The Government Bans Doctors Who Can’t Repay Their Student Loans From Treating Medicare Patients

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"The Government Bans Doctors Who Can’t Repay Their Student Loans From Treating Medicare Patients"

Over ten percent of all doctors and nurses on the government’s Medicare and Medicaid blacklist end up on it because they defaulted on government-backed student loans. Medical workers on the blacklist are barred from treating Medicare and Medicaid patients or receiving federal reimbursements for a predesignated time period.

According to a Modern Healthcare analysis of federal records, more than 5,400 of the 51,729 people on the government health entitlement blacklist were placed on it after failing to pay an HHS-backed medical student loan. Given a still-shaky economy, some in the health care sector expect that trend to continue:

[Government data] show that one of the most common reasons for getting barred is failure to repay HHS-backed student loans: 5,417 people are currently kicked out of Medicare for that.

The number of annual exclusions related to student loans has grown steadily in the past decade, peaking at 517 in 2011 before declining again. “That is tied to the economy, and I would expect that to continue to rise,” [said Lynn Gordon, a Chicago-area hospital group partner].

The increasing frequency of default-related blacklisting could prove problematic as the Obama Administration tries to entice more medical students to become primary care and family doctors. Primary care providers and nurse practitioners will be crucial to effective Obamacare implementation, since the health law is expected to drive up demand for medical services as millions of previously uninsured Americans gain coverage.

But the ballooning cost of a medical education could end up being a major barrier to the Administration’s recruitment efforts. According to the Association of American Medical Colleges’ (AAMC) 2012 report on medical school debt, “86 percent of medical school graduates had education debt, with a median amount of $162,000″ in 2011 — a number that has been rising steadily over the years:

AAMC estimates that a borrower with the median $162,000 debt “would have monthly payments ranging from $1,500 to $2,100 after residency.”

That disproportionately affects the very primary care doctors that are integral to health care reform and the U.S. medical system at large. In a 2012 report, consulting firm Merritt Hawkins & Associates found that family practitioners, pediatricians, and psychiatrists are the lowest-paid physician groups in the U.S. with a base pay of $189,000.

While that’s still a lavish salary compared to average U.S. compensation, it pales in comparison to specialist pay — and as the entitlement blacklist numbers underscore, that contributes to a system in which care providers are banned from treating certain patients for purely financial, rather than medical or criminal, reasons.

Rising student debt isn’t just restricted to the medical field. The first three months of 2013 were the worst on record for student debt defaults, with $3.5 billion in government and private student debt going bad between January and March. That reflects the increasingly unaffordable cost of a college education, which has sextupled over the last three decades.

Although President Obama’s student loan policy bypassing third-party private lenders has eased student borrowing costs and reaped a stunning $51 billion profit, the president has argued the need for further action. Obama called for tying federal college aid to higher educational institutions’ “affordability and value” during his latest State of the Union address to Congress, asserting that colleges “must do their part to keep costs down, and it’s our job to make sure that they do.”

On Sunday, Sen. Kirsten Gillibrand (D-NY) proposed her own legislation to address student debt. Gillibrand’s bill would allow student debt holders to refinance their loans into lower fixed rates and save “nearly 37 million borrowers billions of dollars in annual interest payments.”

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