A bill to amend the Immigration and Nationality Act and the Public Health Service Act to reduce dependence on alien graduates of foreign medical schools in United States hospitals, and for other purposes.

Amends the Immigration and Nationality Act regarding alien graduates of foreign medical schools to: (1) require medical schools to submit to the Commissioner on Immigration and Naturalization and the Secretary of Health and Human Services (formerly, the Secretary of Health, Education, and Welfare) an assessment of staffing requirements in the hospital departments in which the alien will be trained, and a staff utilization plan; (2) limit such alien's stay to the lesser of seven years or the time normally required to complete a designated course of medical study (presently two years with a one year extension); (3) permit such alien to change his designated course of medical study, upon approval of the Director of the International Communication Agency (presently must continue course of education under which admitted into the United States); (4) make such duration of stay and course change provisions applicable to those aliens entering the United States on or after January 10, 1978; and (5) extend the waiver authority regarding such aliens from December 31, 1980, to December 31, 1985.

Amends the Public Health Service Act to consider as health manpower shortage areas hospitals with a residency training program in which more than 25 percent of the positions in such program are filled by alien graduates of foreign medical schools. Provides; (1) for priority assignments of National Health Service Corps personnel at such hospitals; and (2) that whenever possible such assignments shall reduce the number of alien residents at such hospitals. Establishes financial incentives for such replacement. Permits such residency to be counted toward satisfying the period of obligated Corps service.

Directs the Secretary, in order to reduce hospital dependence on alien graduates of foreign medical schools, to: (1) identify the States, and the hospitals in such States, in which such aliens fill more than 25 percent of the places in residency training programs; and (2) develop a plan to reduce such dependence.