Debt Collection:

More Aggressive Action Needed To Collect Debts Owed by Health Professionals

AFMD-88-23: Published: Feb 2, 1988. Publicly Released: Feb 10, 1988.

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Pursuant to a congressional request, GAO evaluated the Department of Health and Human Services' (HHS) Health Resources and Services Administration's (HRSA) debt collection efforts under its financial assistance programs for health professions and medical facilities, focusing on the: (1) Health Professions Student Loan Program; (2) Nursing Student Loan Program; (3) National Health Service Corps Scholarship Program; (4) Health Education Assistance Loan Program; and (5) Health Facilities Direct and Guaranteed Loan Program.

GAO found that: (1) HRSA imposed several measures which resulted in significant declines in loan delinquency rates for health professions schools, but not for nursing schools; (2) the delinquency rates for nursing schools will decline when HRSA terminates a large number of these schools from the program for noncompliance with performance standards; (3) health professions and nursing schools reported $47.5 million in delinquent loans as of June 30, 1986, of which $27 million was more than 3 years delinquent; and (4) HRSA has not established a time frame in which schools must request write-off approval for uncollectible loans. GAO also found that: (1) lack of a comprehensive debt management system, staffing shortages, and failure to follow established procedures have seriously hindered HRSA attempts to collect on delinquent debts; (2) HRSA untimely issued collection notices, made few personal contacts with delinquent debtors, and improperly granted additional time for delinquent debt repayment; and (3) HHS opposes offsetting delinquent educational debts from Medicare reimbursements to physicians.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: HHS now refers claims immediately to a collection agency and to Justice within 12 months. Claims are also referred to consumer reporting agencies.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator, HRSA, to reduce the collection process time in the insured loan program. Under the insured loan program, HRSA should adhere to strict time frames and guidance established by PHS in its debt management manual for completing the collection process, including routinely referring delinquent cases to consumer reporting agencies.

    Agency Affected: Department of Health and Human Services

  2. Status: Closed - Implemented

    Comments: HHS established the full repayment date as 1 year from date of default and now issues notices to recipients at the time notification of default is received, and 30 and 60 days prior to the repayment date. HHS now adheres to established time limits in performing collection actions.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator, HRSA, to reduce the collection process time in the scholarship program. Under the scholarship program, HRSA should: (1) establish, in accordance with law, the full repayment date as 1 year from the date of default; (2) issue periodic notices and attempt telephone contacts based on predetermined time frames during the 1-year period; and (3) aggressively pursue collection after the 1-year period following the date of initial default by adhering to procedures in the Public Health Service's (PHS) debt management manual.

    Agency Affected: Department of Health and Human Services

  3. Status: Closed - Implemented

    Comments: HHS published regulations on October 1, 1991, to implement this recommendation.

    Recommendation: The Administrator, HRSA, should set time limits within which the schools must reimburse the funds, or HRSA (in the case of those schools which are no longer participating in the programs) for those loans for which the schools did not follow required collection procedures.

    Agency Affected: Department of Health and Human Services: Public Health Service: Health Resources and Services Administration

  4. Status: Closed - Implemented

    Comments: HHS published regulations on October 1, 1991, to implement this recommendation.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator, HRSA, to establish time limits within which schools participating in the Health Professional and Nursing Student Loan programs must determine the collectibility of delinquent loans and must request HRSA write-off approval for those which are determined to be uncollectible.

    Agency Affected: Department of Health and Human Services

  5. Status: Closed - Not Implemented

    Comments: Instead of offset, HHS plans to exclude delinquent physicians from the Medicare program. HHS believes the threat of exclusion will provide a strong incentive for delinquent physicians to repay their debts.

    Recommendation: To facilitate the collection of unpaid debts, the Secretary of Health and Human Services should direct the Administrators of the Health Care Financing Administration and HRSA to pilot test the offset of Medicare reimbursements to physicians delinquent on HRSA medical educational assistance. If the pilot test successfully demonstrates the merits of the offset procedure, offset should be fully implemented.

    Agency Affected: Department of Health and Human Services

 

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