CMA urges U.S. education secretary to correct unjust denial of public service loan forgiveness benefits

February 19, 2016
Area(s) of Interest: Physician Workforce Professional Development & Education 

The California Medical Association (CMA) is asking members of the California Congressional Delegation to sign a letter to the U.S. Department of Education urging it to correct an unjust denial of the Public Service Loan Forgiveness benefits to California physicians because of a conflicting state law.

Under the program, individuals can have their education loans forgiven after making 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.

CMA recently learned that under the implementing regulations, the definition of "employed in a public service job” was written in a way that excludes most California physicians (who are independent contractors) from the program, even if they are practicing in a qualifying setting. The regulations require claimants to be directly employed by nonprofit public service organizations. However, employment of physicians is prohibited in the state of California under the corporate bar on the practice of medicine.

California law prohibits lay individuals, organizations and corporations from practicing medicine (Business & Professions Code §§2052 and 2400). This law generally prohibits lay entities from hiring or employing physicians, or from otherwise interfering with a physician’s practice of medicine. It also prohibits most lay individuals, organizations and corporations from engaging in the business of providing health care services indirectly by contracting with health care professionals to render such services. The corporate practice ban does not apply to physician partnerships or professional medical corporations, federally qualified health clinics and public hospitals.

The Public Service Loan Forgiveness Program was intended to encourage careers serving the public good and to improve access to physicians. The regulation could have a chilling effect on access to care in California and could discourage physicians from serving patients in California’s underserved areas because of the heavy burden of medical student loan debt, which now averages $250,000 yearly. These physicians will go to other states where they can receive loan forgiveness. California is the only state negatively impacted by this regulation.

More than 15,000 California physicians have obtained their medical license since the passage of the law, many of whom are unaware that they will not qualify for loan forgiveness under this program. Other young physicians may have been interested in the program, but were discouraged by the disqualifying criteria.

Congress could not have intended the unjust scenario that is a result of the department’s regulations – a physician leading the team of health care professionals treating patients at private, nonprofit hospitals in California is not eligible for loan forgiveness, while the nurses, lab technicians, physician assistants and other health care professionals on that team who are assisting in the treatment of that physician’s patients are entitled to loan forgiveness due to their employment relationship with the hospital.

CMA has asked the Department of Education to make the appropriate regulatory changes consistent with the broad language in the statute. However, they have refused to change the regulations.

Please contact your member of Congress and urge them to cosign a California Congressional Delegation letter to the Secretary of Education. The letter urges the Secretary to make the necessary regulatory changes to include California physicians in the Public Service Loan Forgiveness Program. To sign on to the letter, ask them to contact either Congresswoman Zoe Lofgren's office (Angela Ebiner) or Congressman Ken Calvert's office (Molly Lowe).

To find your Member of Congress go to www.house.gov/representatives/find. To read the letter, click here.

Contact: Elizabeth McNeil, (800) 786-4262 or ecmneil@cmadocs.org.



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