March 31, 2000 MERC Advisory Committee Meeting Minutes - Minnesota Dept. of Health

March 31, 2000
MERC Education and Research Costs (MERC) Advisory Committee

Members Present:
Louis J. Ling, Chair, Michael Belzer (for Morris Davidman), James R. Davis, Mary Edwards (for Peter Rapp), Sandra Edwardson, Daniel D. Foley, Robert Howe, Mark Huber (for Byron Crouse), Frank Iossi (for John Abenstein), Larry Kuusisto, Kirsten J. Libby, Dawn Ludwig, Donald Marsh, Mike Murray (for Kathleen Meyerle), Carl Patow, Marilyn Speedie, Michael Till, Cathy Wisner, William Wustenberg.

Interested Parties Present:
Numerous other visitors were present.

MDH Staff Present:
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 1:05 and welcomed committee members and visitors. Dr. Ling distributed a meeting schedule for MERC Advisory Committee meetings for calendar year 2000.

II. Update on staffing

Tom Major introduced Diane Rydrych who is the lead staff person for the MERC project. Diane previously worked for the Department of Economic Security. Mr. Major also announced that an additional new MERC staff person, Diane Marty, will begin next week in the position previously held by Dani Flint.

III. Update on application process

Tom Major stated that Diane Rydrych and Diane Marty will be focused on processing applications over the next few months. Staff will be contacting sponsoring institutions, as necessary, with questions or requests for information. Grants are expected to be distributed in July.

IV. Legislative activity surrounding MERC

MDH MERC Technical Bill

Scott Leitz summarized the bill which contains technical changes to the MERC statute (please refer to the summary of this bill in the minutes of the January 21, 2000 MERC meeting). The bill passed the House and has passed out of committee and is waiting action in the Senate.

PMAP Carve-Out Discussions

Dr. Ling reviewed the history of the current statutory formula for distribution of the PMAP/PGAMC medical education dollars. The current statutory formula distributes half of these dollars based on medical education volume (average clinical training cost by provider type multiplied by the number of clinical FTEs at a training site) and half of these dollars based on public program volume (each site's total public program revenue divided by the grand total of all sites' public program revenue).

Under current statute, the percentage carved out of the PMAP/PGAMC rates is different for Hennepin County, other metro counties and non-metro counties based on the amount of medical education dollars included in the public program reimbursement rates for each of those entities. The carve-out constitutes 6.3% of the capitated PMAP rate for Hennepin County, 2.0% for other metro counties, and 1.6% for non-metro counties.

The stakeholders and advisory committee members have continued to discuss the current distribution formula because it appears to have a disproportionate impact on some counties and providers who serve a large number of public program clients. For example, based on preliminary and estimated data, the Department of Human Services determined that the carve out for Hennepin County under the current 6.3% carve-out percentage would be $12,989,434. The Department of Health estimated that Hennepin County would receive $9,194,622 under the current distribution formula (50% education factor and 50% public program volume factor).

There was no consensus on an alternative formula at the January 21, 2000 MERC Advisory Committee meeting. Instead, the Advisory Committee passed a motion to recommend to the Commissioner of Health that the Department initiate a technical amendment to the MERC statute to delay implementation of the PMAP carve-out until January 1, 2002.

In a memo dated February 7, 2000, from Scott Leitz to the MERC Advisory Committee members, Mr. Leitz informed members that the Department decided not to pursue legislative language to delay the implementation. Mr. Leitz stated that the Department stands ready to assist the Advisory Committee in whatever capacity to resolve the issue. Mr. Leitz sent a second memo to the advisory committee on February 15, 2000 that outlined two alternative distribution formulas. He stated that he was available to discuss any alternatives, answer questions, or provide further information.

Following this memo, and in response to the Department's offer of technical assistance, several stakeholders on the MERC Advisory Committee expressed an interest in opening discussions around possible alternatives to the current distribution formula. The Department agreed to facilitate these discussions which involved the following stakeholders: Allina Health System, Fairview Health System, HealthPartners, HealthSystem Minnesota, Hennepin County Medical Center, Mayo and the University of Minnesota's Academic Health Center. In addition, other parties were apprised of the meetings and of the discussions as they were occurring. In a memo to MERC Advisory Committee members, dated March 21, 2000, Mr. Leitz informed members of these discussions and detailed the formula on which these stakeholders seemed to have reached consensus (hereinafter referred to as "the proposed formula").

The proposed formula is as follows: The distribution would return 65% of any carve-out to the region from which the funds originated, with the remaining 35% pool distributed state-wide based on state-wide medical education volume. The 65% returned to Hennepin County and the Metro regions would be distributed within the region based on medical education volume within the region; the 65% returned to non-metro areas of the state would be distributed based on the current statutory formula of 50% public program volume/50% medical education volume.

In a memo dated March 28, Mr. Leitz provided MERC Advisory Committee members with detailed estimates on the amount of money distributed under various formulas (including current law and the proposed formula), by county and by clinical training site, based on the carve-out percentages currently in statute (Hennepin - 6.3%, Metro - 2.0%, and non-Metro 1.6%) and, alternatively, based on carve-out percentages proposed at the legislature (Hennepin -5.0%, Metro 1.5%, and Non-Metro 0.0%).

Dr. Ling opened the meeting for discussion. A number of members expressed concern with the Department's process in facilitating a compromise proposal. Specifically, it was noted that Children's Hospital of Minneapolis and St. Paul, and a number of metro hospitals suffer under this proposal. For example, Minneapolis and St. Paul Children's Hospital stated that they are estimated to lose $1 million under the current statutory formula. Under the proposed formula, they estimate losing another $380,000. Similarly, the proposed formula puts significant losses on other Metro hospitals such as Mercy, Unity, and North Memorial.

An advisory committee member questioned whether the proposed formula serves the public program population if the carve-out dollars retained within metropolitan region are distributed 100% based on medical education FTEs.

A representative of Mayo restated Mayo's position that if the carve out percentages are reduced, thereby reducing the amount of the carve-out, Mayo will not continue to support the proposed formula.

A member from St. Cloud voiced concern that all non-Metro providers other than Mayo were excluded from the discussions until today's meeting.

A member stated that this proposal is not perfect for Regions and Health Partners but they believe it is a real compromise and they support it.

Mike Belzer moved that the committee recommend the proposed formula to the Commissioner of Health. Larry Kuusisto seconded the motion. Frank Iossi moved a friendly amendment, that the committee recommend the proposed formula only if current statutory carve-out percentages remain the same. Dr. Belzer accepted the amendment. The motion passed (15 voted in favor of the motion. 3 voted in opposition to the motion).

Committee members discussed the bill to reduce the PMAP/PGAMC carve out percentages. Dan Foley moved that the committee support the Commissioner of Health in opposing any reduction in the PMAP/PGAMC carve-out. Robert Howe seconded the motion. The motion passed (18 members voted in favor of the motion, 0 members opposed).

Committee members discussed the bill to take 10 million dollars from the tobacco endowment medical education appropriation and use those dollars to fund diabetes research. There was no motion on this topic, but committee members were strongly opposed to this transfer of funds away from medical education. Some members expressed additional concern over the fact that a specific research project was targeted for legislative appropriation, and this was not consistent with the accepted competitive peer review process for research grants, similar to the process the advisory committee recommended in their report to the legislature on medical research.

V. Establishment of workforce subcommittee  

Dr. Ling announced the formation of a MERC workforce subcommittee. The purpose of this committee is to examine the issue of workforce needs and training in Minnesota, and consider whether the MERC Trust Fund should use incentives to address workforce shortages.

Dr. Ling announced that Byron Crouse, MERC committee member from the University of Minnesota Duluth School of Medicine, Department of Family Practice, has agreed to serve as chairperson for this subcommittee. Dr. Ling asked which members are interested in serving on this subcommittee. The following individuals indicated an interest: Jim Davis, Larry Kuusisto, Robert Howe, Dawn Ludwig, Sandy Edwards, Mary Edwards/Peter Rapp, Marilyn Speedie, Carl Patow, Dan Foley, and Timothy Gaspar. The subcommittee will begin meeting this summer. Notice of the meetings will be sent to all members and the Department's list of interested persons.

VI. New business

Dr. Ling asked if committee members wanted to continue meeting at Metro Square or would like to move back to the Veteran's Service Building. Those members who expressed a preference preferred meeting at the Veteran's Service Building. Staff will try to obtain the meeting room for future MERC Advisory Committee meetings. Please read meeting notices carefully so you know the location for the meeting.

Meeting adjourned at 2:50 p.m.


Tuesday, November 16, 2010 at 12:25PM