To amend the Public Health Service Act to authorize loan guarantees for rural health facilities to buy new and repair existing infrastructure and technology.

March 21, 2002

Mr. CRAIG introduced the following bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions

To amend the Public Health Service Act to authorize loan guarantees for rural health facilities to buy new and repair existing infrastructure and technology.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Rural Health Care Facility Improvement Act of 2002'.

SEC. 2. GUARANTEED LOANS FOR RURAL HEALTH FACILITIES.

Title VI of the Public Health Service Act (42 U.S.C. 291 et seq.) is amended by adding at the end the following:

`PART E--RURAL HEALTH FACILITIES

`SEC. 651. GUARANTEED LOANS FOR RURAL HEALTH FACILITIES.

`(a) AUTHORIZATION OF LOAN GUARANTEES-

`(1) ESTABLISHMENT- The Secretary is authorized to establish a program under which the Secretary may guarantee 100 percent of the principal and interest on loans made by non-Federal lenders to rural health facilities to pay for the costs of--

`(A) buying new or repairing existing infrastructure; and

`(B) buying new or repairing existing technology.

`(2) TOTAL LOAN AMOUNT AVAILABLE- The Secretary is authorized to guarantee not more than--

`(A) $250,000,000 in the aggregate of the principal and interest on loans for rural health facilities under paragraph (1); and

`(B) $5,000,000 of the principal and interest on loans under paragraph (1) for each rural health facility.

`(b) PROTECTION OF FINANCIAL INTERESTS- The Secretary may not approve a loan guarantee under this section unless the Secretary determines that--

`(1) the terms, conditions, security (if any), and schedule and amount of repayments with respect to the loan are sufficient to protect the financial interests of the United States and are otherwise reasonable, including a determination that the rate of interest does not exceed such percent per annum on the principal obligation outstanding as the Secretary determines to be reasonable, taking into account the range of interest rates prevailing in the private market for similar loans and the risks assumed by the United States, except that the Secretary may not require as security any rural health facility asset that is, or may be, needed by the rural health facility involved to provide health services;

`(2) the loan would not be available on reasonable terms and conditions without the guarantee under this section; and

`(3) amounts appropriated for the program under this section are sufficient to provide loan guarantees under this section.

`(c) RECOVERY OF PAYMENTS-

`(1) IN GENERAL- The United States shall be entitled to recover from the applicant for a loan guarantee under this section the amount of any payment made pursuant to such guarantee, unless the Secretary for good cause waives such right of recovery (subject to appropriations remaining available to permit such a waiver) and, upon making any such payment, the United States shall be subrogated to all of the rights of the recipient of the payments with respect to which the guarantee was made. Amounts recovered under this section shall be credited as reimbursements to the financing account of the program established under this section.

`(2) MODIFICATION OF TERMS AND CONDITIONS- To the extent permitted by paragraph (3) and subject to the requirements of section 504(e) of the Federal Credit Reform Act of 1990 (2 U.S.C. 661c(e)), any terms and conditions applicable to a loan guarantee under this section (including terms and conditions imposed under paragraph (4)) may be modified or waived by the Secretary to the extent the Secretary determines it to be consistent with the financial interest of the United States.

`(3) INCONTESTABILITY- Any loan guarantee made by the Secretary under this section shall be incontestable--

`(A) in the hands of an applicant on whose behalf such guarantee is made unless the applicant engaged in fraud or misrepresentation in securing such guarantee; and

`(B) as to any person (or successor in interest) who makes or contracts to make a loan to such applicant in reliance thereon unless such person (or successor in interest) engaged in fraud or misrepresentation in making or contracting to make such loan.

`(4) FURTHER TERMS AND CONDITIONS- Guarantees of loans under this section shall be subject to such further terms and conditions as the Secretary determines to be necessary to assure that the purposes of this section will be achieved.

`(d) DEFAULTS-

`(1) IN GENERAL- Subject to the requirements of the Federal Credit Reform Act of 1990 (2 U.S.C. 661 et seq.), the Secretary may take such action as may be necessary to prevent a default on a loan guaranteed under this section, including the waiver of regulatory conditions, deferral of loan payments, renegotiation of loans, and the expenditure of funds for technical and consultative assistance, for the temporary payment of the interest and principal on such a loan, and for other purposes. Any such expenditure made under the preceding sentence on behalf of a rural health facility shall be made under such terms and conditions as the Secretary shall prescribe, including the implementation of such organizational, operational, and financial reforms as the Secretary determines are appropriate and the disclosure of such financial or other information as the Secretary may require to determine the extent of the implementation of such reforms.

`(2) FORECLOSURE- The Secretary may take such action, consistent with State law respecting foreclosure procedures and, with respect to reserves required for furnishing services on a prepaid basis, subject to the consent of the affected States, as the Secretary determines appropriate to protect the interest of the United States in the event of a default on a loan guaranteed under this section, except that the Secretary may only foreclose on assets offered as security (if any) in accordance with subsection (b).

`(e) NONAPPLICATION OF PART D- The provisions of part D shall not apply to this part.

`(f) DEFINITIONS- In this part:

`(1) NON-FEDERAL LENDER- The term `non-Federal lender' means any entity other than an agency or instrumentality of the Federal Government authorized by law to make such loan, including a federally insured bank, a lending institution authorized or licensed by the State in which it resides to make such loans, and a State or municipal bonding authority or such authority's designee.

`(2) RURAL AREA- The term `rural area' has the meaning given the term in section 1886(d)(2)(D) of the Social Security Act (42 U.S.C. 1395ww(d)(2)(D)).

`(3) RURAL HEALTH FACILITY- The term `rural health facility' includes--

`(A) rural health clinics (as defined in section 1861(aa)(2) of the Social Security Act (42 U.S.C. 1395x(aa)(2)));

`(B) critical access hospitals (as defined in section 1861(mm)(1) of the Social Security Act (42 U.S.C. 1395x(mm)(1))) that are located in rural areas;

`(C) hospitals (as defined in section 1861(e) of the Social Security Act (42 U.S.C. 1395x(e))) that are located in rural areas;

`(D) skilled nursing facilities (as defined in section 1819(a) of the Social Security Act (42 U.S.C. 1395i-3(a))) that are located in rural areas;

`(E) health centers (as defined in section 330) that are located in rural areas;

`(F) federally qualified health centers (as defined in section 1861(aa)(3) of the Social Security Act (42 U.S.C. 1395x(aa)(3))); and

`(G) nursing homes (as defined in section 1908(e) of the Social Security Act (42 U.S.C. 1396g(e))) that are located in rural areas.'.

END