January 24, 2003 MERC Advisory Committee Meeting Minutes - Minnesota Dept. of Health

January 24, 2003
MERC Advisory Committee Meeting

Advisory Committee Members Present:

John Abenstein, James Davis, Sandra Edwardson, Tim Gaspar, Larry Kuusisto, Louis Ling, Dawn Ludwig, Daniel Mareck, Kathy Meyerle, Carl Patow, Marilyn Speedie, Jim Toscano, Harley Will (for Gary Anderson).

Interested Parties Present:

Carol Backstrom, Ben Bornsztein, Jerry Collingham, Gerald Hallenbeck, Pat Hanson, Jeny Stumpf Kertz, Deb Mayland-Poyzer, Gerhardt Meier, Anna Thompson, and Edward Todd.

MDH Staff Present:

Scott Leitz, Diane Reger, and Diane Rydrych.

I. Introductory Remarks from MERC Advisory Committee Chair - Louis Ling

The meeting began at 1:10 p.m.

Dr. Ling welcomed the committee and visitors and asked for introductions of all attendees.

II. Proposal for Alternate Funding for Psychiatry - Carl Patow

Dr. Patow gave a proposal to the committee and asked that they consider looking into alternate funding for psychiatrists and psychiatric residents. His proposal indicated that, on average, Minnesota has approximately 10 psychiatrists for every 100,000 residents, lower than the national average of 16 per 100,000. He suggested that the committee consider giving psychiatrists incentives that would help increase the number choosing to practice in Minnesota. (See attached.)

One member indicated that they have no difficulties recruiting and training psychiatrists, but that due to low reimbursement rates and the inability of psychiatrists to bill enough to cover their costs, the hospital is forced to subsidize their psychiatrists. Another member indicated that the difficulty extends to other psychiatric providers as well, including psychologists and psychiatric nurse practitioners and that a general lack of support for training may be leading to a lack of interest in psychiatric CNS programs. Other members agreed that waiting times for psychiatric appointments are often excessive, particularly in northeastern Minnesota.

All members agreed that shortages in various medical fields are still a pressing issue in Minnesota. They suggested that the workforce committee begin meeting again in an effort to identify shortages and potential remedies. Although MERC has now been gathering healthcare labor market data for two years through the exit surveys, these data may or may not provide enough specialty-based information to assist with the identification of workforce shortages. MERC staff pointed out that the funding for strategies related to workforce composition or distribution might need to come from another source outside of MERC; MERC funds might not be available for this type of funding because they are Medicaid funds related to clinical training. Staff also advised the committee that a statutory change would be necessary to change any funding arrangements and that the committee would need to determine what leeway there is with legislature before getting too far into this process.

III. 2003 Legislative Session and Budget Deficit - Scott Leitz

Mr. Leitz discussed the substantial budget deficit that the State faces. The department is not clear if the tobacco endowment MERC receives will be affected. Without a Health Commissioner named and in place, there is uncertainty as to how the deficit will affect the entire department's budget.

Mr. Leitz reminded the committee that during the 2002 legislative session, the $5 million General Fund appropriation for MERC was reduced by $4.85 million and that the funding for MERC administrative costs was reduced from $150,000 to $100,000, for a total reduction of $4.9 million. In response to these reductions, the Department and the University of Minnesota Academic Health Center agreed to backfill a portion of the lost funds through an annual loan of $4.85 million from the AHC to MERC beginning in FY2002.  Under this arrangement, the $4.85 million supplied by the AHC is combined with funds from the medical education endowment and any other unmatched MERC funds and used to draw down federal matching funds. Upon receipt of matching funds, MERC repays the initial amount to the AHC along with five percent interest for the period in which the funds were held by MDH. All other funds, including the remaining matching funds obtained on the AHC dollars, are distributed through MERC. This change went into effect in 2002.

Also in the 2002 session, a modification to Minnesota Statutes 62J.694 allows the Commissioner of Finance, beginning in SFY04, to use funds from the medical education endowment to pay general fund expenses. If such a cash flow mechanism is activated in a given fiscal year, funds earmarked for distribution to MERC or the AHC in that year will not be available for cash flow, and funds from the endowment base will still be included in the calculation of fair market value even if those funds are used for cash flow purposes. If funds are used for cash flow, they must be repaid before the end of the fiscal biennium at a monthly rate of interest comparable to the rate earned by the state on invested treasurer's cash. The intent of the legislation is to hold the AHC harmless, which means that MERC funds may have to be used in order to make the AHC endowment whole if the repayment rate is lower than the interest which the used endowment funds would otherwise have earned. This will not affect the 2003 MERC distribution.

The department has already received three quarters of its FY2003 tobacco endowment allotment. The fourth quarter payment is expected in April 2003.  MERC staff does not know if the tobacco installments can be used for filling the gap in the budget deficit. Staff is hopeful that at least the first three installments, if not all, will be available for the MERC distribution in June 2003.

Federal matching funds for MERC may be an issue this year if DHS is close to or over the Medicaid upper payment limit. If so, staff will look for alternative ways for receiving a match.

Mr. Leitz informed the committee that the department decided not to move forward with any changes to the dental innovations pool language in the MERC statute.

IV. Status of the MERC Advisory Committee - Scott Leitz

Mr. Leitz reminded the committee that its existence is authorized under Statute 62J.  According to the language in that statute, the committee expires every two years unless renewed by the Department of Health. At this time, the department has chosen only to extend the authorization of committees that directly distribute funds. Since the MERC Advisory Committee plays an advisory role and does not distribute funds, the department will not include the committee as a statutory body in new legislative language. This means that the committee will dissolve at the end of the fiscal year. Staff realizes that some members whose terms expired in January 2003 were in the process of seeking reappointment. Those members are welcome to continue serving until the committee expires at the end of June.

Several members expressed concern that if there were not a committee in place, stakeholders would have no representation during the distribution process. Mr. Leitz pointed out that MERC staff would still be able to pull interested parties together on an as needed basis for discussions surrounding medical education. Members indicated that they did not agree with the committee being dissolved. They voted unanimously for the Chair to write a letter to the Commissioner of Health to argue that the committee is vital for issues surrounding MERC and that its authorization should be extended.

V. Update on the 2003 MERC Application Process - Diane Reger

The 2003 MERC application process is going well. With the web-based application's improvements this past year, the process is getting smoother. Over 61% of the sponsoring institutions used the 2003 web application. Users seemed to find it easy to use and gave positive comments on their experience. With more institutions using the web application this year, the amount of requests sent out for additional information were reduced. This may also be attributed to the fact that costs and financial data were not required for this application period.

All applications are in the database and additional information requests have been made where necessary. The follow-up information is expected to be returned to MERC staff within the next month. Unless there is a hold on contracts, drafts of the MERC contract are scheduled to be sent to sponsoring institutions in late March.

The distribution is expected to take place in June 2003 once funds are available.

VI. Spring 2003 PMAP Distribution - Diane Rydrych

Ms. Rydrych provided an update on the PMAP distribution process. The next PMAP distribution, which will contain approximately $18.3 million in funds that were carved out between July and December of 2002, will go out within the next few weeks. The contracts were briefly kept on hold during the Department's spending freeze, but have now been released and were distributed to sponsoring institutions today. After all signed contracts have been received by staff, checks/transfers to sponsoring institutions should follow in approximately two weeks.

VII. MERC 2003 Trainee Exit Survey - Diane Rydrych

Ms. Rydrych informed the committee that the 2003 Health Professions Trainee Exit Surveys are expected to be administered as usual later this spring. There will be few modifications to the surveys, and the Department plans to change from an annual to a biennial survey cycle after this year.

As discussed at the last meeting, there was a strong response rate of 75-90% for all provider types in 2002, with the exception of MDs. Ms. Rydrych will be working with several institutions this year to improve their response rates for resident physicians by possibly changing the survey administration methodology. Members suggested that a better response to the surveys might be obtained if the survey were made available on the Internet. Another member suggested that the surveys be sent out each year as part of State Licensing renewal. This would be a requirement that must be completed if they want their license to be renewed. Ms. Rydrych will check with Department technical staff about the feasibility of web-based surveys. Ms. Rydrych also noted that the 2002 survey results would be published in Minnesota Medicine this summer.

VIII. Additional Comments

Dr. Ling announced that he and Ms. Rydrych have written a pair of articles about the ongoing funding gap for graduate medical education in Minnesota, and that the two articles will appear together in the upcoming February issue of Minnesota Medicine.  Members suggested that copies of the articles should be made available to key legislative staff and included with the Chair’s letter to the Commissioner of Health.

IX. Meeting Schedule

The next meeting will be held from 1 – 4 p.m. on Friday, May 30, 2003.  The conference room at the Veterans' Service Building will not be available due to renovations. A meeting place will be announced at a later date.

MERC Incentive Funding for Psychiatrists

Proposal by HealthPartners

November 2002

The Issue: Minnesota has, on average, approximately 10 psychiatrists for every 100,000 residents. This lags dramatically behind the national average of 16 per 100,000.  We also lag behind in the number of child psychiatrists at 4.6 per 100,000 vs. the national average of 6.73.  While we train about 20 psychiatrists each year in Minnesota residency programs, it is our understanding that approximately 50% of these are not originally from Minnesota and leave shortly after training is complete. Not all psychiatric residency spots are filled each year. Additionally, of those that do stay and practice psychiatry, many prefer outpatient settings because of the additional challenges that inpatient settings demand. And many of them only practice part-time.

One possible solution to this shortage may be in creating incentives for psychiatric residents to stay and practice in Minnesota after their residency is completed. Because of the state budget deficit, new funds for such incentives will not come from state coffers. Instead, funds could potentially come from existing medical training dollars within the state Medical Education Research and Costs (MERC) fund.

The 2001 MERC distribution to medical training institutions and sites was $27.1 million. The projected 2002 distribution will be approximately $20-$25 million, depending on interest earned on the MERC principle.

We propose two ideas:

1) Using $250,000 of the MERC funds to fund 10 of the approximately 20 final-year psych residents at $25,000 per person over three years (a one-time attempt to increase the number of psychiatrists in the state by 10) OR

2) Using $250,000 of the MERC funds per year for a three-year pilot project (for a total cost of $750,000) designed to keep approximately 10 students per year in Minnesota (a three- to five-year attempt to increase the number of psychiatrists in the state by 30).


1) This money is directly aimed at psychiatrists and would be an attractive incentive.

2) Keeping more psychiatrists in the state will alleviate the current demand for psychiatric services.

3) No new money will be requested.

4) MERC funds would still be kept within the realm for which they've been directed:  medical education.


1) Tapping the MERC funds internally could potentially send the message to the Legislature that MERC has "more than enough" money and therefore could be cut.

2) Using incentive money for psychiatrists could pit one medical specialty group against another medical specialty group, both of which may have legitimate shortage concerns.

3) Some hospitals now receiving MERC dollars would see a slight decrease in overall funding to their programs.

Updated Monday, May 08, 2017 at 08:32AM