2001 MERC Legislative Summary


There were several provisions that passed into law during the 2001 special session that, directly or indirectly, have an impact on the MERC program. These provisions include the establishment of a medical education "innovations pool" for clinical dental education and the establishment of mechanisms for intergovernmental transfers between several MERC grant recipients and the State:

Establishment of a clinical education innovations pool for dental professionals

During the special session, the Legislature approved language setting aside a pool of funds to incent innovative clinical training for dental professionals and programs that increase access to dental care for underserved populations. Funding for the innovations comes from using an existing Health Care Access Fund appropriation for the University of Minnesota's Academic Health Center to increase PMAP capitation rates, and then directing a portion of the federal matching funds received to the innovations pool. Approximately half of the matching funds received under this initiative will go to Hennepin County Medical Center, with the remaining funds going to the Medical Education Innovations Pool. We anticipate that the Pool will distribute approximately $1.3 million per year for innovative clinical dental training that increases access for underserved populations.

  • Receipt and distribution of funds will be contingent on federal approval of federal financial participation by the Center for Medicare and Medicaid Services (CMS).
  • MDH will administer this program. Funds will be distributed on a competitive basis to sponsoring institutions, training sites, or consortia based on an RFP that will be posted sometime in the fall of 2001. The Department will be convening a review committee this fall that will review qualified proposals. As mentioned, dental innovation is the initial focus of the innovations pool; however, MDH will be examining potential expansion of the pool into other areas.

PMAP formula

  • Based on the report produced by the Department in January 2001, MDH brought forth legislation this past year to change the PMAP distribution formula from 50% public program volume/50% teaching volume to 75% public program volume and 25% teaching volume.
  • Both bills were introduced (Senator Kiscaden and Representative Goodno were the authors).
  • Ultimately, no changes were made to the current "50/50" statutory formula for distribution of carveout funds. Distribution of carved-out PMAP/PGAMC funds will continue to occur biannually based on this formula.
  • The Legislature did not extend the exemption of Greater Minnesota from the PMAP/PGAMC carveout. Therefore, carveout of medical education funds from Greater Minnesota PMAP/PGAMC rates will begin in January, 2002.

Intergovernmental transfers

  • This past session, the legislature passed into law mechanisms to allow for intergovernmental transfers (IGTs) between local units of government and the state.
  • The government hospitals participating or potentially participating in the IGTs are MERC recipients.
  • A new IGT of $24 million annually will be paid by Hennepin County. This increase is offset by $34.08 million in higher medical assistance payments to Hennepin County Medical Center, with a net of $10.08 million going to HCMC under the IGT.
  • A new IGT of $12 million annually will be paid by Ramsey County. This increase is offset by $17.04 million in higher medical assistance payments to Regions Hospital, with a net of $5.04 million going to Regions under the IGT.
  • Fairview University Medical Center may also participate in the IGTs upon federal approval of their classification as a "government hospital"
  • Implementation of the IGTs is pending approval from the federal Centers for Medicare and Medicaid Services (CMS).



Text of MERC 2001 Legislative Changes


CHAPTER 9-S.F.No. 4

Sec. 2. Minnesota Statutes 2000, section 62J.692, subdivision 7, is amended to read:

Subd. 7. [TRANSFERS FROM THE COMMISSIONER OF HUMAN SERVICES.]

(a) The amount transferred according to section 256B.69, subdivision 5c, paragraph (a), clause (1), shall be distributed by the commissioner to clinical medical education programs that meet the qualifications of subdivision 3 based on a distribution formula that reflects a summation of two factors:

(1) an education factor, which is determined by the total number of eligible trainee FTEs and the total statewide average costs per trainee, by type of trainee, in each clinical medical education program; and

(2) a public program volume factor, which is determined by the total volume of public program revenue received by each training site as a percentage of all public program revenue received by all training sites in the fund pool created under this subdivision.

In this formula, the education factor shall be weighted at 50 percent and the public program volume factor shall be weighted at 50 percent.

(b) Public program revenue for the distribution formula in paragraph (a) shall include revenue from medical assistance, prepaid medical assistance, general assistance medical care, and prepaid general assistance medical care.

(c) Training sites that receive no public program revenue shall be ineligible for funds available under this subdivision paragraph.

(b) Fifty percent of the amount transferred according to section 256B.69, subdivision 5c, paragraph (a), clause (2), shall be distributed by the commissioner to the University of Minnesota board of regents for the purposes described in sections 137.38 to 137.40. Of the remaining amount transferred according to section 256B.69, subdivision 5c, paragraph (a), clause (2), 24 percent of the amount shall be distributed by the commissioner to the Hennepin County Medical Center for clinical medical education. The remaining 26 percent of the amount transferred shall be distributed by the commissioner in accordance with subdivision 7a. If the federal approval is not obtained for the matching funds under section 256B.69, subdivision 5c, paragraph (a), clause (2), 100 percent of the amount transferred under this paragraph shall be distributed by the commissioner to the University of Minnesota board of regents for the purposes described in sections 137.38 to 137.40.

Sec. 3. Minnesota Statutes 2000, section 62J.692, is amended by adding a subdivision to read:

Subd. 7a. [CLINICAL MEDICAL EDUCATION INNOVATIONS GRANTS.]

(a) The commissioner shall award grants to teaching institutions and clinical training sites for projects that increase dental access for underserved populations and promote innovative clinical training of dental professionals. In awarding the grants, the commissioner, in consultation with the commissioner of human services, shall consider the following:

(1) potential to successfully increase access to an underserved population;

(2) the long-term viability of the project to improve access beyond the period of initial funding;

(3) evidence of collaboration between the applicant and local communities;

(4) the efficiency in the use of the funding; and

(5) the priority level of the project in relation to state clinical education, access, and workforce goals.

(b) The commissioner shall periodically evaluate the priorities in awarding the innovations grants in order to ensure that the priorities meet the changing workforce needs of the state.

Sec. 50. Minnesota Statutes 2000, section 256B.69, subdivision 5c, is amended to read:

Subd. 5c. [MEDICAL EDUCATION AND RESEARCH FUND.]

(a) Beginning in January 1999 and each year thereafter:

(1) The commissioner of human services shall transfer an amount equal to the reduction in the prepaid medical assistance and prepaid general assistance medical care payments resulting from clause (2), excluding nursing facility and elderly waiver payments and demonstration projects operating under subdivision 23, to the medical education and research fund established under section 62J.692; each year to the medical education and research fund established under section 62J.692, the following:

(2) (1) an amount equal to the reduction in the prepaid medical assistance and prepaid general assistance medical care payments as specified in this clause. Until January 1, 2002, the county medical assistance and general assistance medical care capitation base rate prior to plan specific adjustments and after the regional rate adjustments under section 256B.69, subdivision 5b, shall be is reduced 6.3 percent for Hennepin county, two percent for the remaining metropolitan counties, and no reduction for nonmetropolitan Minnesota counties; and after January 1, 2002, the county medical assistance and general assistance medical care capitation base rate prior to plan specific adjustments shall be is reduced 6.3 percent for Hennepin county, two percent for the remaining metropolitan counties, and 1.6 percent for nonmetropolitan Minnesota counties. Nursing facility and elderly waiver payments and demonstration project payments operating under subdivision 23 are excluded from this reduction. The amount calculated under this clause shall not be adjusted for periods already paid due to subsequent changes to the capitation payments; and

(2) beginning July 1, 2001, $2,537,000 from the capitation rates paid under this section plus any federal matching funds on this amount.

(3) the amount calculated under clause (1) shall not be adjusted for subsequent changes to the capitation payments for periods already paid.

(b) This subdivision shall be effective upon approval of a federal waiver which allows federal financial participation in the medical education and research fund.

Sec. 46. [256B.195] [ADDITIONAL INTERGOVERNMENTAL TRANSFERS; HOSPITAL PAYMENTS.]

Subdivision 1. [FEDERAL APPROVAL REQUIRED.] Sections 145.9268, 256.969, subdivision 26, and this section are contingent on federal approval of the intergovernmental transfers and payments to safety net hospitals and community clinics authorized under this section. These sections are also contingent on current payment, by the government entities, of intergovernmental transfers under section 256B.19 and this section.

Subd. 2. [PAYMENTS FROM GOVERNMENTAL ENTITIES.] (a) In addition to any payment required under section 256B.19, effective July 15, 2001, the following government entities shall make the payments indicated before noon on the 15th of each month:

(1) Hennepin county, $2,000,000; and

(2) Ramsey county, $1,000,000.

(b) These sums shall be part of the designated governmental unit's portion of the nonfederal share of medical assistance costs. Of these payments, Hennepin county shall pay 71 percent directly to Hennepin County Medical Center, and Ramsey county shall pay 71 percent directly to Regions hospital. The counties must provide certification to the commissioner of payments to hospitals under this subdivision.

Subd. 3. [PAYMENTS TO CERTAIN SAFETY NET PROVIDERS.] (a) Effective July 15, 2001, the commissioner shall make the following payments to the hospitals indicated after noon on the 15th of each month:

(1) to Hennepin County Medical Center, any federal matching funds available to match the payments received by the medical center under subdivision 2, to increase payments for medical assistance admissions and to recognize higher medical assistance costs in institutions that provide high levels of charity care; and

(2) to Regions hospital, any federal matching funds available to match the payments received by the hospital under subdivision 2, to increase payments for medical assistance admissions and to recognize higher medical assistance costs in institutions that provide high levels of charity care.

(b) Effective July 15, 2001, the following percentages of the transfers under subdivision 2 shall be retained by the commissioner for deposit each month into the general fund:

(1) 18 percent, plus any federal matching funds, shall be allocated for the following purposes:

(i) during the fiscal year beginning July 1, 2001, of the amount available under this clause, 39.7 percent shall be allocated to make increased hospital payments under section 256.969, subdivision 26; 34.2 percent shall be allocated to fund the amounts due from small rural hospitals, as defined in section 144.148, for overpayments under section 256.969, subdivision 5a, resulting from a determination that medical assistance and general assistance payments exceeded the charge limit during the period from 1994 to 1997; and 26.1 percent shall be allocated to the commissioner of health for rural hospital capital improvement grants under section 144.148; and

(ii) during fiscal years beginning on or after July 1, 2002, of the amount available under this clause, 55 percent shall be allocated to make increased hospital payments under section 256.969, subdivision 26, and 45 percent shall be allocated to the commissioner of health for rural hospital capital improvement grants under section 144.148; and

(2) 11 percent shall be allocated to the commissioner of health to fund community clinic grants under section 145.9268.

(c) This subdivision shall apply to fee-for-service payments only and shall not increase capitation payments or payments made based on average rates.

(d) Medical assistance rate or payment changes, including those required to obtain federal financial participation under section 62J.692, subdivision 8, shall precede the determination of intergovernmental transfer amounts determined in this subdivision. Participation in the intergovernmental transfer program shall not result in the offset of any health care provider's receipt of medical assistance payment increases other than limits resulting from hospital-specific charge limits and limits on disproportionate share hospital payments.

Subd. 4. [ADJUSTMENTS PERMITTED.] (a) The commissioner may adjust the intergovernmental transfers under subdivision 2 and the payments under subdivision 3, and payments and transfers under subdivision 5, based on the commissioner's determination of Medicare upper payment limits, hospital-specific charge limits, and hospital-specific limitations on disproportionate share payments. Any adjustments must be made on a proportional basis. If participation by a particular hospital under this section is limited, the commissioner shall adjust the payments that relate to that hospital under subdivisions 2, 3, and 5 on a proportional basis in order to allow the hospital to participate under this section to the fullest extent possible and shall increase other payments under subdivisions 2, 3, and 5 to the extent allowable to maintain the overall level of payments under this section. The commissioner may make adjustments under this subdivision only after consultation with the counties and hospitals identified in subdivisions 2 and 3, and, if subdivision 5 receives federal approval, with the hospital and educational institution identified in subdivision 5.

(b) The ratio of medical assistance payments specified in subdivision 3 to the intergovernmental transfers specified in subdivision 2 shall not be reduced except as provided under paragraph (a).

Subd. 5. [INCLUSION OF FAIRVIEW UNIVERSITY MEDICAL CENTER.] (a) Upon federal approval of the inclusion of Fairview university medical center in the nonstate government category, the commissioner shall establish an intergovernmental transfer with the University of Minnesota in an amount determined by the commissioner based on the increase in the Medicare upper payment limit due solely to the inclusion of Fairview university medical center as a nonstate government hospital and limited by hospital-specific charge limits and the amount available under the hospital-specific disproportionate share limit.

(b) The commissioner shall increase payments for medical assistance admissions at Fairview University Medical Center by 71 percent of the transfer plus any federal matching payments on that amount, to increase payments for medical assistance admissions and to recognize higher medical assistance costs in institutions that provide high levels of charity care. From this payment, Fairview University Medical Center shall pay to the University of Minnesota the cost of the transfer, on the same day the payment is received. Eighteen percent of the transfer plus any federal matching payments shall be used as specified in subdivision 3, paragraph (b), clause (1). Payments under section 256.969, subdivision 26, may be increased above the 90 percent level specified in that subdivision within the limits of additional funding available under this subdivision. Eleven percent of the transfer shall be used to increase the grants under section 145.9268.


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