More than 6,000 physicians, some of whom work for the government or teach at medical schools, have failed to repay more than $5 million in federal loans they received to finance their medical educations, a new audit has found.
The study by the inspector general of the Health and Human Services Department found that 401 of the doctors, despite being delinquent on their federal loans, continue to receive large payments from the federal Medicare and Medicaid programs.
These doctors, who owe a total of $443,000 on their loans, nevertheless have received more than $10 million in Medicare and Medicaid payments over the past two years, the study shows.
Richard P. Kusserow, the HHS inspector general, is recommending that the department bar doctors who are delinquent in repaying their loans from receiving Medicare and Medicaid funds in the future until they repay their federal loan debts.
Kusserow said that more than 6,000 doctors are behind by at least a year in repaying $5.2 million in low-interest federal loans under the Health Professions Student Loan program, which provides low-interest loans to graduate students in health-related fields. These doctors, some of whom received more than one loan, are delinquent on 6,698 loans.
He said the doctors' failure to repay the money sharply reduces the revolving fund of loan money available to current and future medical students.
Among those delinquent are 83 faculty members at 17 medical schools across the country, the auditors found. They also found that 80 doctors who are delinquent in repaying their loans are employed by HHS itself.
Half of these are regular HHS employes, 21 of whom earn more than $40,000 a year. The others earn between $22,000 and $39,000 a year working in the Public Health Service's commissioned officer corps, which cares for military dependents and provides staff for public hospitals and clinics operated by the service throughout the country.
Kusserow's aides said that under HHS regulations, any employes who do not repay their loans can be disciplined or fired. The aides said the department had not been aware of the situation earlier.
HHS officials declined to release a list of the delinquent doctors, but one of the cases they are examining involves Dr. Robert S. Beale Jr., a Washington physician who has received more than $623,000 in Medicaid payments over the past three years, primarily for helping obese patients to lose weight.
According to records of Howard University's School of Medicine, Beale has not repaid a $4,750 federal loan that he received for his medical education there. The school's records also show that Beale, who graduated in 1968, owes $353 in interest.
HHS officials say they ran a special computer check on Beale after The Washington Post reported last month that he was receiving sizable payments from the D.C. Medicaid program. But they declined to discuss the specifics of his case.
Beale initially said in an interview that he didn't recall taking out a federal loan for medical school. Then he added: "I am under the impression that I don't owe the federal government any money for student loans. They have never written to me.
"It seems that all of our student loans from the government are being forgiven for practicing in a depressed area," said Beale, who practices in Anacostia.
HHS does forgive payment of some loans for doctors who spend at least two years practicing in impoverished areas. But the university's records show that Beale's loan has not been forgiven, and that he was notified as early as 1974 that he was delinquent in his loan payments.
Beale has been billing the District of Columbia's Medicaid program for treating hundreds of poor, overweight patients with a regimen of diet pills, drug injections, dieting, vitamins and exercise.
D.C. Medicaid officials are trying to decide whether these twice-a-week treatments are medically necessary or excessive, and whether they should continue paying Beale and other city doctors for weight-reduction services.
Beale has maintained that obesity is an illness that requires medical treatment, and that his weight-reduction services are safe, effective and provided only to severely obese patients.
Under the law, the nation's medical schools, not HHS, are responsible for collecting the overdue loans.
"We intend to take every possible measure to collect this money," said Alan Hermesch, a spokesman for Howard University, which has several former students who are delinquent in repaying their loans. He said Howard has hired two private collection agencies and has asked its attorney to consider legal action.
The penalty for late payments, which was set when interest rates were far lower than today, is $2 a month. Kusserow is recommending that these penalties be increased to reflect current interest rates of 15 percent or more.
HHS Secretary Richard S. Schweiker ordered the crackdown on delinquent medical loans last December as part of a general effort to step up collection of bad debts.
In all, HHS auditors found doctors, nurses and other health professionals are at least one year delinquent on 59,053 student loans worth $189 million, a delinquency rate of more than 20 percent. This has depleted the loan fund at a time when the administration has sharply curtailed these and other student loan programs.
Although this is the first inquiry to focus on doctors, the Carter administration found numerous Health, Education and Welfare employes who did not repay other types of student loans or who were receiving improper federal benefits, including 116 who were illegally on the D.C. welfare rolls.