) in order to provide for the increased availability of primary health services in health manpower shortage areas. “(2) Loan repayment programs.—The programs referred to in paragraph (1) are, subject to subsection (c), programs of entering into contracts under which the State involved agrees to pay all or part of the principal, interest, and related expenses of the educational loans of health professionals in consideration of 104 STAT. 3030 the professionals agreeing to provide primary health services in health manpower shortage areas. “(3) Direct administration by state agency.—The Secretary may not make a grant under paragraph (1) unless the State involved agrees that the program operated with the grant will be administered directly by a State agency. “(b) Requirement of Matching Funds.— “(1) In general.—The Secretary may not make a grant under subsection (a) unless the State agrees that, with respect to the costs of making payments on behalf of individuals under contracts made pursuant to paragraph (2) of such subsection, the State will make available (directly or through donations from public or private entities) non-Federal contributions in cash toward such costs in an amount equal to not less than $1 for each $1 of Federal funds provided in the grant. “(2) Determination of amount of non-federal contribution.—In determining the amount of non-Federal contributions in cash that a State has provided pursuant to paragraph (1), the Secretary may not include any amounts provided to the State by the Federal Government. “(c) Coordination With Federal Program.— “(1) Assignments for health manpower shortage areas under federal program.—The Secretary may not make a grant under subsection (a) unless the State involved agrees that, in carrying out the program operated with the grant, the State will assign health professionals participating m the program only to public and nonprofit private entities located in and providing health services in health manpower shortage areas. “(2) Remedies for breach of contracts.—The Secretary may not make a grant under subsection (a) unless the State involved agrees that the contracts provided by the State pursuant to paragraph (2) of such subsection will provide remedies for any breach of the contracts by the health professionals involved. “(3) Limitation regarding contract inducements.— “(A) Except as provided in subparagraph (B), the Secretary may not make a grant under subsection (a) unless the State involved agrees that the contracts provided by the State pursuant to paragraph (2) of such subsection will not be provided on terms that are more favorable to health professionals than the most favorable terms that the Secretary is authorized to provide for contracts under the Loan Repayment Program under section 338B, including terms regarding— “(i) the annual amount of payments provided on behalf of the professionals regarding educational loans; and “(ii) the availability of remedies for any breach of the contracts by the health professionals involved. “(B) With respect to the limitation established in subparagraph (A) regarding the annual amount of payments that may be provided to a health professional under a contract provided by a State pursuant to subsection (a)(2), such limitation shall not apply with respect to a contract if— “(i) the excess of such annual payments above the maximum amount authorized in section 338B(g)(2)(A) for annual payments regarding contracts is paid solely 104 STAT. 3031from non-Federal contributions under subsection (b); and “(ii) the contract provides that the health professional involved will satisfy the requirement of obligated service under the contract solely through the provision of primary health services in a health manpower shortage area that is receiving priority for purposes of section 333A(a)(1) and that is authorized to receive assignments under section 333 of individuals who are participating in the Scholarship Program under section 338A. “(d) Restrictions on Use of Funds.—The Secretary may not make a grant under subsection (a) unless the State involved agrees that the grant will not be expended— “(1) to conduct activities for which Federal funds are expended— “(A) within the State to provide technical or other non-financial assistance under subsection (f) of section 330; “(B) under a memorandum of agreement entered into with the State under subsection (h) of such section; or “(C) under a grant under section 338J; or “(2) for any purpose other than making payments on behalf of health professionals under contracts entered into pursuant to subsection (a)(2). “(e) Reports.—The Secretary may not make a grant under subsection (a) unless the State involved agrees— “(1) to submit to the Secretary reports providing the same types of information regarding the program operated pursuant to such subsection as reports submitted pursuant to subsection (i) of section 338B provide regarding the Loan Repayment Program under such section; and “(2) to submit such a report not later than January 10 of each fiscal year immediately following any fiscal year for which the State has received such a grant. “(f) Requirement of Application.—The Secretary may not make a grant under subsection (a) unless an application for the grant is submitted to the Secretary and the application is in such form, is made in such manner, and contains such agreements, assurances, and information as the Secretary determines to be necessary to carry out such subsection. “(g) Noncompliance.— “(1) In general.—The Secretary may not make payments under subsection (a) to a State for any fiscal year subsequent to the first fiscal year of such payments unless the Secretary determines that, for the immediately preceding fiscal year, the State has complied with each of the agreements made by the State under this section. “(2) Reduction in grant relative to number of breached contracts.— “(A) Before making a grant under subsection (a) to a State for a fiscal year, the Secretary shall determine the number of contracts provided by the State under paragraph (2) of such subsection with respect to which there has been an initial breach by the health professionals involved during the fiscal year preceding the fiscal year for which the State is applying to receive the grant. 104 STAT. 3032 (B) Subject to paragraph (3), in the case of a State with 1 or more initial breaches for purposes of subparagraph (A), the Secretary shall reduce the amount of a grant under subsection (a) to the State for the fiscal year involved by an amount equal to the sum of the expenditures of Federal funds made regarding the contracts involved and an amount representing interest on the amount of such expenditures, determined with respect to each contract on the basis of the maximum legal rate prevailing for loans made during the time amounts were paid under the contract, as determined by the Treasurer of the United States. “(3) Waiver regarding reduction in grant.—The Secretary may waive the requirement established in paragraph (2)(B) with respect to the initial breach of a contract if the Secretary determines that such breach by the health professional involved was attributable solely to the professional having a serious illness. “(h) Definitions.—For purposes of this section, the term ‘State’ means each of the several States. “(i) Authorization of Appropriations.— “(1) In general.—For the purpose of making grants under subsection (a), there is authorized to be appropriated $10,000,000 for each of the fiscal years 1991 through 1995. “(2) Availability.—Amounts appropriated under paragraph (1) shall remain available until expended.”.