December 9, 2005
MERC Committee Meeting – Held via Conference Call

Advisory Committee Members Present:
Gary Anderson, Mary Schmidt for Barbara Brandt, Tim Gaspar, Roger Harms, Jim Kohrt, Linda Vegell for Connie Delaney, Louis Ling, Dawn Ludwig, Carl Patow, Charles Sawyer, Beth Schneider for Jim Toscano, and Marilyn Speedie.

Interested Parties Present:
Barb Adrian, Rena Garni, David Knowlan, Gerhardt Meier, Mike Harristhal, Sonja Meiers, Brandon Miller, Rick Roberts, and Randy Scheper.

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


I. Introductory Remarks from MERC Committee Chair – Louis Ling

Dr. Ling opened the meeting by welcoming callers and thanked everyone for taking part in the conference call. Based on the short agenda, staff recommended the conference call to save the long commute that would have been necessary by some committee members. All committee members and interested parties then introduced themselves. There were a few substitutes sitting in on the meeting. They are noted above.

Since the last meeting, the following committee member changes have taken place:

Connie Delaney has replaced Marsha Lewis.
Beth Schneider will serve as a substitute for Jim Toscano (who is planning to retire in early 2007).
Lee Greenfield was added to the committee.
Daniel Mareck resigned.

II. Discussion of MERC Federal Financial Participation for Fiscal Year 2005 and Beyond – Richard Tester, MN Department of Human Services

Last year at this time, Ann Berg spoke to the committee to discuss how 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 distribution. A few days after that meeting, CMS and DHS reached an agreement wherein DHS would continue to use the same methodology for obtaining the federal match 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.

Richard Tester updated the committee on where things are currently at by telling members that the ‘ball is in CMS’s court’ until the end of January. DHS submitted a new SPA that will be effective beginning with the FY06 distribution and would change 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 that shows where the actual funds are being paid (to over thirty hospitals and other provider types). Mr. Tester was asked if he foresees any problems with CMS approving the new methodology. He replied saying he was hopeful that the plan would be approved. He also noted that while there were technical issues earlier on (i.e., should we be paying institutions instead of making payments directly to hospitals and are MERC payments really double payment of regular DRG payments), some of these issues have since been resolved.

Currently a CMS auditor is auditing MERC in St. Paul. This should be completed this month. Mr. Tester stated that, while the SPA decision won’t be made until the auditor’s report comes out, DHS doesn’t anticipate any problems coming out of the audit, as the auditor is recommending changes that have already been implemented.

Rick Roberts, of Regions Hospital, noted that this mechanism does not follow Medicaid utilization payments. Mr. Tester responded by saying that the information shows volume in Medicaid and in FTEs, following the current MERC formula. Mr. Roberts also voiced his concern regarding the possibility that the SPA may not be approved, as it was similar to the SPA that CMS had previously expressed concerns about, and noted that this would have a significant adverse impact on training sites, including Regions. Mr. Tester explained that the plan was not rejected before, but rather was withdrawn by DHS, and that attitudes within CMS may have changed since that time. Scott Leitz reminded members that the SPA decision is currently out of the state‘s hands, and that while we are all concerned about the impact that a loss of federal matching funds would have on clinical training, the decision is currently pending on a federal level.

Mr. Leitz asked whether any changes to the MERC statute would need to take place for the upcoming legislative session in response to changes requested by CMS. Richard said that DHS would have a meeting with MDH in January to see what, if anything, would be necessary once they have more information from CMS regarding specific changes requested.


III. OIG Audit of State Medicaid GME Payments – Richard Tester, DHS

At the meeting in December 2004, Richard had 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 of 2004, 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 2004, and have received no additional questions from them, nor has there been an exit conference. As of today, we are still waiting for a final report. Richard stated that DHS is assuming that no problems were found since there has not been any communication stating otherwise.

IV. Overview of 2005 MERC/PMAP and Discretionary Fund Distribution – Diane Reger

Diane Reger briefly discussed the MERC/PMAP distribution for 2005 and how the distribution needed to be sent out in two separate batches due to the state shutdown and the inability to secure a federal match on MERC funds prior to July 1. All available funds had to be distributed before the shutdown, thus making the process a bit more cumbersome for sponsoring institutions and MERC staff alike. The first distribution amount was calculated based only on funding from PMAP. These funds were sent out at the end of June 2005. Once the shutdown was over and the federal match on MERC funding was made available in August, the second distribution was made. A final report is available on the MERC web site at the link below.

Since the web application collected detailed information on discretionary sites in 2005, we were able to track the funding they received from sponsoring institutions. A final report is available on the MERC web site see the link below.

Link to MERC/PMAP and Discretionary Reports: http://www.health.state.mn.us/divs/hpsc/hep/merc/publications/index.html.

V. Update on 2006 MERC/PMAP Application Process – Diane Reger

All applications were submitted on the web application this year. The process seemed to go smoothly without cost data being required and without the issue of an FTE cut-off this year. There are two new sponsoring institutions applying: Saint Mary's Duluth Clinic Health System and Minnesota State University, Moorhead. At this point, all applications have been received and are being reviewed.

Marilyn Speedie expressed concern over the impact of the new Medicare prescription drug program on Medicaid volumes at nursing homes and the subsequent MERC grants. She wanted to know whether any additional funding would be available to offset this. At this point, no additional funding for this purpose is available through MERC; however, Ms. Reger reminded her that discretionary funds could be used for additional funding to sites that may be losing funds from other sources.

VI. Update on Legislative Session – Diane Rydrych

Diane Rydrych reviewed the 2005 legislative changes with the committee. She reminded everyone that the legislature approved adding small sites back into the distribution and passed a change that would allow MDH to collect cost data at the Commissioner’s discretion. There had been concern that since the small sites were back in the distribution that this would mean that the discretionary fund would no longer be available. Ms. Rydrych assured everyone that discretionary funds would still be available for sponsoring institutions to use as additional funding to their eligible training sites listed in the application. Institutions will still need to report which of their training sites received funding and the methodology used to make this determination.

Ms. Rydrych also discussed the collection of cost data on the application. The last time costs were collected was on the 2004 application. Staff will not be collecting cost data for the 2006 application, but may collect them every fourth or fifth year. Costs are estimated to be collected again on either the 2008 or 2009 application.

MDH does not currently intend to put forward any MERC-related initiatives in the 2006 session. Depending on changes requested by CMS in order to retain our ability to draw federal matching funds, however, a change in the MERC statute might need to be made.

VII. Reorganization of the Minnesota Department of Health – Scott Leitz and Diane Rydrych

Mr. Leitz and Ms. Rydrych informed the committee of several changes that have taken place in the organization of the Department of Health since the last MERC meeting. Scott Leitz is now the Director of Health Policy for the department, overseeing not only the Health Economics Program but also the Center for Health Statistics (headed by John Oswald and including both the Office of the State Registrar and the Center for Health Statistics Research), the Center for Health Informatics, and the Center for Data Initiatives, which includes hospital and surgical center reporting. This newly-formed Office of Health Policy, Statistics and Informatics also includes Adverse Health Events Reporting and MERC, both of which report directly to Scott. Diane Rydrych is now the Assistant Director of this new, larger office. Ms. Rydrych’s responsibilities still include MERC, but she is also now managing the Adverse Health Events reporting system, a role previously held by Marie Dotseth. Mr. Leitz noted that these organizational changes should have little impact on MERC or on the rest of the activities conducted by the Health Economics Program with which members may have been familiar.

Ms. Rydrych noted that she would no longer be handling the Dental Innovations grant program, which grew out of MERC. Karen Welter in the Office of Rural Health and Primary Care will now manage this function. Ms. Rydrych will still be involved in the process, serving on the review committee and keeping MERC committee members updated. However, she will no longer be involved in the application and distribution process of these grants, or in the day-to-day management and oversight of the grants.


VIII. Upcoming meeting dates

Ms. Reger reminded the committee that the next MERC meeting would be on Friday, June 16, 2006, at 1:00 at Snelling Office Park. Updates will be communicated through email and through the MERC Web Site.

Updated Tuesday, November 16, 2010 at 12:25PM