46th legislature - STATE OF NEW MEXICO - first session, 2003

RELATING TO THE PRACTICE OF MEDICINE; AMENDING THE MEDICAL STUDENT LOAN FOR SERVICE ACT TO PROVIDE FOR LOANS TO MEDICAL STUDENTS SPECIALIZING IN CERTAIN FIELDS WHO AGREE TO PRACTICE IN NEW MEXICO; PROVIDING AN INCOME TAX EXEMPTION FOR STIPENDS RECEIVED PURSUANT TO THE HEALTH SERVICE CORPS ACT; MAKING AN APPROPRIATION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. A new section of the Income Tax Act is enacted to read:

"[NEW MATERIAL] EXEMPTION--STIPENDS RECEIVED PURSUANT TO THE HEALTH SERVICE CORPS ACT.--Stipends received from the New Mexico health service corps pursuant to the Health Service Corps Act are exempt from taxation."

Section 2. Section 21-1-26.8 NMSA 1978 (being Laws 1995, Chapter 144, Section 1) is amended to read:

"21-1-26.8. HEALTH PROFESSION ADVISORY COMMITTEE--CREATED--DUTIES.--

A. The "health profession advisory committee" is created to advise the commission on higher education on matters relating to the administration of student loan programs for health professionals. [The health profession advisory committee replaces the medical shortage area committee.]

B. The health profession advisory committee shall be composed of a representative of the department of health; a representative of the New Mexico health policy commission; and representatives of public post-secondary health and medical training programs, underserved health and medical area providers, recruiting and placement organizations and professional health and medical associations. Members shall be appointed by the commission on higher education pursuant to the policies and procedures of the commission.

C. The health profession advisory committee shall:

(1) designate health professional shortage areas of the state;

(2) designate those fields of specialization within the practice of medicine in which the state is suffering an acute shortage;

[(2)] (3) make recommendations to the commission on higher education on applicants for medical, osteopathic, nursing and allied health loan for service programs and loan repayment programs; and

[(3)] (4) give advice or other assistance to the commission as requested."

Section 3. Section 21-22-2 NMSA 1978 (being Laws 1975, Chapter 244, Section 2, as amended) is amended to read:

"21-22-2. [PURPOSE--COMMITTEE] PURPOSES.--The [purpose] purposes of the Medical Student Loan for Service Act [is] are:

A. to meet the emergency currently existing resulting from the shortage of medical doctors and physician assistants in the less populated areas of the state by [increasing the number of practitioners in rural areas through a program of loans for medical and physician assistant students. The program shall require as a condition of each loan that the student declare his intent that after licensure he will commence his] providing loans to medical and physician assistant students who declare that, after licensure, they will commence the practice of medicine within one of [the] those areas of the state designated by the health profession advisory committee; and

B. to meet the current emergency resulting from the acute shortage of certain medical specialists throughout the state by providing loans to those students who declare that, after licensure, they will commence the practice of medicine within New Mexico and specialize in one of the fields of medicine in which an acute shortage has been designated by the health profession advisory committee."

Section 4. Section 21-22-4 NMSA 1978 (being Laws 1975, Chapter 244, Section 4, as amended) is amended to read:

"21-22-4. MEDICAL STUDENT LOANS--COMMISSION [ON HIGHER

EDUCATION] AUTHORIZED--QUALIFICATIONS.--

A. The commission is authorized to grant a loan to defray the expenses of the medical education of a student deemed qualified by the commission to receive the medical education, upon such terms and conditions as may be imposed by regulations of the commission.

B. The commission shall only receive, pass upon and allow or disallow those applications for loans made by those students enrolled or accepted by colleges of medicine who are bona fide citizens and residents of the United States and of New Mexico and who declare their intent to practice as physicians within designated areas of the state.

C. The commission shall make a full and careful investigation of the ability, character and qualifications of each applicant and determine his fitness to become a recipient of a student loan. The investigation of each applicant shall include an investigation of the ability of the applicant and his parents or guardians to pay the applicant's expenses for a medical education. The commission shall give preference to qualified applicants who are unable, or whose parents or guardians are unable, to pay the applicant's expenses in obtaining a medical education.

D. The loan agreement shall provide that the commission shall arrange for loan recipients to receive assistance in locating, planning and implementing the establishment and maintenance of a medical practice [in a designated underserved area]."

Section 5. Section 21-22-6 NMSA 1978 (being Laws 1975, Chapter 244, Section 6, as amended) is amended to read:

"21-22-6. MEDICAL STUDENT LOANS--CONTRACT TERMS--REPAYMENT.--

A. [Each] An applicant who is approved for a loan by the commission may be granted a loan, in such amounts and for such periods as determined by the commission, with which to defray expenses incurred in obtaining a medical education at any reputable and accredited medical school in the United States if the applicant files with the commission a declaration of his intent:

(1) to practice his profession as a licensed physician or physician assistant in areas of New Mexico designated as not being adequately served by medical practitioners; or

(2) to practice medicine within New Mexico and specialize in one of the fields of medicine in which an acute shortage has been designated by the health profession advisory committee.

B. The [loans] loan shall not exceed the necessary expenses incurred while attending a medical school or college and shall bear interest at the rate of:

(1) eighteen percent per year if the student completes his medical education and no portion of the principal and interest is forgiven pursuant to Subsection E or F of this section; and

(2) seven percent per year in all other cases.

C. The loan shall be evidenced by a contract between the student and the commission acting on behalf of the state. The contract shall provide for the payment by the state of a stated sum covering the costs of a medical education and shall be conditioned upon the repayment of the loan to the state, together with interest, over a period established by the commission in consultation with the student after completion of medical school and any period of internship or residency required to complete the student's education. The contract shall further provide that, immediately upon completion or termination of the student's medical education, all interest then accrued shall be capitalized.

D. Loans made to students who fail to complete their medical education as agreed to in the contract shall become due, together with interest, immediately upon termination of their medical education. The commission, in consultation with the student, shall establish terms of repayment, alternate service or cancellation [terms].

E. For recipients who agree to practice in a designated health professional shortage area, the contract shall provide that the commission shall forgive a portion of the loan principal and interest for each year that a loan recipient practices his profession as a licensed physician or physician assistant in areas approved by the health profession advisory committee as not being adequately served by medical practitioners. Loan principal and interest shall be forgiven as follows:

(1) loan terms of one year shall require one year of practice in a designated health professional shortage area. Upon completion of service, one hundred percent of the principal plus accrued interest shall be forgiven;

(2) loan terms of two years shall require one year of practice in a designated health professional shortage area for each year of the loan. Upon completion of the first year of service, fifty percent of the principal plus accrued interest shall be forgiven. Upon completion of the second year of service, the remainder of the principal plus accrued interest shall be forgiven; and

(3) for loan terms of three years or more, forty percent of the principal plus accrued interest shall be forgiven upon completion of the first year of service in a designated health professional shortage area, thirty percent of the principal plus accrued interest shall be forgiven upon completion of the second year of service and the remainder of the principal plus accrued interest shall be forgiven upon completion of the third year of service.

F. For recipients who agree to specialize in one of the fields of medicine in which an acute shortage has been designated by the health profession advisory committee, the contract shall specify the number of years that the recipient agrees to practice in New Mexico, provided that the specified number of years shall not be less than two. The contract shall also provide that the commission shall forgive the loan principal and interest as follows:

(1) loan terms of two years shall require two years of practice in New Mexico, specializing in one of the fields of medicine in which an acute shortage has been designated. Upon completion of service, one hundred percent of the principal plus accrued interest shall be forgiven; and

(2) loan terms of three years or more shall require that a proportionate amount of the principal and accrued interest shall be forgiven for each year of practice in New Mexico, specializing in one of the fields of medicine in which an acute shortage has been designated, provided that no principal or interest shall be forgiven if the recipient practices less than two years.

[F.] G. Recipients shall serve a complete year in order to receive credit for that year. The minimum credit for a year shall be established by the commission.

[G.] H. If a loan recipient completes his professional education and does not serve [in a health professional shortage area] pursuant to the terms of the contract, the commission shall assess a penalty of up to three times the principal due, plus eighteen percent interest, unless the commission finds acceptable extenuating circumstances for why the student cannot serve. If the commission does not find acceptable extenuating circumstances for the student's failure to carry out his declared intent to serve [in a health professional shortage area in the state] pursuant to the terms of the contract, the commission shall require immediate repayment of the unpaid principal amount of the loan plus accrued interest owed the state plus the amount of any penalty assessed pursuant to this subsection.

[H.] I. The commission shall adopt regulations to implement the provisions of this section. The regulations may provide for the repayment of medical student loans in annual or other periodic installments."

Section 6. APPROPRIATION.--Five hundred thousand dollars ($500,000) is appropriated from the general fund to the medical student loan for service fund for expenditure in fiscal year 2004 for the purpose of making loans pursuant to the Medical Student Loan for Service Act to students who agree to practice in New Mexico and specialize in one of the fields of medicine in which an acute shortage has been designated. Any unexpended or unencumbered balance remaining at the end of fiscal year 2004 shall revert to the general fund.