December 3, 2004
MERC Advisory Committee Meeting Minutes

Advisory Committee Members Present:
John Abenstein, Gary Anderson, James Davis, Tim Gaspar, Larry Kuusisto, Marsha Lewis, Louis Ling, Dawn Ludwig, Daniel Mareck, Carl Patow, Charles Sawyer, Marilyn Speedie, Jim Toscano.

Interested Parties Present:
Barb Adrian, Carol Backstrom, Ben Bornsztein, David Hagen, Ann Jaszewski, David Knowlan, Deb Mayland-Poyzer, Janet McCarthy, Gerhardt Meier, Rick Roberts, Edward Todd.

Staff Present:
Scott Leitz, Diane Rydrych – MN Department of Health Ann Berg, Richard Tester – MN Department of Human Services

I. Introductory Remarks from MERC Advisory Committee Chair– Louis Ling
Dr. Ling opened the meeting by welcoming the committee members and introducing Marsha Lewis, who has replaced Sandra Edwardson as the representative of the UM nursing school.All committee members and interested parties introduced themselves.

II. Discussion of MERC Federal Financial Participation for fiscal year 2004 and Beyond – Ann Berg, MN Department of Human Services
Ann Berg reminded committee members that, at the previous MERC meeting, DHS was working with CMS to come to agreement on the portion of the State Plan Amendment (SPA) governing the mechanism for drawing down federal funds for the FY04 distribution.   A few days after that meeting, CMS and DHS reached an agreement wherein DHS would continue to use the same methodology for obtaining federal match as it had used in the previous years of MERC through FY05, the end of the biennium.After FY05, however, DHS agreed to modify the mechanism to address CMS’s concerns, although the exact changes desired by CMS were not stated.

Currently, DHS is working with CMS on a new SPA that will be effective beginning with the FY06 distribution and that changes how MERC funds are matched.Previously, the SPA specified a special one-time payment to six large teaching hospitals, which then assigned the payment directly to MDH for distribution through MERC.Under the new SPA, these six hospitals would no longer have to participate in the assignment process; rather, the SPA outlines a process for a one-time payment to each of the provider types covered by MERC, with each provider within the group receiving an amount equal to what they would receive per the MERC distribution, and with the payment being made by MDH through the MERC fund.  

In the past, CMS has expressed concerns about Minnesota’s funding of GME in general, including a concern that MERC payments are not sufficiently tied to Medicaid volume, that we should consider changing MERC to a system of add-on payments rather than distributing these dollars through a separate mechanism, and that we should not be funding training that takes place in ambulatory sites.At this point, CMS has not raised these concerns regarding the new mechanism, but Ms. Berg noted that there are still many more people who need to review the SPA, including those who had found the mechanism – as well as the policy that underlies it – questionable in the past.CMS has also raised some questions about the 10% discretionary fund.At this point, the 90-day review period is about to run out, and while CMS has not yet stopped the clock on the SPA, it is anticipated that they will do so in the next few days, to allow more time for questions.

Rick Roberts, of Regions Hospital, asked whether the assignment to hospitals under the new mechanism would be higher or lower than the previous assignment to each facility under the old system.Ms. Berg responded that it would be lower, and equal to the amount that each hospital would receive as their calculated grant from MERC.

III. OIG Audit of State Medicaid GME Payments – Richard Tester, DHS
Mr. Tester updated the committee on the audit of Minnesota’s Medicaid GME payments by the Office of Inspector General at DHHS.This audit is not related to the ongoing discussions about the MERC components of the State Plan Amendment discussed above, but rather is one of 15 state audits being conducted by OIG at the request of the Office of Management and Budget.When the auditors were in Minnesota in May and early June, they indicated that they would have a draft report available for response within approximately six months.However, staff from DHS and MDH have not talked to the auditors since June, and have received no additional questions from them, nor has there been an exit conference.Staff have no information on the status of the audit at this point.Deb Mayland-Poyzer, from Fairview, noted that she had received some questions from the auditors within the last month, indicating that it is still in process.

The committee briefly discussed the OIG’s findings from audits conducted in other states, particularly the exclusion of indirect medical education costs from their accounting of GME costs in those states.Dr. Abenstein suggested that the Department recommend, in their response to the eventual report from the OIG, that that office change how they measure GME costs in order to provide a more accurate picture of funding levels relative to costs in the state.

IV. Overview of 2004 MERC/PMAP and discretionary fund distribution – Diane Rydrych
Diane Rydrych briefly discussed the MERC/PMAP distribution for 2004, which was distributed in July. She also noted that she and Diane Reger had just recently received the last of the reports from sponsoring institutions indicating how they had disbursed their grants from the 10% discretionary fund, and provided a handout for committee members illustrating how sponsoring institutions distributed those funds.Roughly 20% of discretionary funds were given to small sites (urban or rural) and roughly 20% to rural sites (large and small).

V. Update on 2005 MERC/PMAP Application Process – Diane Rydrych
Ms. Rydrych announced that the 2005 web application had been available to sponsoring institutions since early August, and that many had chosen to use it.At this point, all applications have been received, and Diane Reger was able to get back to all sponsoring institutions with initial questions about missing data before going out on maternity leave.As this is a non-cost data year, the process of cleaning data should be relatively smooth.Ms. Rydrych estimated that the size of the combined pool should be roughly the same as last year, approximately $50M.However, the Department has been asked by DHS to distribute the MERC/PMAP pool a bit earlier this year, before the end of the fiscal year, to avoid the cash flow problems that have sometimes resulted when distributions are made in July.With that modified distribution schedule, it is unlikely that the June PMAP carveout funds will have been received at the time of distribution, reducing the size of the pool by roughly $3M.June funds would be rolled forward, so that each succeeding distribution would contain PMAP funds from June through May rather than July through June.

VI. Update on upcoming Legislative Session – Diane Rydrych
Ms. Rydrych reminded the committee that the 2004 legislative session did not bring changes that affected MERC/PMAP other than language that altered the loan period from the Academic Health Center (AHC).Originally the $4.85 million loan from the AHC was borrowed on April 15, each year and had to be paid back with interest on June 30, regardless of whether the department was able to secure a match on the funds.   Since issues related to securing federal match for MERC dollars in FY04 are ongoing and might not be resolved by the end of the fiscal year, new language was added so that the department would have authority do two transfers in this fiscal year if necessary.

Ms. Rydrych also informed the committee that the Department has put forward several amendments to the MERC statute.The first involves a change in the frequency with which the MERC application will ask for cost data.This potential change was also discussed at the previous MERC meeting.The language changes the frequency of cost data collection from every other year to ‘at the discretion of the Commissioner,’ which staff do not envision being more frequent than every 3-5 years.

The second proposed change to the MERC statute involves the repeal of the small site cut-off that first went into effect with the 2004 distribution.Ms. Rydrych reminded the committee that at an earlier meeting, committee members had unanimously voted to write a letter to the Commissioner opposing the cutoff and requesting that it be repealed; the Commissioner’s response was that the Department would not be pursuing a change at that time.In the interim, various parties have become interested in reversing the cutoff, especially as analysis has shown a disproportionate impact on rural sites and on particular provider types.If the 0.5 FTE cutoff were to be repealed, the 10% discretionary fund that was enacted at the same time would remain in effect.

Dr. Abenstein suggested that programs should be given discretion in determining how funds are awarded to sites, as they are in the best position to know where training occurs and who is most in needs of funds, and that MERC should not collect data on training sites at all in order to further lessen the administrative burden.Dr. Gaspar noted that administration is no longer a significant cost for his institution, as most systems for collecting MERC data are now automated.He also noted that all of the APN programs in the state had recently discussed the issue of administrative burden related to MERC and agreed that it was not a problem.Mr. Roberts agreed.Ms. Ludwig and Dr. Gaspar noted that it is still important to collect the data, for accountability purposes.

The third change put forth by the Department is a placeholder for potential changes to the MERC statute that might be required, based on the outcome of the negotiation process with CMS.

Mr. Leitz noted that all three proposals are still moving through the departmental approval process, and while no opposition is expected, we still can not be sure of the outcome for any proposal.Dr. Abenstein suggested contacting the Minnesota Medical Association, whose trustees will be meeting in January, to gain their support for the proposals; Dr. Ling suggested that he could send a copy of the language to the MMA once it is available.

Dr. Ling also raised the issue of redirecting a portion of the existing MERC funds – either from the combined pool or the discretionary fund – for other projects that the committee deems to be important, including rural or small sites, particular geographic areas or provider types, or different approaches to providing clinical education.Dr. Abenstein noted that such a proposal would need to be significantly more detailed in order to get the committee’s support; Dr. Ling suggested establishing an ad-hoc committee to discuss how such a pool could function.Ms. Rydrych asked that interested members talk to her after the meeting.

VII. Study of resident hour limits and GME costs – Diane Rydrych
Ms. Rydrych introduced to the committee a topic that she has begun researching and on which she would be interested in working with the committee.As most members know, the ACGME enacted new duty hours standards for residency and fellowship programs that include, among other standards, a requirement that residents/fellows work no more than 80 hours per week, on average, over a 4-week period, that all residents/fellows have one full 24-hour period off per week, that no resident/fellow can work more than 24 hours (plus 6 additional hours for transition) in a single shift, and that residents/fellows should have 10 hours off between shifts.These new standards have been in effect since July 1, 2003, and have required many programs to make changes in scheduling, staffing, oversight, and other areas in order to comply.Ms. Rydrych informed the committee that she would like to examine the impact of these standards on Minnesota programs, with a particular focus on their financial impact for teaching programs and institutions.

Ms. Rydrych noted that she had already met with the U of MN and HCMC to discuss this project, and that they had tentatively decided to proceed through a two-step process, first surveying program directors to inventory the changes that they have made in response to the new regulations and then following up to gather cost information.The committee discussed whether it would be possible to find any data supporting the theory that the hour limits have led to additional costs for teaching programs or facilities.One interested party felt that it would be almost impossible to collect data from the various physician groups or to isolate the effect of a single policy change on costs, while Dr. Abenstein noted that there are some costs, such as Mayo’s recent approval of $500,000 for moonlighting costs in response to the changes, that could be identified.Dr. Ling noted that opportunity costs, such as lost time for education or research related to shifts in faculty time, would be quite hard to pin down.Dr. Patow cautioned that it would be important to avoid making the assumption that the old model is necessarily a better one than the new one and that framing the issue carefully would be important.Mr. Toscano suggested starting the process with a focus group of residents and faculty.

The committee agreed that this would be a very worthwhile endeavor for MERC.Ms. Rydrych noted that she would like to convene an advisory group some time soon after the holidays to provide input on the survey instrument and to discuss issues related to the collection of relevant cost data.She asked that interested committee members speak to her after the meeting if they wanted to be involved.

VIII. Update on dental innovations grant pool – Diane Rydrych
Ms. Rydrych updated the committee on the most recent round of dental innovations grants, the third round that has been awarded.The Department received more proposals than it had in any previous year (12), and the review committee decided to award grants to 10 of the 12 organizations.One of the 10 subsequently withdrew its proposal, leaving nine grantees with awards totaling roughly $1.3M.The amount awarded was roughly equal to the amount that MDH receives for these grants annually; however, since the Department has been unable to award all available funds in previous years and has rolled funds forward, there is still roughly $1.2 M in unawarded past funds available. The funded proposals are more wide-ranging than in the past, including a new geriatric dental clinic housed in a south Minneapolis nursing home and including interdisciplinary care, a teledentistry project for orofacial pain patients in Northern Minnesota, projects in the southern and western parts of the state, and metro-area teledentistry and community clinic programs.

IX.Upcoming meeting dates
Ms. Rydrych reminded the committee that the next MERC meeting will be on Friday, June 17, 2005 at 1:00 at Snelling Office Park.

Updated Thursday, July 03, 2014 at 11:01AM