[Code of Federal Regulations]

[Title 42, Volume 4]

[Revised as of October 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 42CFR505.7]



[Page 1113-1114]

 

                         TITLE 42--PUBLIC HEALTH

 

  CHAPTER IV--CENTERS FOR MEDICARE & MEDICAID SERVICES, DEPARTMENT OF 

                  HEALTH AND HUMAN SERVICES (CONTINUED)

 

PART 505_ESTABLISHMENT OF THE HEALTH CARE INFRASTRUCTURE IMPROVEMENT 

 

                         Subpart A_Loan Criteria

 

Sec.  505.7  Terms of the loan.



    All loan recipients must agree to the following loan terms:

    (a) Loan obligation. An authorized official of a qualifying hospital 

must execute a promissory note, loan agreement, or a form approved by 

CMS and accompanied by any other documents CMS may designate. The loan 

recipient must provide required documentation in a timely manner.

    (b) Schedule of loan. A loan recipient receives a lump sum 

distribution for which payment of principal and interest is deferred for 

60 months beginning with the day of award notification from CMS. The 

loan repayment period is 20 years.

    (c) Bankruptcy protection. In the event a loan recipient files for 

bankruptcy protection in a court of competent jurisdiction or otherwise 

proves to be insolvent, CMS may terminate the deferment period described 

in paragraph (b) of this section and require immediate payment of the 

loan. If a loan recipient should file for bankruptcy protection in a 

court of competent jurisdiction or should otherwise evidence insolvency 

after the deferment period we will require immediate repayment of the 

outstanding principal and interest due. Those payments may be deducted 

from any Medicare payments otherwise due that hospital.

    (d) Loan forgiveness. CMS does not require a loan recipient to begin 

making payments of principal or interest at the end of the 60-month 

deferment period if it determines that the loan recipient meets the 

criteria for loan forgiveness under section 1897 of the Act, as 

determined by the Secretary.

    (e) Default. If a loan recipient fails to make any payment in 

repayment of a loan under this subpart within 10 days of its due date, 

the loan recipient may be considered to have defaulted on the loan. Upon 

default, all principal and accrued interest become due immediately, and 

CMS may require immediate payment of any outstanding principal and 

interest due. Those payments may be deducted from any Medicare payments 

otherwise due that hospital.

    (f) Loan repayment. The loan recipient must meet the following 

conditions:

    (1) Make payments every month for 20 years until the loan, including 

interest payments, are paid in full.

    (2) Pay interest on the unpaid principal until the full amount of 

principal has been paid.

    (3) Pay interest at a yearly rate based upon the rate as fixed by 

the Secretary of the Treasury and set forth at 45 CFR 30.13(a).

    (4) If a loan recipient fails to make any payment in repayment of a 

loan under this subpart within 10 days of its due date, that payment may 

be deducted from any Medicare payments otherwise due to the recipient.



[[Page 1114]]



    (g) Interest rate and monthly payment charges. CMS calculates 

interest charges and payments consistent with Sec.  405.378 of this 

chapter.

    (h) Loan recipient's right to prepay. A loan recipient has the right 

to make payments of principal at any time before they are due. A loan 

recipient may make full prepayment or partial prepayment without paying 

any prepayment charge. If a prepayment is made, the loan recipient must 

provide written notice to CMS at CMS, Division of Accounting Operations, 

P.O. Box 75120, Baltimore, MD 21207-0520.