Recently, the US Department of Education released draft regulations to reform the national Public Service Loan Forgiveness (PSLF) program. The California Medical Association (CMA), California Hospital Association (CHA), Texas Medical Association (TMA) and Texas Hospital Association (THA)—representing nearly 100,000 physicians and hundreds of hospitals—applaud the actions taken to improve this important national program. Our organizations also appreciate the Department’s stated interest in fixing its existing PSLF regulation, which inadvertently excluded many California and Texas physicians from participating.  However, the draft regulatory language inexplicably still fails to fix the problem.

“We implore the Department of Education to resolve the problem once and for all to ensure that physicians in all 50 states can equally participate in this important program to encourage low-income, minority students to pursue careers in medicine and to help our neediest, most vulnerable patients in underserved communities,” said CMA President Robert E. Wailes, M.D.

The PSLF program was intended to provide loan forgiveness to individuals who commit to community service for 10 years by working full time in non-profit organizations, such as non-profit hospitals, and improving access to health care. Unfortunately, the program’s implementing regulations were narrowed to require physicians to be “directly employed.” Physicians in our nation’s two largest states consequently were inadvertently excluded because, while they may be members of their hospital medical staffs working full time in private nonprofit hospitals and able to meet all PSLF eligibility requirements, state laws in California and Texas prohibit these hospitals from employing physicians. But for this legal prohibition, these California and Texas physicians could be eligible for loan forgiveness just as physicians from all other 48 states who similarly work in private non-profit hospitals are eligible to participate. 

Earlier this year a bipartisan group of Congressional representatives sent U.S. Education Secretary Miguel Cardona a joint letter emphasizing that Congress never contemplated excluding physicians in two of the nation’s largest states when they created the program.

The language in the draft regulations attempts to solve the problem of requiring “direct employment” in California and Texas by instead requiring that physicians “contract with” private non-profit hospitals “to provide payroll or similar services” to receive loan forgiveness. While well-intended, the proposed regulation does not solve the problem and still excludes California and Texas physicians because they do not contract with hospitals to provide payroll services.  Moreover, many physicians in these states do not practice in nonprofit hospitals with a contract and would still be ineligible regardless of whether the contract must be for payroll services.

“Our organizations have submitted a fair solution that provides a California and Texas credentialing alternative to direct hospital employment, which we believe meets the intent of the original statute and the Department’s standards and policy goals,” said TMA President Gary Floyd, M.D.  “The credentialing alternative would enable participation by licensed physicians who have been conferred hospital medical staff clinical privileges by a private non-profit hospital that is prohibited by state law from directly employing such physicians. Credentialing is a rigorous process that includes verifiable information about the hours worked in the hospital providing medical care.  We urge the Department to ensure Texas and California physicians, who are dedicated to serving marginalized patients and the public good, have access to this national loan forgiveness program.”

A potential compromise solution, which could be more inclusive and mirrors physician eligibility in the other 48 states, might be to adopt 1) the California-Texas proposed language that allows medical staff privileges as a surrogate for employment in states where employment is prohibited and 2) the Department’s proposal to allow contracts between physicians and non-profit hospitals for medical services (not payroll services). Such a solution could allow more primary care physicians, who are in short supply, to be eligible just as they are in other states. 

“With the average medical education loan debt at more than $200,000, far too many students simply cannot afford to become doctors without loan forgiveness,” said CHA President and CEO Carmela Coyle. “The situation is worst in our largest states, as California and Texas are projected to have the two biggest physician shortages over the next decade. Access to care for people served by non-profit community hospitals, children’s hospitals, and rural hospitals will be in even greater jeopardy if regulations are not changed to address this fundamental problem that creates shortfalls of clinicians in our most vulnerable communities.”

“We urge the Department to reconsider our proposed solution. If the regulations are not corrected, California and Texas physicians working full-time in private non-profit hospitals will be blocked from participating.  Physicians will choose to practice in other states where they can receive loan forgiveness, accelerating our worsening physician shortages and harming our ability to fully care for the patients who need us most,” said THA President and CEO John Hawkins.