2003 MERC Legislative Summary - Minnesota Dept. of Health

1998 MERC Legislative Summary

The legislature provided ongoing funding for MERC in the 1998 legislative session by appropriating $10 million from the general fund for distribution in fiscal year 1999 and increasing the Minnesota Department of Health's budget base by $5 million annually beginning in FY 2000. The legislature also authorized the Department of Human Services to seek a federal match on these dollars. The distribution formula for the general fund dollars and federal match (if attained) is the same as the formula utilized in the 1998 MERC Trust Fund distribution. The distribution of the PMAP and PGAMC carve out fund will be based on a simple additive formula which reflects equally the volume of medical education and the volume of public program service at each training site.

The legislature gave the Commissioner of Health authority to review the provider groups eligible for the MERC Trust Fund to assure that the distribution of funds is consistent with the purpose of the statue, which is to support medical education in clinical training sites that have experienced a loss of medical education funding due to increased competition in the health care market. In addition, the legislature directed the Department of Health to conduct a study of the structure and composition of the MERC Advisory Committee; determine whether adjustments are necessary in the distribution formula for the PMAP/PGAMC medical education dollars; and determine whether any additional criteria beyond the current statutory criteria should be utilized in weighting future distributions of the MERC Trust Fund, including the criteria that trainees continue to practice in Minnesota. The legislature did not appropriate any funds to administer the Trust Fund or staff the MERC Advisory Committee.

Text of 1998 MERC Legislation: 1998 Minnesota Health and Human Services Omnibus Bill, Senate File 3346, MERC Provisions--Unofficial Version


  • stricken = old language to be removed

  • underscored = new language to be added


 19.22  FUND.] Of the general fund 
 19.23  appropriation, $10,000,000 in fiscal 
 19.24  year 1999 is to the commissioner for 
 19.25  the medical education and research 
 19.26  trust fund.  Of this amount, $5,000,000 
 19.27  shall become part of base level funding 
 19.28  for the biennium beginning July 1, 1999.
 19.30  (1) The commissioner of human services 
 19.31  shall seek to maximize federal 
 19.32  financial participation for payments 
 19.33  for medical education and research 
 19.34  costs. 
 19.35  (2) If the commissioner of human 
 19.36  services determines that federal 
 19.37  financial participation is available 
 19.38  for the fiscal year 1999 appropriation 
 19.39  for the medical education and research 
 19.40  trust fund under this subdivision, the 
 19.41  commissioner of health shall transfer 
 19.42  to the commissioner of human services 
 19.43  the amount of state funds necessary to 
 19.44  maximize the federal funds. 
 19.45  (3) The transferred amount, plus the 
 19.46  federal financial participation amount, 
 19.47  shall be distributed to medical 
 19.48  assistance providers according to the 
 19.49  distribution methodology of the medical 
 19.50  education research trust fund 
 19.51  established under Minnesota Statutes, 
 19.52  section 62J.69. 

 24.16     Sec. 5.  Minnesota Statutes 1997 Supplement, section 
 24.17  62J.69, subdivision 1, is amended to read: 
 24.18     Subdivision 1.  [DEFINITIONS.] For purposes of this 
 24.19  section, the following definitions apply: 
 24.20     (a) "Medical education" means the accredited clinical 
 24.21  training of physicians (medical students and residents), doctor 
 24.22  of pharmacy practitioners, doctors of chiropractic, dentists, 
 24.23  advanced practice nurses (clinical nurse specialist, certified 
 24.24  registered nurse anesthetists, nurse practitioners, and 
 24.25  certified nurse midwives), and physician assistants. 
 24.26     (b) "Clinical training" means accredited training for the 
 24.27  health care practitioners listed in paragraph (a) that is funded 
 24.28  and was historically funded in part by inpatient patient care 
 24.29  revenues and that occurs in both either an inpatient and or 
 24.30  ambulatory patient care settings training site. 
 24.31     (c) "Trainee" means students involved in an accredited 
 24.32  clinical training program for medical education as defined in 
 24.33  paragraph (a). 
 24.34     (d) "Eligible trainee" means a student involved in an 
 24.35  accredited training program for medical education as defined in 
 24.36  paragraph (a), which meets the definition of clinical training 
 25.1   in paragraph (b), who is in a training site that is located in 
 25.2   Minnesota and which has a medical assistance provider number. 
 25.3      (e) "Health care research" means approved clinical, 
 25.4   outcomes, and health services investigations that are funded by 
 25.5   patient out-of-pocket expenses or a third-party payer. 
 25.6      (e) (f) "Commissioner" means the commissioner of health. 
 25.7      (f) (g) "Teaching institutions" means any hospital, medical 
 25.8   center, clinic, or other organization that currently sponsors or 
 25.9   conducts accredited medical education programs or clinical 
 25.10  research in Minnesota. 
 25.11     (h) "Accredited training" means training provided by a 
 25.12  program that is accredited through an organization recognized by 
 25.13  the department of education or the health care financing 
 25.14  administration as the official accrediting body for that program.
 25.15     (i) "Sponsoring institution" means a hospital, school, or 
 25.16  consortium located in Minnesota that sponsors and maintains 
 25.17  primary organizational and financial responsibility for an 
 25.18  accredited medical education program in Minnesota and which is 
 25.19  accountable to the accrediting body. 
 25.20     Sec. 6.  Minnesota Statutes 1997 Supplement, section 
 25.21  62J.69, subdivision 2, is amended to read: 
 25.23  RESEARCH.] (a) The commissioner may establish a trust fund for 
 25.24  the purposes of funding medical education and research 
 25.25  activities in the state of Minnesota. 
 25.26     (b) By January 1, 1997, the commissioner may appoint an 
 25.27  advisory committee to provide advice and oversight on the 
 25.28  distribution of funds from the medical education and research 
 25.29  trust fund.  If a committee is appointed, the commissioner 
 25.30  shall:  (1) consider the interest of all stakeholders when 
 25.31  selecting committee members; (2) select members that represent 
 25.32  both urban and rural interest; and (3) select members that 
 25.33  include ambulatory care as well as inpatient perspectives.  The 
 25.34  commissioner shall appoint to the advisory committee 
 25.35  representatives of the following groups:  medical researchers, 
 25.36  public and private academic medical centers, managed care 
 26.1   organizations, Blue Cross and Blue Shield of Minnesota, 
 26.2   commercial carriers, Minnesota Medical Association, Minnesota 
 26.3   Nurses Association, medical product manufacturers, employers, 
 26.4   and other relevant stakeholders, including consumers.  The 
 26.5   advisory committee is governed by section 15.059, for membership 
 26.6   terms and removal of members and will sunset on June 30, 1999. 

 26.7      (c) Eligible applicants for funds are accredited medical 
 26.8   education teaching institutions, consortia, and programs 
 26.9   operating in Minnesota.  Applications must be submitted by the 
 26.10  sponsoring institution on behalf of the teaching program, and 
 26.11  must be received by September 30 of each year for distribution 
 26.12  in January of the following year.  An application for funds must 
 26.13  include the following: 
 26.14     (1) the official name and address of the sponsoring 
 26.15  institution and the official name and address of the facility or 
 26.16  program programs on whose behalf the institution is applying for 
 26.17  funding; 
 26.18     (2) the name, title, and business address of those persons 
 26.19  responsible for administering the funds; 
 26.20     (3) the total number, type, and specialty orientation of 
 26.21  eligible Minnesota-based trainees in for each accredited medical 
 26.22  education program for which funds are being sought the type and 
 26.23  specialty orientation of trainees in the program, the name, 
 26.24  address, and medical assistance provider number of each training 
 26.25  site used in the program, the total number of trainees at each 
 26.26  site, and the total number of eligible trainees at each training 
 26.27  site; 
 26.28     (4) audited clinical training costs per trainee for each 
 26.29  medical education program where available or estimates of 
 26.30  clinical training costs based on audited financial data; 
 26.31     (5) a description of current sources of funding for medical 
 26.32  education costs including a description and dollar amount of all 
 26.33  state and federal financial support, including Medicare direct 
 26.34  and indirect payments; 
 26.35     (6) other revenue received for the purposes of clinical 
 26.36  training; and 
 27.1      (7) a statement identifying unfunded costs; and 
 27.2      (8) other supporting information the commissioner, with 
 27.3   advice from the advisory committee, determines is necessary for 
 27.4   the equitable distribution of funds. 
 27.5      (d) The commissioner shall distribute medical education 
 27.6   funds to all qualifying applicants based on the following basic 
 27.7   criteria:  (1) total medical education funds available; (2) 
 27.8   total eligible trainees in each eligible education program; and 
 27.9   (3) the statewide average cost per trainee, by type of trainee, 
 27.10  in each medical education program.  Funds distributed shall not 
 27.11  be used to displace current funding appropriations from federal 
 27.12  or state sources.  Funds shall be distributed to the sponsoring 
 27.13  institutions indicating the amount to be paid to each of the 
 27.14  sponsor's medical education programs based on the criteria in 
 27.15  this paragraph.  Sponsoring institutions which receive funds 
 27.16  from the trust fund must distribute approved funds to the 
 27.17  medical education program according to the commissioner's 
 27.18  approval letter.  Further, programs must distribute funds among 
 27.19  the sites of training based on the percentage of total program 
 27.20  training performed at each site. as specified in the 
 27.21  commissioner's approval letter.  Any funds not distributed as 
 27.22  directed by the commissioner's approval letter shall be returned 
 27.23  to the medical education and research trust fund within 30 days 
 27.24  of a notice from the commissioner.  The commissioner shall 
 27.25  distribute returned funds to the appropriate entities in 
 27.26  accordance with the commissioner's approval letter. 
 27.27     (e) Medical education programs receiving funds from the 
 27.28  trust fund must submit annual cost and program reports a medical 
 27.29  education and research grant verification report (GVR) through 
 27.30  the sponsoring institution based on criteria established by the 
 27.31  commissioner.  If the sponsoring institution fails to submit the 
 27.32  GVR by the stated deadline, or to request and meet the deadline 
 27.33  for an extension, the sponsoring institution is required to 
 27.34  return the full amount of the medical education and research 
 27.35  trust fund grant to the medical education and research trust 
 27.36  fund within 30 days of a notice from the commissioner.  The 
 28.1   commissioner shall distribute returned funds to the appropriate 
 28.2   entities in accordance with the commissioner's approval letter.  
 28.3   The reports must include:  
 28.4      (1) the total number of eligible trainees in the program; 
 28.5      (2) the programs and residencies funded, the amounts of 
 28.6   trust fund payments to each program, and within each program, 
 28.7   the percentage dollar amount distributed to each training site; 
 28.8   and 
 28.9      (3) the average cost per trainee and a detailed breakdown 
 28.10  of the components of those costs; 
 28.11     (4) other state or federal appropriations received for the 
 28.12  purposes of clinical training; 
 28.13     (5) other revenue received for the purposes of clinical 
 28.14  training; and 
 28.15     (6) other information the commissioner, with advice from 
 28.16  the advisory committee, deems appropriate to evaluate the 
 28.17  effectiveness of the use of funds for clinical training.  
 28.18     The commissioner, with advice from the advisory committee, 
 28.19  will provide an annual summary report to the legislature on 
 28.20  program implementation due February 15 of each year. 
 28.21     (f) The commissioner is authorized to distribute funds made 
 28.22  available through: 
 28.23     (1) voluntary contributions by employers or other entities; 
 28.24     (2) allocations for the department of human services to 
 28.25  support medical education and research; and 
 28.26     (3) other sources as identified and deemed appropriate by 
 28.27  the legislature for inclusion in the trust fund. 
 28.28     (g) The advisory committee shall continue to study and make 
 28.29  recommendations on:  
 28.30     (1) the funding of medical research consistent with work 
 28.31  currently mandated by the legislature and under way at the 
 28.32  department of health; and 
 28.33     (2) the costs and benefits associated with medical 
 28.34  education and research. 
 28.35     Sec. 7.  Minnesota Statutes 1997 Supplement, section 
 28.36  62J.69, is amended by adding a subdivision to read: 
 29.2   SERVICES.] (a) The amount transferred according to section 
 29.3   256B.69, subdivision 5c, shall be distributed to qualifying 
 29.4   applicants based on a distribution formula that reflects a 
 29.5   summation of two factors: 
 29.6      (1) an education factor, which is determined by the total 
 29.7   number of eligible trainees and the total statewide average 
 29.8   costs per trainee, by type of trainee, in each program; and 
 29.9      (2) a public program volume factor, which is determined by 
 29.10  the total volume of public program revenue received by each 
 29.11  training site as a percentage of all public program revenue 
 29.12  received by all training sites in the trust fund pool.  
 29.13     In this formula, the education factor shall be weighted at 
 29.14  50 percent and the public program volume factor shall be 
 29.15  weighted at 50 percent. 
 29.16     (b) Public program revenue for the formula in paragraph (a) 
 29.17  shall include revenue from medical assistance, prepaid medical 
 29.18  assistance, general assistance medical care, and prepaid general 
 29.19  assistance medical care. 
 29.20     (c) Training sites that receive no public program revenue 
 29.21  shall be ineligible for payments from the prepaid medical 
 29.22  assistance program transfer pool. 
 29.23     Sec. 8.  Minnesota Statutes 1997 Supplement, section 
 29.24  62J.69, is amended by adding a subdivision to read: 
 29.25     Subd. 5.  [REVIEW OF ELIGIBLE PROVIDERS.] (a) Provider 
 29.26  groups added after January 1, 1998, to the list of providers 
 29.27  eligible for the trust fund shall not receive funding from the 
 29.28  trust fund without prior evaluation by the commissioner and the 
 29.29  medical education and research costs advisory committee.  The 
 29.30  evaluation shall consider the degree to which the training of 
 29.31  the provider group: 
 29.32     (1) takes place in patient care settings, which are 
 29.33  consistent with the purposes of this section; 
 29.34     (2) is funded with patient care revenues; 
 29.35     (3) takes place in patient care settings, which face 
 29.36  increased financial pressure as a result of competition with 
 30.1   nonteaching patient care entities; and 
 30.2      (4) emphasizes primary care or specialties, which are in 
 30.3   undersupply in Minnesota. 
 30.4      Results of this evaluation shall be reported to the 
 30.5   legislative commission on health care access.  The legislative 
 30.6   commission on health care access must approve funding for the 
 30.7   provider group prior to their receiving any funding from the 
 30.8   trust fund.  In the event that a reviewed provider group is not 
 30.9   approved by the legislative commission on health care access, 
 30.10  trainees in that provider group shall be considered ineligible 
 30.11  trainees for the trust fund distribution. 
 30.12     (b) The commissioner and the medical education and research 
 30.13  costs advisory committee may also review provider groups, which 
 30.14  were added to the eligible list of provider groups prior to 
 30.15  January 1, 1998, to assure that the trust fund money continues 
 30.16  to be distributed consistent with the purpose of this section.  
 30.17  The results of any such reviews must be reported to the 
 30.18  legislative commission on health care access.  Trainees in 
 30.19  provider groups, which were added prior to January 1, 1998, and 
 30.20  which are reviewed by the commissioner and the medical education 
 30.21  and research costs advisory committee, shall be considered 
 30.22  eligible trainees for purposes of the trust fund distribution 
 30.23  unless and until the legislative commission on health care 
 30.24  access disapproves their eligibility, in which case they shall   
 30.25  be considered ineligible trainees. 

 91.24  HEALTH CENTER.] 
 91.25     The University of Minnesota academic health center, after 
 91.26  consultation with the health care community and the medical 
 91.27  education and research costs advisory committee, is requested to 
 91.28  report to the commissioner of health and the legislative 
 91.29  commission on health care access by January 15, 1999, on plans 
 91.30  for the strategic direction and vision of the academic health 
 91.31  center.  The report shall address plans for the ongoing 
 91.32  assessment of health provider workforce needs; plans for the 
 91.33  ongoing assessment of the educational needs of health 
 91.34  professionals and the implications for their education and 
 91.35  training programs; and plans for ongoing, meaningful input from 
 91.36  the health care community on health-related research and 
 92.1   education programs administered by the academic health center. 


 95.17  The commissioner of health shall review the current medical 
 95.18  education and research costs advisory committee structure and 
 95.19  composition and recommend methods to ensure balanced and 
 95.20  appropriate representation of major training programs.  The 
 95.21  commissioner shall also review the statutory formula for the 
 95.22  prepaid medical assistance carve out to determine if any 
 95.23  adjustments should be made to correct existing or potential 
 95.24  inequities on current training programs.  The commissioner shall 
 95.25  determine if there should be other criteria for weighting future 
 95.26  distributions of medical education and research funds beyond the 
 95.27  current statutory criteria, including the criteria that trainees 
 95.28  continue to practice in Minnesota.  The commissioner shall 
 95.29  report the findings and recommendations to the legislative 
 95.30  commission on health care access by December 15, 1998. 

Updated Monday, May 08, 2017 at 11:59AM