June 16, 2006
MERC Committee Meeting
Committee Members Present:
John Abenstein, Gary Anderson, Jim Davis, Dan Foley, Tim Gaspar, Lee Greenfield, Roger Harms, Larry Kuusisto, Louis Ling, Dawn Ludwig, Carl Patow, Curtis Savstrom, Mike Wiles for Charles Sawyer, and Marilyn Speedie.
Interested Parties Present:
Ben Bornsztein, Paula Buckner, Rena Garni, David Hagen, Susan Hammersten, Frank Iossi, Ruth Lindquist, Deb Mayland-Poyzer, Gerhardt Meier, Becky Path, Rick Roberts, Trisha Schirmers, Chris Tholen, and Edward Todd.
Diane Reger and Diane Rydrych – MN Department of Health
Ann Berg and Richard Tester – MN Department of Human Services
I. Introductory Remarks from MERC Committee Chair ; 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.
Since the last meeting, the following committee member change has taken place:
Curtis Savstrom replaced Jim ToscanoII. Update/Discussion on Fiscal Year 2006 Distribution Process Diane Rydrych, MDH
Ms. Rydrych discussed a memo that she had sent out in May that explained that nursing homes would not be eligible for a federal match until the portion of the SPA covering nursing homes was approved. Ann Berg from DHS has been working with CMS on approval of the State Plan Amendment (SPA). The only portion that was not approved through 2007 was the nursing home portion. This is being held up due to other payment issues surrounding nursing homes and is not due to the MERC grant itself.
What this means for the MERC distribution is that sponsoring institutions will not receive the portion of the distribution for nursing homes that comes from federal matching dollars until that portion of the SPA is approved. Until that time, DHS will hold the nursing homes’ federal matching dollars. Once approval is granted by CMS, MDH will receive these federal funds and can then distribute that portion to the nursing home sites through the sponsoring institutions. It’s uncertain when the approval will come, but doubtful that it will be before the 2006 MERC/PMAP distribution takes place. Diane Reger explained that she would be providing reports to sponsoring institution contacts that will show the amount that is being held back. She also explained that this would affect the discretionary distribution. Nursing homes will still be able to receive discretionary funds; however, the sponsoring institution will need to make sure that the funding comes from sources other than state or federal funds. Only funds from PMAP will be available to nursing homes through the discretionary pool this year. Ms. Reger will explain this in more detail at the time of the distribution.
Richard Tester from DHS told the committee that the federal match on state funds would not be available until after the UPL (upper payment limit) was calculated. He expected this information to be available at the end of August or in early September. Ms. Rydrych told the committee that a later distribution would need to take place because of the pending federal match. The distribution will likely take place in September 2006. Subsequent distributions will likely take place around the same time each year due to the change in how/when the federal match is calculated.III. Update/Discussion: Moving Forward, Fiscal Year 2008 and Beyond – Ann Berg and Richard Tester, MN Department of Human Services
Ms. Rydrych reminded committee members that CMS (Centers for Medicare and Medicaid Services) has approved the SPA through the 2007 distribution, which will take place in late summer or early fall of 2007. Federal funding has not been approved for 2008 and beyond, and DHS (along with MDH) have agreed to make changes in the distribution process and/or the process for obtaining federal matching funds starting in 2008. Based on communications with CMS over the last year, it appears that CMS will not approve the existing approach for calculating the MERC distribution after FY07, and substantial changes may have to be made to the current methodology. The impression of both DHS and MDH is that CMS would prefer that the MERC distribution more closely follow patterns of Medicaid utilization, although the exact expectations have not been made clear. CMS has not given any indication as to what they want to see in the SPA going forward. They have only indicated that they most likely will not approve the current process and would prefer a closer link to MA utilization.
MERC staff mentioned that while approval of the SPA for FY2008 and beyond is an issue, there are many scenarios that the department could propose to CMS to address their concerns. For example, the department could change the MERC formula to put more weight or full weight on MA revenue, choose to forgo the federal match altogether and avoid any changes to formula, forego match on a portion of funds, leave the PMAP formula as is and change the MERC formula to be based on utilization, or make any of a number of other changes to the formula. The department could also propose a more radical change in the distribution process based on the policy goals that this committee and the Department want to pursue.
Any changes made to how the MERC formula is calculated or how the funds are distributed would require an amendment to the MERC statute. In order for changes to be effective for the 2008 distribution, the statute would need to be changed during the 2007 session, since the 2008 applications will go out in August of 2007 for distribution in the summer/fall of 2008. In addition, if changes to the application were necessary in order to collect additional or different data, those changes would need to be made prior to the release of the 2008 application in August 2007. The committee may want to meet this fall to discuss possible proposals to CMS regarding the SPA. If approved, wording will need to be placed in statute during the spring of 2007. If CMS doesn’t approve the SPA before session is over, we may have to forgo the federal match in 2008.
To begin a discussion about how to think about potential changes that may be required in 2008, and to prepare for crafting a proposal for CMS, Ms. Rydrych asked members to look over the original “Guiding Principles and Policy Issues” document developed by the MERC Committee in 1995. She gave members a few minutes to review the document and asked whether or not members still believed that these were the policy goals that MERC stakeholders held, and whether we should continue to support these goals moving forward. Ben Bornsztein suggested that a survey be developed to see how well organizations felt that the original principles/policies were being met. Dr. Ling suggested that we hold off on a survey at this time since it might be difficult to collect that information. A few members indicated that the original principles remained the same; however, several voiced their opinions regarding research funding and noted that nothing has ever been done related to the research portion of MERC’s original mission.
Ms. Rydrych clarified that while research funding was part of the original vision for MERC, the issue currently at hand related to CMS approval deals strictly with the MERC distribution and GME financing, and that it is CMS’s reluctance to continue to approve our current methodology for distributing funds that is driving this discussion. She also suggested that committee members look at the guiding principles in that light to determine whether we, as a group, still want to consider those principles important as we negotiate with CMS about the MERC distribution. The concerns of CMS seem to be very narrowly focused on the distribution formula at this time, and don’t cover some of the larger issues around MERC.
Roger Harms said that the original purpose behind MERC was to support medical education and not primarily to serve the underserved population. We are simply following the method of serving the underserved because we can get more funds through the underserved population. The committee had a brief discussion of the historically difficult issue of balancing those two issues in the MERC formula, and Ms. Rydrych reminded the committee that it was that very issue that led to the original ‘50/50’ PMAP formula, as the PMAP committee could not decide what the original intent behind the inclusion of medical education funds in MA rates was.
John Abenstein asked whether there was a way to hold institutions harmless through a formula change, perhaps by moving the PMAP portion of the formula so that it would be based fully on education costs, while the MERC portion of the distribution would be based on MA utilization to satisfy CMS. Dr. Abenstein noted that, as the stakeholders have always known that these funds could disappear in the future, the focus of this group has to be on finding ways to continue to provide care and training; to do that, institutions would need to know how formula changes would affect them financially.
Ms. Rydrych and Ms. Reger noted that they have developed a set
of scenarios showing how three formula changes would impact each
institution. Based on the group’s discussion and
Dr. Abenstein’s suggestion, they will add a fourth scenario,
under which MERC funds would be distributed based on MA utilization
and PMAP funds based on relative costs. Ms. Reger will
send a draft report to members and interested parties that will
show an estimate for each of the four scenarios.
Ms. Reger distributed copies of the preliminary 2006 MERC/PMAP and discretionary distribution along with a breakdown of the estimated funding sources. The reports reflect a full federal match and assumption that no changes will be made to any sites (i.e., site closures or ineligibility) prior to the distribution. Should there be a change in the funding or if a site become ineligible/closes, the entire distribution will need to be recalculated. Ms. Reger stressed that the distribution reflected in the report was only an estimate at this time, and that we are not guaranteed a full match.
As Ms. Reger had stated earlier in the meeting, the amounts listed for those sponsoring institutions that had trainees at nursing homes would need to be adjusted at the time of the distribution if nursing homes were still not approved for federal funding. She will send information to the sponsoring institutions affected within a week so they are aware of the preliminary amounts after the adjustment. She will also be contacting the sponsoring institutions to ask how they plan to distribute the discretionary distribution. DHS will need to know the actual discretionary amounts going to sites so they can account for this under the UPL they are calculating. This year, the federal match will be ‘fronted’ by DHS and given to MDH to distribute; however, DHS will not receive the actual match until the payments have been made to the sites and the Grant Verification Reports returned to MERC staff. Since the federal match will not be available to DHS until after reports are returned, Diane asked that verifications be returned as quickly as possible when the time comes.
Drafts of the MERC grant agreement were sent to sponsoring institution contacts this week. There were no changes to the contracts other than combining the MERC/PMAP wording together again (as a reminder, the distribution had to be split last year due to the state government shutdown). By having the review of the agreements completed ahead of time, we’ll be able to quickly process the paperwork when the distribution is available.
Some have been asking if the 2007 MERC web application is available yet. Since the distribution has been delayed, staff is keeping the 2006 data on the web for as long as possible. We anticipate that the application will be available in August as it usually is. A mailing will take place once it is ready.V. Update on Fiscal Year 2007 Dental Grants – Diane Rydrych, MDH
Diane Rydrych is no longer overseeing the Dental Innovations Grants. These are now being managed by Karen Welter in MDH’s Office of Rural Health and Primary Care. The RFP for 2007 grants have already been issued, and proposals are due in a few days. Ms. Rydrych will continue to participate on the grant review committee and will keep the MERC committee informed of developments related to the grants.
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, December 1, 2006, and Friday, June 15, 2007. For directions, please visit our web site http://www.health.state.mn.us/divs/hpsc/hep/merc/ for further information.
There may be a meeting scheduled in late September or early October to discuss the 2008 SPA process. Meeting dates are not set at this time.