under section 799A of the Act is no longer satisfactory.

(b) Interest subsidy. Each agreement pertaining to the payment of interest subsidies with respect to a loan shall include the following provisions:

(1) That the holder of the loan shall have a contractual right to receive from the United States interest subsidy payments in amounts sufficient to reduce by up to 3 percent per annum the net effective interest rate determined by the Secretary to be otherwise payable on such loan.

(2) That payments of interest subsidies pursuant to paragraph (b)(1) of this section will be made by the Secretary, in accordance with the terms of the loan with respect to which the interest subsidies are paid, directly to the holder of such loan, or to a trustee or agent designated in writing to the Secretary by such holder, until such time as the Secretary is notified in writing by the holder that such loan has been transferred. Pursuant to such written notification of transfer, the Secretary will make such interest payments directly to the new holder (transferee) of the loan: Provided, however, That it shall be the responsibility of the holder to remit any payments of interest subsidy to the new holder which the Secretary may have made to the holder after such transfer and prior to receipt of such written notice, and the Secretary shall not be liable to any party for amounts remitted to the holder prior to receipt of such written notice and acknowledgment in writing by the Secretary of receipt of such notice.

(3) That the holder of the loan will promptly notify the Secretary of any default or prepayment by the applicant with respect to the loan.

(4) In the event of any exercise by the holder of the loan of the right to accelerate payment of such loan, whether as a result of default on the part of the applicant or otherwise, the Secretary's obligations with respect to the payment of interest subsidies shall cease.

(5) Where, during the life of the loan with respect to which interest subsidies are to be paid, the applicant ceases to use the facility for the purposes for which constructed, the Secretary's obligation with respect to the

payment of interest subsidies shall cease: Provided, however, That where the applicant is continuing to use the facility for purposes eligible for support under part B of title VII of the act, the Secretary may make a determination, based upon the health manpower needs of the community served by the facility as well as other relevant factors, to continue to make interest subsidy payments in accord with the agreement.

(6) Where during the life of the loan with respect to which interest subsidies are to be paid, it is determined, after an opportunity for a hearing pursuant to 45 CFR part 83, that the Assurance executed by the applicant under section 704 (or its predecessor, section 799A) of the Act, is no longer satisfactory, the Secretary's obligation with respect to the payment of interest subsidies shall cease: Provided, however, That the Secretary shall resume making interest subsidy payments if he determines that a subsequent Assurance submitted by the applicant is satisfactory.

(7) Where during the life of the loan with respect to which interest subsidies are to be paid, it is determined by the Secretary, after an opportunity for a hearing pursuant to 45 CFR parts 80 and 81, that the applicant has ceased to comply with the Assurance it has executed under 45 CFR 80.4(d) concerning nondiscrimination on the basis of race, color or national origin, the Secretary's obligation with respect to the payment of interest subsidies shall cease: Provided, however, That the Secretary shall resume making interest subsidy payments if he subsequently determines that the applicant has come into compliance with the requirements of title VI of the Civil Rights Act of 1964 and implementing regulations.

(8) Where during the life of the loan with respect to which interest subsidies are to be paid, it is determined by the Secretary after an opportunity for a hearing pursuant to title IX of the Education Amendments of 1972, that the applicant has ceased to comply with such title, and its implementing regulations, the Secretary's obligation with respect to the payment

of interest subsidies shall cease: Provided, however, That the Secretary shall resume making interest subsidy payments if he subsequently determines that the applicant has come into compliance with the requirements of title IX of the Education Amendments of 1972 and implementing regulations.

(c) General. In addition to the applicable requirements of paragraphs (a) and (b) of this section, each agreement, whether pertaining to a loan guarantee or interest subsidy or both, shall contain such other provisions as the Secretary finds necessary in order to protect the financial interests of the United States.

[38 FR 31836, Nov. 19, 1973, as amended at 49 FR 38113, Sept. 27, 1984]

$57.1515 Loan closing.

Closing of any loan with respect to which a guarantee is made or interest subsidies are paid under this subpart shall be accomplished at such time as may be agreed upon by the parties to such loan and found acceptable to the Secretary.

$57.1516 Right of recovery-subordination.

(a) The United States shall be entitled to recover from the applicant for a loan guarantee under this subpart the amount of any payment made pursuant to such guarantee, unless the Secretary waives such right of recovery as provided in §57.1517.

(b) Upon making of any payments pursuant to a loan guarantee under this subpart, 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.

§ 57.1517 Waiver of right of recovery.

In determining whether there is good cause for waiver of any right of recovery which he may have against any applicant by reason of any payments made pursuant to a loan guarantee under this subpart, the Secretary shall take into consideration the extent to which:

(a) The facility with respect to which the loan guarantee was made will continue to be devoted by the applicant or other owner to the teaching of health professions personnel, or to other pur

poses in the sciences related to health for which funds are available under part B of title VII of the act and these regulations;

(b) A hospital or outpatient facility will be used as provided for under title VI of the act;

(c) There are reasonable assurances that for the remainder of the repayment period of the loan other facilities not previously utilized for the purpose for which the facility was constructed will be so utilized and are substantially equivalent in nature and extent for such purposes; and

(d) Such recovery would seriously curtail the training of qualified health professions personnel in the area served by the facility.

$57.1518 Modification of loans.

No official of the Department of Health and Human Services will approve any proposal to modify the terms of a loan guaranteed under title VII of the Public Health Service Act (42 U.S.C. 293 et seq.) and this subpart which would permit the use of the guaranteed loan (or the guarantee) as collateral for an issue of tax-exempt securities.

(Secs. 215 and 726, Public Health Service Act. 58 Stat. 690 and 85 Stat. 432, 42 U.S.C. 216 and 2931, as amended)

[48 FR 42984, Sept. 21, 1983]

private nonprofit entities for projects to: (a) Plan, develop, and operate, or participate in predoctoral, graduate, or faculty development educational programs in family medicine; and (b) provide financial assistance to trainees participating in predoctoral or graduate educational programs who are in need of financial assistance and who plan to practice family medicine or to trainees in faculty development programs who plan to teach in family medicine training programs.

[57 FR 45738, Oct. 5, 1992, as amended at 61 FR 6125, Feb. 16, 1996]

Act means the Public Health Service Act, as amended.

Clerkship means supervised clinical training in a specific field of medicine for predoctoral medical (M.D. or D.O.) students.

Faculty development program means a systematic training program to increase faculty competence in teaching skills and in other areas related to academic responsibilities.

Family medicine means the field of medicine, including osteopathic general practice, in which the physician:

(a) Serves as a physician of first contact with families and with patients of all ages and provides a means of entry into the health care system;

(b) Evaluates the patient's total health needs, provides personal medical care within one or more fields of medicine, and refers the patient, when indicated, to appropriate sources of care while preserving the continuity of care;

(c) Assumes responsibility with the patient for comprehensive and continuous health care and acts as a leader or coordinator of others providing health services; and

(d) Considers the patient's total health care within the context of his or her environment, including the community and the family or comparable social units.

Hospital means a public or other nonprofit hospital which is accredited by the Joint Commission on Accreditation of Hospitals or the American Osteopathic Association.

Nonprofit refers to the status of an entity which is a corporation or asso

ciation, or is owned and operated by one or more corporations or associations, no part of the net earnings of which inures, or may lawfully inure, to the benefit of any private shareholder or individual.

Osteopathic internship program means an internship which emphasizes family medicine and is approved by the American Osteopathic Association.

Preceptorship means an educational experience in which the trainee works individually with a designated physician, the preceptor, who teaches and personally supervises clinical activity.

Predoctoral training program means an educational program in family medicine, including courses, clerkships or preceptorships in family medicine, which is part of a course of study leading to the degree of doctor of medicine or osteopathic medicine, and student assistantships in family medicine.

Residency training program means:

(a) A residency program in family practice which is fully or provisionally accredited by the Accreditation Council for Graduate Medical Education; or

(b) A postdoctoral program in osteopathic general practice which emphasizes family medicine and is approved by the American Osteopathic Association.

School of medicine or osteopathic medicine means a public or private nonprofit school in a State which provides training leading, respectively, to a degree of doctor of medicine or to a degree of doctor of osteopathic medicine and which is accredited as provided in section 799(1)(E) of the Act.

Secretary means the Secretary of Health and Human Services and any other officer or employer of the Department of Health and Human Services to whom the authority involved has been delegated.

State means, in addition to the several States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, the Virgin Islands, Guam, American Samoa, the Republic of Palau, the Republic of the Marshall Islands, and the Federated States of Micronesia.

Student assistantship means a research program in family medicine for

predoctoral medical (M.D. or D.O.) students.

Trainee means a medical (M.D. or D.O.) student, intern, resident, or physician participating in a training program supported by a grant under these regulations.

[45 FR 68895, Oct. 16, 1980, as amended at 49 FR 11613, Mar. 26, 1984; 57 FR 45738, Oct. 5, 1992; 61 FR 6125, Feb. 16, 1996]

§ 57.1603 Who is eligible to apply for a grant?

(a) For predoctoral training programs, an applicant must be a school of medicine or osteopathic medicine located in a State.

(b) For graduate and faculty development training programs, an applicant must be located in a State and be a school of medicine or osteopathic medicine, a hospital, or a public or private nonprofit entity which provides either health or educational programs as one of its major functions.

(c) Each eligible applicant desiring a grant under this subpart shall submit an application in the form and at such time as the Secretary may prescribe.

[45 FR 68895, Oct. 16, 1980, as amended at 57 FR 45738, Oct. 5, 1992]

$57.1604 What requirements must a project meet?

(a) General requirements. A project supported under this subpart must meet the following requirements:

(1) Each project must have a project director who works at the grantee institution or training site institution, has relevant training and experience, and has been approved by the Secretary to direct the project.

(2) Each project must have an appropriate administrative and organizational plan and appropriate faculty, staff, and facility resources for the achievement of stated objectives.

(3) Each project must systematically evaluate the educational program including trainees and faculty preceptors, the administration of the program and the degree to which program and educational objectives are met.

(4) Each project, other than a faculty development project, must use ambulatory care settings where family medicine is practiced and in which an ade

quate portion of the clinical training is conducted.

(5) Each project, other than a faculty development project, must have a family medicine curriculum which:

(i) Is appropriate for the academic level of the trainees and the specific length and nature of the educational program;

(ii) Supplements any practical (including clinical) experiences with related education activities; and

(iii) Emphasizes subjects pertinent to:

(A) Ambulatory care;

(B) Psychosocial skills and topics; and

(C) Related nonclinical areas relevant to the practitioner of family medicine.

(b) Additional requirements for predoctoral training programs. In addition to the requirements of paragraph (a) of this section, projects for predoctoral training programs must also meet the following additional requirements:

(1) The training program must be sponsored and supervised by an appropriate administrative unit in family medicine, the faculty of which participates in the preparation of the preclerkship curriculum and required courses and activities, for which faculty may be interdisciplinary, such as physical diagnosis and clinical pathological conferences, and which coordinates the predoctoral offering of clerkships and other clinical experiences oriented to family medicine.

(2) Each training program must be part of an integrated institutional strategy to provide education and training in family medicine designed to encourage an appropriate percentage of its graduates, annually, to seek graduate training in family medicine and eventually to enter a career in family medicine.

(3) For projects which include preceptorships in family medicine:

(i) The project must provide medical (M.D. or D.O.) students with ambulatory care training in a community setting.

(ii) Preceptors must have practices which are consistent with the principles of family medicine and must be

selected by the administrative unit in family medicine.

(iii) Stipend support from grant funds may be given to trainees who are not receiving academic credit for the preceptorship only if they (A) need it; (B) indicate an interest in working in the field of family medicine; and (C) engage in the preceptorship full time for at least 4 consecutive weeks. Stipend support from grant funds may be given to trainees who are receiving academic credit for the preceptorship only when the three conditions above are met and, additionally, when the trainee incurs extraordinary living expenses due to participation in the preceptorship. (4) For projects for student assistantships:

(i) A family medicine faculty member of the administrative unit, identified under paragraph (b)(1) of this section, must supervise each student assistant.

(ii) The grantee must give preference in admission to the training program to applicants considering a career in academic family medicine.

(iii) Stipend support from grant funds may be given to trainees who are not receiving academic credit for the assistantship only if they (A) need it; (B) indicate an interest in working in the field of family medicine; and (C) engage in the assistantship full time for at least 8 consecutive weeks. Stipend support from grant funds may be given to trainees who are receiving academic credit for the assistantship only when the three conditions above are met and, additionally, when the trainees incurs extraordinary living expenses, due to participation in the assistantship.

(c) Additional requirements for graduate training projects (except faculty development). In addition to the requirements of paragraph (a) of this section, projects for approved or accredited residency training programs must meet the following additional requirements:

(1) Each program must have a supervisor of training with appropriate experience and training who is responsible for coordination and supervision of training in the program.

(2) Each program must use an appropriate resident or intern recruitment and selection process which assures that residents and interns in the pro

gram have applied specifically for training in the approved graduate training program.

(3) Each program must provide education for a sufficient number of interns or residents to provide an adequate collegial environment for the educational program and to enhance cost efficiency.

(4) Each program must have an adequate number of qualified faculty with training and experience in family medicine, behavioral sciences, and liaison specialties, for the number of interns or resident in the program. The faculty of the program must engage in periodic educational activities to improve their teaching skills.

(5) Each program must provide an appropriate amount of clinical training for each intern or resident in ambulatory care settings emphasizing family medicine in each year of the training program. This training will be for the purpose of assuring an adequate education in the principles of the practice of family medicine throughout the program. In addition, each training program must provide clinical training in other ambulatory care settings relevant to family medicine, such as emergency units.

(6) Each program must have adequate facilities for the provision of the educational activities and, in particular, have family medicine ambulatory care space sufficient to provide an adequate clinical experience for the interns or residents.

(7) Each intern or resident must serve a sufficient number of families and individual patients with a variety of health care needs to provide the trainee with a broad clinical experi

ence.

(d) Additional requirements for faculty development programs. (1) Each project must have a curriculum which:

(i) Directly applies to family medicine training programs;

(ii) Emphasizes improvement of pedagogical skills for clinical and classroom settings; and

(iii) Uses didactic and nondidactic teaching strategies.

(2) Only physicians who teach or intend to teach in family medicine are eligible to participate as trainees in the program.