2003 MERC Legislative Summary - Minnesota Dept. of Health

1999 MERC Legislative Summary

The 1999 legislature set aside $968 million in one-time tobacco settlement funds to establish two endowments: a tobacco prevention endowment of $590 million dollars (61% of the total), and a medical education endowment of $378 million (39 % of the total). The interest earned will be distributed annually, beginning in fiscal year 2000. The medical education endowment will fund two related activities: (1) the clinical training of medical professionals through the MERC Trust Fund and (2) instructional costs of health professional education at publicly funded academic health centers (AHCs) and affiliated teaching institutions. The AHCs receiving the largest percentage at the outset (70%), decreasing to 42% beginning in 2002. The estimated dollar distributions are as follows:

Fiscal Year Academic Health Centers



$8 million

$3.4 million


$8 million

$8.3 million


$8 million

$10.9 million

$8 million

$10.9 million

The endowment fund earnings allocated to the MERC Trust Fund are in addition to the $5 million annual General Fund appropriation for MERC. The formula for distribution of the endowment fund earnings and the General Fund appropriation is stated in Minn. Stat. 62J.692, and is based on the average training costs for designated providers and number of eligible trainees at each clinical training site throughout Minnesota.

There were no statutory changes to that portion of the MERC Trust Fund that consists of medical education dollars transferred to MERC from the Prepaid Medical Assistance Program (PMAP) and Prepaid General Assistance Medical Care (PGAMC) program. These funds will be distributed beginning in FY 2000, using the formula enacted in 1998.

As a result of legislative changes, doctors of chiropractic will be eligible for the MERC Trust Fund, beginning in fiscal year 2000.

The legislature requested the Department of Health provide recommendations on a process for review of research grant applications with priority to applications that are intended to gather preliminary data for a subsequent proposal for funding from a federal agency or foundation. These recommendations are due to the legislature by January 15, 2000.

Text of MERC 1999 Legislative Changes

53.32 Sec. 9. [62J.691] [PURPOSE.] 53.33 The legislature finds that medical education and research
53.34 are important to the health and economic well being of
53.35 Minnesotans. The legislature further finds that, as a result of
53.36 competition in the health care marketplace, these teaching and
54.1 research institutions are facing increased difficulty funding
54.2 medical education and research. The purpose of sections 62J.692
54.3 and 62J.693 is to help offset lost patient care revenue for
54.4 those teaching institutions affected by increased competition in
54.5 the health care marketplace and to help ensure the continued
54.6 excellence of health care research in Minnesota.

54.7 Sec. 10. [62J.692] [MEDICAL EDUCATION.]
54.8 Subdivision 1. [DEFINITIONS.] For purposes of this
54.9 section, the following definitions apply:
54.10 (a) "Accredited clinical training" means the clinical
54.11 training provided by a medical education program that is
54.12 accredited through an organization recognized by the department
54.13 of education or the health care financing administration as the
54.14 official accrediting body for that program.
54.15 (b) "Commissioner" means the commissioner of health.
54.16 (c) "Clinical medical education program" means the
54.17 accredited clinical training of physicians (medical students and
54.18 residents), doctor of pharmacy practitioners, doctors of
54.19 chiropractic, dentists, advanced practice nurses (clinical nurse
54.20 specialists, certified registered nurse anesthetists, nurse
54.21 practitioners, and certified nurse midwives), and physician
54.22 assistants.
54.23 (d) "Sponsoring institution" means a hospital, school, or
54.24 consortium located in Minnesota that sponsors and maintains
54.25 primary organizational and financial responsibility for a
54.26 clinical medical education program in Minnesota and which is
54.27 accountable to the accrediting body.
54.28 (e) "Teaching institution" means a hospital, medical
54.29 center, clinic, or other organization that conducts a clinical
54.30 medical education program in Minnesota.
54.31 (f) "Trainee" means a student or resident involved in a
54.32 clinical medical education program.
54.33 (g) "Eligible trainee FTEs" means the number of trainees,
54.34 as measured by full-time equivalent counts, that are at training
54.35 sites located in Minnesota with a medical assistance provider
54.36 number where training occurs in either an inpatient or
55.1 ambulatory patient care setting and where the training is
55.2 funded, in part, by patient care revenues.
55.4 COMMITTEE.] The commissioner shall appoint an advisory committee
55.5 to provide advice and oversight on the distribution of funds
55.6 appropriated for distribution under this section. In appointing
55.7 the members, the commissioner shall:
55.8 (1) consider the interest of all stakeholders;
55.9 (2) appoint members that represent both urban and rural
55.10 interests; and
55.11 (3) appoint members that represent ambulatory care as well
55.12 as inpatient perspectives.
55.13 The commissioner shall appoint to the advisory committee
55.14 representatives of the following groups to ensure appropriate
55.15 representation of all eligible provider groups and other
55.16 stakeholders: public and private medical researchers; public
55.17 and private academic medical centers, including representatives
55.18 from academic centers offering accredited training programs for
55.19 physicians, pharmacists, chiropractors, dentists, nurses, and
55.20 physician assistants; managed care organizations; employers;
55.21 consumers and other relevant stakeholders. The advisory
55.22 committee is governed by section 15.059 for membership terms and
55.23 removal of members and expires on June 30, 2001.
55.24 Subd. 3. [APPLICATION PROCESS.] (a) A clinical medical
55.25 education program conducted in Minnesota by a teaching
55.26 institution is eligible for funds under subdivision 4 if the
55.27 program:
55.28 (1) is funded, in part, by patient care revenues;
55.29 (2) occurs in patient care settings that face increased
55.30 financial pressure as a result of competition with nonteaching
55.31 patient care entities; and
55.32 (3) emphasizes primary care or specialties that are in
55.33 undersupply in Minnesota.
55.34 (b) Applications must be submitted to the commissioner by a
55.35 sponsoring institution on behalf of an eligible clinical medical
55.36 education program and must be received by September 30 of each
56.1 year for distribution in the following year. An application for
56.2 funds must contain the following information:
56.3 (1) the official name and address of the sponsoring
56.4 institution and the official name and site address of the
56.5 clinical medical education programs on whose behalf the
56.6 sponsoring institution is applying;
56.7 (2) the name, title, and business address of those persons
56.8 responsible for administering the funds;
56.9 (3) for each clinical medical education program for which
56.10 funds are being sought; the type and specialty orientation of
56.11 trainees in the program; the name, site address, and medical
56.12 assistance provider number of each training site used in the
56.13 program; the total number of trainees at each training site; and
56.14 the total number of eligible trainee FTEs at each site;
56.15 (4) audited clinical training costs per trainee for each
56.16 clinical medical education program where available or estimates
56.17 of clinical training costs based on audited financial data;
56.18 (5) a description of current sources of funding for
56.19 clinical medical education costs, including a description and
56.20 dollar amount of all state and federal financial support,
56.21 including Medicare direct and indirect payments;
56.22 (6) other revenue received for the purposes of clinical
56.23 training; and
56.24 (7) other supporting information the commissioner deems
56.25 necessary to determine program eligibility based on the criteria
56.26 in paragraph (a) and to ensure the equitable distribution of
56.27 funds.
56.28 (c) An applicant that does not provide information
56.29 requested by the commissioner shall not be eligible for funds
56.30 for the current funding cycle.
56.31 Subd. 4. [DISTRIBUTION OF FUNDS.] (a) The commissioner
56.32 shall annually distribute medical education funds to all
56.33 qualifying applicants based on the following criteria:
56.34 (1) total medical education funds available for
56.35 distribution;
56.36 (2) total number of eligible trainee FTEs in each clinical
57.1 medical education program; and
57.2 (3) the statewide average cost per trainee, by type of
57.3 trainee, in each clinical medical education program.
57.4 (b) Funds distributed shall not be used to displace current
57.5 funding appropriations from federal or state sources.
57.6 (c) Funds shall be distributed to the sponsoring
57.7 institutions indicating the amount to be distributed to each of
57.8 the sponsor's clinical medical education programs based on the
57.9 criteria in this subdivision and in accordance with the
57.10 commissioner's approval letter. Each clinical medical education
57.11 program must distribute funds to the training sites as specified
57.12 in the commissioner's approval letter. Sponsoring institutions,
57.13 which are accredited through an organization recognized by the
57.14 department of education or the health care financing
57.15 administration, may contract directly with training sites to
57.16 provide clinical training. To ensure the quality of clinical
57.17 training, those accredited sponsoring institutions must:
57.18 (1) develop contracts specifying the terms, expectations,
57.19 and outcomes of the clinical training conducted at sites; and
57.20 (2) take necessary action if the contract requirements are
57.21 not met. Action may include the withholding of payments under
57.22 this section or the removal of students from the site.
57.23 (d) Any funds not distributed in accordance with the
57.24 commissioner's approval letter must be returned to the medical
57.25 education and research fund within 30 days of receiving notice
57.26 from the commissioner. The commissioner shall distribute
57.27 returned funds to the appropriate training sites in accordance
57.28 with the commissioner's approval letter.
57.29 Subd. 5. [REPORT.] (a) Sponsoring institutions receiving
57.30 funds under this section must sign and submit a medical
57.31 education grant verification report (GVR) to verify that the
57.32 correct grant amount was forwarded to each eligible training
57.33 site. If the sponsoring institution fails to submit the GVR by
57.34 the stated deadline, or to request and meet the deadline for an
57.35 extension, the sponsoring institution is required to return the
57.36 full amount of funds received to the commissioner within 30 days
58.1 of receiving notice from the commissioner. The commissioner
58.2 shall distribute returned funds to the appropriate training
58.3 sites in accordance with the commissioner's approval letter.
58.4 (b) The reports must provide verification of the
58.5 distribution of the funds and must include:
58.6 (1) the total number of eligible trainee FTEs in each
58.7 clinical medical education program;
58.8 (2) the name of each funded program and, for each program,
58.9 the dollar amount distributed to each training site;
58.10 (3) documentation of any discrepancies between the initial
58.11 grant distribution notice included in the commissioner's
58.12 approval letter and the actual distribution;
58.13 (4) a statement by the sponsoring institution stating that
58.14 the completed grant verification report is valid and accurate;
58.15 and
58.16 (5) other information the commissioner, with advice from
58.17 the advisory committee, deems appropriate to evaluate the
58.18 effectiveness of the use of funds for medical education.
58.19 (c) By February 15 of each year, the commissioner, with
58.20 advice from the advisory committee, shall provide an annual
58.21 summary report to the legislature on the implementation of this
58.22 section.
58.23 Subd. 6. [OTHER AVAILABLE FUNDS.] The commissioner is
58.24 authorized to distribute, in accordance with subdivision 4,
58.25 funds made available through:
58.26 (1) voluntary contributions by employers or other entities;
58.27 (2) allocations for the commissioner of human services to
58.28 support medical education and research; and
58.29 (3) other sources as identified and deemed appropriate by
58.30 the legislature for inclusion in the fund.
58.32 SERVICES.] (a) The amount transferred according to section
58.33 256B.69, subdivision 5c, shall be distributed by the
58.34 commissioner to clinical medical education programs that meet
58.35 the qualifications of subdivision 3 based on a distribution
58.36 formula that reflects a summation of two factors:
59.1 (1) an education factor, which is determined by the total
59.2 number of eligible trainee FTEs and the total statewide average
59.3 costs per trainee, by type of trainee, in each clinical medical
59.4 education program; and
59.5 (2) a public program volume factor, which is determined by
59.6 the total volume of public program revenue received by each
59.7 training site as a percentage of all public program revenue
59.8 received by all training sites in the fund pool created under
59.9 this subdivision.
59.10 In this formula, the education factor shall be weighted at
59.11 50 percent and the public program volume factor shall be
59.12 weighted at 50 percent.
59.13 (b) Public program revenue for the formula in paragraph (a)
59.14 shall include revenue from medical assistance, prepaid medical
59.15 assistance, general assistance medical care, and prepaid general
59.16 assistance medical care.
59.17 (c) Training sites that receive no public program revenue
59.18 shall be ineligible for funds available under this subdivision.
59.20 commissioner of human services shall seek to maximize federal
59.21 financial participation in payments for medical education and
59.22 research costs. If the commissioner of human services
59.23 determines that federal financial participation is available for
59.24 the medical education and research, the commissioner of health
59.25 shall transfer to the commissioner of human services the amount
59.26 of state funds necessary to maximize the federal funds
59.27 available. The amount transferred to the commissioner of human
59.28 services, plus the amount of federal financial participation,
59.29 shall be distributed to medical assistance providers in
59.30 accordance with the distribution methodology described in
59.31 subdivision 4.
59.32 Subd. 9. [REVIEW OF ELIGIBLE PROVIDERS.] The commissioner
59.33 and the medical education and research costs advisory committee
59.34 may review provider groups included in the definition of a
59.35 clinical medical education program to assure that the
59.36 distribution of the funds continue to be consistent with the
60.1 purpose of this section. The results of any such reviews must
60.2 be reported to the legislative commission on health care access.
60.3 Sec. 11. [62J.693] [MEDICAL RESEARCH.]
60.4 Subdivision 1. [DEFINITIONS.] For purposes of this
60.5 section, health care research means approved clinical, outcomes,
60.6 and health services investigations.
60.7 Subd. 2. [GRANT APPLICATION PROCESS.] (a) The commissioner
60.8 of health shall make recommendations for a process for the
60.9 submission, review, and approval of research grant
60.10 applications. The process shall give priority for grants to
60.11 applications that are intended to gather preliminary data for
60.12 submission for a subsequent proposal for funding from a federal
60.13 agency or foundation, which awards research money on a
60.14 competitive, peer-reviewed basis. Grant recipients must be able
60.15 to demonstrate the ability to comply with federal regulations on
60.16 human subjects research in accordance with Code of Federal
60.17 Regulations, title 45, section 46, and shall conduct the
60.18 proposed research. Grants may be awarded to the University of
60.19 Minnesota, the Mayo clinic, or any other public or private
60.20 organization in the state involved in medical research. The
60.21 commissioner shall report to the legislature by January 15,
60.22 2000, with recommendations.
60.23 (b) The commissioner may consult with the medical education
60.24 and research advisory committee established in section 62J.692
60.25 in developing these recommendations or may appoint a research
60.26 advisory committee to provide advice and oversight on the grant
60.27 application process. If the commissioner appoints a research
60.28 advisory committee, the committee shall be governed by section
60.29 15.059 for membership terms and removal of members.

Updated Tuesday, November 16, 2010 at 12:25PM