January 26, 2001
MERC Advisory Committee

Committee Members Present:
Louis J. Ling - Chair, Larry Kuusisto, Marilyn Speedie, John Abenstein, Byron Crouse, James R. Davis, Anna Geary (for Daniel Foley), Jim Kohrt, Robert Howe, James Toscano, Kathy Meyerle, Gary Anderson (for Peter Polverini), Jim Koppel.

Interested Parties Present:
Ben Bornstein, Gerhardt Meier, Tiffany Schmidt, Peggy Rehder, Mark Huber.

Staff Present:
Marie Dotseth, Scott Leitz, Tom Major, Diane Rydrych, Michelle Strangis.

I. Introductory remarks from MERC Advisory Committee Chair, Dr. Louis Ling:

Dr. Ling opened the meeting at 1:15 p.m. and welcomed both committee members and visitors. In his opening remarks Dr. Ling mentioned that Peggy Spector had passed away and asked for a moment for the Advisory Committee to remember her.

II. MERC 2001 Distribution Process Update: Diane Rydrych

Diane Rydrych briefly discussed the status of the 2001 MERC distribution. All applications have been received, and Diane Marty has begun work on data entry and flagging of missing or questionable data on the 2001 applications. This year, for the first time, sponsoring institutions were given reports showing all submitted data from the previous year and allowed to indicate which fields need to be changed, rather than filling out information that is identical from year to year; for example, rather than providing all information for each site each year, a sponsoring institution can simply make changes to the number of FTEs at a site that was also listed the previous year. The long-awaited MERC web application is now operational, and Ms. Marty is using this to make revisions to 2000 data to reflect these indicated changes. Ms. Marty anticipates that the data entry and flagging process will continue throughout February, and intends to work with each institution to address problematic or missing data as she enters that institution’s application. A spreadsheet showing a preliminary distribution should be available for review in April, and staff expect distribution of the 2001 Trust Fund to occur in May.

For the 2001 distribution, Scott Leitz estimated that there will be approximately $13.4 million in grant funds before the federal match. This will be comprised of $5 million from the general fund and approximately $8.4 million from tobacco endowment payments, less $150,000 for administrative expenses. (See also Section VI. below.)

III. 2001 PMAP Distribution Update: Diane Rydrych

Ms. Rydrych gave an update on progress towards distribution of the funds carved out from capitated PMAP rates during October-December of last year. MERC staff have now received public program revenue estimates from the Minnesota Department of Human Services, and have created reports showing the DHS revenue estimates for each clinical training site paired with the self-reported public program estimates MDH received in the 2000 MERC applications. Sponsoring institutions were recently sent these reports along with a memo describing the way in which the DHS estimates were derived and instructions for requesting modifications to a site’s revenue estimate and for accepting the DHS estimates without modification.

Sponsoring institutions were given until February 6th to either approve DHS estimates or request modifications. However, at this point it is difficult to estimate how long this process will take; to a large degree, the timing will depend on how many sponsoring institutions request modifications to their training sites’ estimates and the length of time that it takes to verify the methodologies used to derive the new estimates. Given these uncertainties, Ms. Rydrych stated that a safe estimate of when the first PMAP distribution will occur would be April but that staff would make every effort to speed up the process.

IV. Workforce Subcommittee activities and draft exit surveys: Diane Rydrych

Ms. Rydrych briefly summarized the activities of the MERC workforce subcommittee, which met four times between June and November. After reviewing several tools currently being used to gather workforce information in Minnesota, the committee determined that none of the tools provided enough detail to allow the committee to draw firm conclusions about supply, demand, or shortages at the occupational or specialty level, and recommended that MERC begin administering trainee exit surveys to all graduating trainees in MERC programs. These surveys would include questions on experiences in the job market, perceptions of openings by specialty, factors that were important in the location of the job search and in the position accepted, salary, educational debt, and other variables.

At the September Advisory Committee meeting, the Advisory Committee asked that the workforce subcommittee develop draft exit surveys for review and comment. Ms. Rydrych provided the Committee with copies of surveys for three MERC provider types - medical residents, pharmacy residents/students and physician assistants. Copies of the dental, advanced practice nursing, and chiropractic surveys are also available upon request. Ms. Rydrych asked that committee members who wish to comment on the survey instruments themselves or on the plans for survey administration get back to her with comments within two weeks so that the survey questions can be finalized.

Several committee members encouraged working with department heads at sponsoring institutions to encourage higher response rates and increased buy-in to these surveys. Ms. Rydrych said that she is working with contacts at each sponsoring institution who can perform this function, and is hoping that department heads will encourage response. One committee member asked whether all graduating trainees would be surveyed or just those who are considered eligible for the purposes of MERC grants. Ms. Rydrych clarified that all completing trainees, including fellows, would be eligible, with the exception of transitional program graduates who would not immediately be entering the job market. One committee member expressed concerns that the inclusion of a medical or other license number as an identifier might make some trainees less likely to complete the surveys, and questioned why this identifier was necessary. Ms. Rydrych responded that given the continuing importance of questions about how many graduates stay in Minnesota after completing training and how long they stay in the state, it would be beneficial to be able to link responses to these exit surveys to existing data from the Minnesota Board of Medical Practice or other licensing bodies and track Minnesota graduates over time. While matching based on name is possible, such a match would result in less complete and less accurate results than would a match based on license number. Another committee member stated that most physicians don’t tend to see their license number as confidential information, and that an individual could opt not to complete that particular field if he or she so desired.

Committee members also suggested asking practicing physicians and other providers similar questions to those included in the exit surveys, which might allow for more accurate responses to questions about practice demographics and labor market perceptions and allow for comparisons over time. Ms. Rydrych stated that such a survey of practicing physicians is currently in the planning stages at MDH’s Office of Rural Health and Primary Care, which is planning to modify its physician surveys to include a detailed survey that would be administered to a sample of physicians on a biennial basis. Ms. Rydrych will discuss this recommendation with the ORHPC staff person who is designing and administering this survey to coordinate question format.

V. Discussion of Governor’s proposed budget: Scott Leitz 

Scott Leitz, Director of the Health Economics Program, discussed the Governor’s proposed budget as it relates to funding of medical education. The Governor proposed that the uncommitted tobacco settlement dollars be added to the existing tobacco endowment, with the earnings used to fund a "Healthy Kids" initiative and medical education. This proposal would add $160 million dollars to the endowment in 2002 for medical education, to be combined with the current $351 million designated for medical education. If the proposed legislation passes, the earnings on this additional $160 million (approximately $8 million per year beginning in FY2003) would be directed to the Academic Health Center. The AHC would be obligated to develop initiatives to increase enrollment of racial and ethnic minorities in all AHC programs, focus greater attention in training programs on providing care to individuals from diverse racial, cultural, and ethnic backgrounds, develop plans to redesign training processes, and develop strategies to reduce future demand for health services through research on quality improvements and provider best practices. Upon satisfaction that these goals are being achieved, the Department would release funds to the University. The amount of funds flowing from the medical education endowment to the MERC Trust Fund would not change under this proposal. This proposal and the distribution of the earnings of the current tobacco endowment are shown on the attached flow chart.

Kathy Meyerle made a motion that the minutes for today’s meeting reflect a commendation to the Commissioner and the Department of Health for their continued support of MERC funding, particularly in light of the current budget plan. Motion seconded by Dr Robert Howe. Motion passed by unanimous vote.

VI. Discussion of estimated total MERC Trust Fund dollars to be distributed in FY 2001: Scott Leitz

Mr. Leitz provided estimates of MERC Trust Fund and PMAP funds to be distributed in FY 2001.

                 MERC TRUST FUND

                $ 5.0 million General Fund

                $ 8.4 million Tobacco Endowment

                $13.3 million Federal Match

               ($150K) administrative costs

                $26.5 million

These funds will be distributed using the general MERC distribution formula (based on clinical training costs and trainee FTEs).

DHS estimates that the PMAP carveout for calendar year 2001 will be approximately $19.2 million. PMAP funds to be carved out in FY2001 will be roughly $14 million (recall that the carveout did not begin until October, 2000, so the FY2001 distribution will not represent a full year of funds). The PMAP medical education dollars will be distributed using the current statutory formula (50% of money distributed based on clinical training costs and trainee FTEs and 50% distributed based on public program volume).

VII. Discussion of recommendations for modification to PMAP distribution formula: Scott Leitz

History: The 2000 legislature directed the Department to convene a group of stakeholders to evaluate the appropriateness of the current PMAP distribution formula and make recommendations to the Commissioner of Health regarding possible changes to the distribution formula. This committee, the Ad Hoc Committee on Medicaid Financing of Medical Education, met four times. At the fourth meeting the committee made the following recommendations to the Commissioner of Health:

1. The current PMAP distribution formula should be amended to include as a factor only public program volume.

2. To the extent that the data permit, the formula should consider only PMAP revenue, not fee-for-service Medicaid revenue, in its measure of public program volume.

3. It would be appropriate for the Department to consider health policy goals in its distribution of medical education funds or to establish a separate pool of funds to incent innovation. However, funds from the PMAP carveout should not be used for these purposes.

4. The Department should work to develop a vision for the overall direction of medical education in Minnesota.

MDH will soon be submitting a report to the Legislature outlining its response to these recommendations and the Department’s recommendations to the Legislature regarding modification of the current PMAP distribution formula. In this report, MDH is recommending that medical education be retained as a factor in the PMAP distribution formula, albeit with a lesser weight than it is given in the current formula. The Department is recommending a formula that would distribute funds based 75% on relative public program volume and 25% on relative training volume; this proposed formula would reward facilities that provide a greater amount of service to public program clients and would have the result of reducing the redistribution of carved-out PMAP dollars from Hennepin County to greater Minnesota. The Department is also recommending that, once it is determined that encounter data alone are sufficient for estimating site-level public program volume, fee-for-service Medicaid revenues no longer be included in revenue calculations for the PMAP formula. Until that time, both fee-for-service and prepaid Medicaid revenues will be included in the PMAP formula.

In discussing these recommendations, Mr. Leitz stressed that MDH feels that the ad hoc Committee made some very compelling arguments in their recommendations to the Commissioner, based on their determination that PMAP funds were originally intended to support service to Medicaid clients, not medical education per se. However, the Department strongly feels that, given the size of the current medical education funding gap, the State has a responsibility to support medical education where it occurs, whether in large, urban inpatient facilities or in smaller ambulatory or rural sites. One member noted that there were two fundamental assumptions during the initial discussions to recommend a carveout of medical education funds from capitated Medicaid rates: 1) The Advisory Committee and the Department did not believe that managed care organizations were passing through public funds intended to support medical education; and 2) the MERC Trust Fund could be a vehicle through which Medicaid funding that had in practice supported medical education could be funded.

Marie Dotseth, Assistant to the Commissioner, and some Advisory Committee members observed that when the original PMAP carveout decision was made the Department and the Advisory Committee were trying to replicate the support that Medicaid had traditionally provided to clinical medical education programs since its establishment in the 60's. In making a recommendation to increase the weight given to Medicaid service in the formula, the Department is implicitly recognizing the importance of service to Medicaid clients under the old system. But the Department also recognizes and understands that the settings in which medical education occurs have changed dramatically in the last 30 years and that the link between high medical education volume and high public program service is more tenuous than it was when the medical education add-on was originally implemented. Given these changes, directing funds only to those facilities that serve large Medicaid populations is no longer sufficient to guarantee appropriate support for medical education. Additionally, the Department feels that removing medical education volume entirely from the distribution formula could result in an even more severe redistribution of funds than that which results from the current 50/50 formula by transferring funds to sites that see a large number of Medicaid clients but do only minuscule amounts of training.

In closing, Dr. Ling noted that the recommendations of the Ad Hoc Committee are well taken, and that the insights of the consultants (Deborah Greene and Tim Henderson) were very helpful. Dr. Ling suggested that should the MERC Advisory Committee designate future meetings to discuss the PMAP carveout and distribution formula that one or both consultants be invited to participate in the discussion.

The next MERC Advisory Committee Meeting will be held on Friday, March 30th, from 1 - 4 p.m. in the Veteran’s Service Building.

Tuesday, November 16, 2010 at 12:25PM