June 15, 2007 MERC Advisory Committee Meeting Minutes - Minnesota Dept. of Health

June 15, 2007
MERC Committee Meeting


Committee Members Present:
John Abenstein, Gary Anderson, Deb Mayland-Poyzer for Mary Edwards, Daniel Foley, Tim Gaspar, Lee Greenfield, Larry Kuusisto, Louis Ling, Dawn Ludwig, Kathy Meyerle, Carl Patow, Curtis Savstrom, and Marilyn Speedie.  

Interested Parties Present:
Barb Adrian, Suzanne Bardouche, Ben Bornsztein, Rena Garni, Ron Hadsall, David Knowlan, Janet McCarthy (via phone), Margo Marko, Gerhardt Meier, Marty McDonough, Jeff Ogden, Rick Roberts, John Rodewald, Trisha Schirmers, and Susan Stout.

Staff Present:
Scott Leitz, Diane Reger and Diane Rydrych – Minnesota Department of Health
Susan Hammersten and Richard Tester – Minnesota Department of Human Service

I.    Introductory Remarks from MERC Committee Chair – Dr. Louis Ling

Dr. Ling opened the meeting by welcoming and thanking members and interested parties for attending.  All committee members and interested parties then introduced themselves.


II.   Update on Fiscal Year 2007 MERC/PMAP Distribution – Diane Reger, MDH

Ms. Reger will be sending each sponsoring institution their 2007 site data within two weeks.  It’s very important that the sites be verified prior to the distribution.  In 2006, numerous sites had to return funding because they were submitted in error and MDH was not aware of this until the grant was calculated and distributed.   When incorrect MAID numbers are submitted for sites, the wrong revenue is used to calculate the distribution.  If an MAID number needs to be changed, the entire distribution is affected, as well as discretionary funding available to the sponsoring institution.  We are asking that programs communicate with the training sites to verify their site data so we do not have issues going forward.  The site name, address, billing address (where checks are mailed), MAID number, and FTEs should be verified to avoid future problems.   

To help verify MAID numbers, MDH is adding a field to the site reports which tells what type of provider the MAID number belongs to.  Often sites have a few different numbers, one may be for the hospital, one for the clinic, pharmacy, etc.  All of these may be named the same and have the same address, but be for different types of providers or charges.  It’s important to make certain the correct one is selected; otherwise, the wrong revenue data is provided to MDH by DHS and the calculations are based on this.  This will throw off the entire distribution if incorrect.

DHS has still not received approval from CMS to release federal funds to nursing homes.   Because of this, we are still holding $321,571 for nursing homes listed as training sites on the 2006 distribution.  Once MDH receives the approval from DHS, 2006 funds will be released.  At this point in time, we are not sure if approval will be received before the 2007 distribution is made.  If that’s the case, MDH will need to hold the 2007 federal funds slated for nursing homes also. MERC staff is not certain what this will mean for nursing homes if approval is not given before January 2008, since nursing homes will no longer be eligible for future MERC/PMAP funding.

Ms. Reger asked if there was any preference in how the grant contracts were sent to each sponsoring institution (Federal Express vs PDF document via email).  Everyone agreed that receiving a PDF and Federal Expressing the signed copy back to MDH would be fine.

MERC staff estimates that the 2007 MERC/PMAP grant will be distributed sometime this fall, due to the timing of federal match process.  We’re estimating approximately $59 million, if a full match is received.  Once more information is known, we’ll communicate that to sponsoring institutions.

III.       Update on Fiscal Year 2007 Dental Grants – Diane Rydrych, MDH

Ms. Rydrych provided an update on the MERC dental innovations grants, which are now administered by MDH’s Office of Rural Health and Primary Care. A total of $2,036,700 was awarded in SFY07 to 11 sites throughout the state. Ms. Rydrych noted that this amount included funds that had been unawarded in previous years and rolled forward. The application deadline for FY08 grants just passed, and the review team (which Ms. Rydrych is part of) will be meeting in mid-July to review the applications submitted this year. Applicants will likely be notified in late July if they have been awarded grants.

IV.    Outcomes of the 2007 Legislative Session – Diane Rydrych, MDH

Ms. Rydrych provided the committee with a brief history of the various MERC proposals discussed during the legislative session, including the proposals put forward by the Governor’s office, the House, and the Senate. 

Ms. Rydrych reminded the committee that the Department had put forward a proposal for a revised MERC formula that retained the status quo distribution formula for all PMAP funds.  The proposal would also have established a pool of $10-$15M in funds, including $5M in cigarette tax funds and $5M in new funds from the HCAF as well as any match received on the $4.85M in Academic Health Center funds, and distributed that pool solely based on relative MA revenue.  This pool would not have had a discretionary fund.  The remaining $3.4M in cigarette tax dollars and an additional $1M in new HCAF funds would have been distributed based solely on relative education costs, in an effort to keep the distribution more closely aligned with the status quo.  The final $2M in new HCAF dollars would have been used to provide financial support to programs training mental health practitioners and incorporating patient safety principles into medical education.

This proposal was incorporated into the Governor’s budget.  The House supported the Governor’s proposal, and introduced parallel language that differed only in the funding source for the new $8M appropriation; the House version included an appropriation from the General Fund rather than from the Health Care Access Fund.

The Senate’s proposal for 2008 eliminated the $4.85 M currently transferred from the Academic Health Center, eliminated nursing homes as recipients of MERC/PMAP funding, and eliminated the discretionary pool.  Under this proposal, all funding would be based on relative MA revenue, and sites with .98% or more of the relative MA revenue would receive a supplemental grant of 20% on top of their original grant.  The “cost” of the supplemental grant would come from those sites with less than .98% of the relative MA revenue.   

Additionally, the Senate proposal would take $5.35 M from the available MERC funds and distribute it to several individual sites.  Those funds would be distributed as follows: $2.475 to the University of Minnesota Medical Center, Fairview, $2.075 to the UM Dental School, and $1.8 M to the Academic Health Center.   These funds could be spent at the facilities’ discretion.  Ms. Rydrych informed the committee that it is unclear at this point whether or not federal matching funds would be available for these dollars, as CMS has expressed some concerns about matching direct payments that are not linked to costs.  If no matching funds are received for these dollars, this would have the effect of reducing the overall pool of money by $5.35M, and reducing the volume of funds distributed through the formula by $10.7M.

Finally, the Senate proposal directed $6.75M in FY2008/FY2009 and $2.5M in FY2010 and CY2011 to the Mayo Clinic from the General Fund.  These funds would also be unmatched.   

MDH was directed to submit a report to the Legislature in January 2009, describing the impact of these changes, particularly on sites with a smaller number of FTE’s or lower MA revenue, and recommending any changes necessary to ensure the financial viability of GME in Minnesota .

The Senate proposal was ultimately adopted, and signed by the Governor.  Ms. Rydrych provided a handout that walked through the main points of the statutory changes.  Mr. Leitz asked for clarification about whether or not a portion of state funds would be left unmatched under this proposal; Ms. Rydrych clarified that, since federal match is questionable for the $5.35M in direct payments, it is likely that those funds would be left unmatched.  Committee members asked for clarification about the impact on small sites and how PMAP revenue would be calculated.  They also asked if cost data would need to be submitted on future applications since it is not part of the new formula.  Ms. Rydrych said although costs are not part of the new formula, they are still necessary to break the site grant down to the program level.  The site as a whole receives grants that may come from many different programs and institutions, to break the amount down to the program level, MERC staff look at the number of FTEs and cost associated with that program’s provider type.  The overall grant to the site when combined across each teaching program it supports is still the same; however, it is just broken down and distributed through many programs.   Requesting cost and revenue data is at the discretion of the Commissioner of Health.  They are not being requested on the 2008 MERC application and MERC staff will continue to use the cost data submitted on the 2004 Application as a proxy.


V.    Federal GME Funding Issues – Richard Tester/Susan Hammersten, DHS

Susan Hammersten and Richard Tester, of DHS, provided an update on federal issues that the committee has previously discussed; the potential elimination of GME from the Medicaid program, and CMS’s intent to adopt regulations that would limit payments under the MA program to costs and enact new restrictions on certified public expenditures (CPE’s).  Recent action by Congress delayed the implementation of both changes for a year, but Ms. Hammersten noted that it is not clear how that one-year delay will be interpreted by CMS.  Ms. Hammersten noted that it is possible that CMS will still publish their proposed regulations on the same timetable, and have them go into effect at the one-year mark or 60 days thereafter, and it is also possible that the proposed regulations themselves would not be published until after the one-year period has passed.   Ms. Hammersten and Mr. Tester also noted that the scope of the GME-elimination proposal is unclear; the preamble seems to imply that indirect medical education (IME) would not be affected by the elimination of GME, but the proposed regulatory language refers to GME more broadly and does not explicitly exempt IME.  In the case of both MERC and PMAP, it is unclear whether federal match will be available in the future.

A committee member asked the DHS staff whether or not GME payments would also be removed from cost reports. Mr. Tester replied that this was likely, and that direct costs (which total roughly $8M per year for FFS) would likely be backed out from cost reports. A committee member asked whether the committee should be thinking about what our response would be if CMS decides that they can only accept cost reports for hospitals. Ms. Hammersten responded that this is a potential issue but has not been explicitly raised yet, and that CMS has indicated some willingness to accept cost reports for non-institutional providers as well.

In the case of both proposals, comments are due to CMS no later than June 22. Committee members discussed several templates that are available for comment letters, and MERC staff agreed to send to the committee any templates or samples that other committees can email within the next few days.


VI.   Upcoming meeting dates


The next regularly scheduled MERC meetings will be held on from 1 – 4 p.m. in the Red River Room at Snelling Office Park on Friday, November 30, 2007. For directions, please visit http://www.health.state.mn.us/divs/hpsc/hep/merc/committee/index.html for further information. 


Tuesday, November 16, 2010 at 12:25PM