PMAP Fund Overview - Minnesota Dept. of Health

PMAP Fund Overview

What is the PMAP Fund?

It is important to understand how Medicaid funds graduate medical education. Under the fee–for–service system, payments to teaching facilities are higher than those to non–teaching facilities. This is done in an effort to offset a portion of the higher costs faced by facilities that provide clinical medical education.

Under managed care Medicaid (the Prepaid Medical Assistance Program and Prepaid General Assistance Medical Care), a medical education add-on payment was added to rates for the same reason. Under managed care, however, payments were made to health plans rather than to the providers themselves. Because of the difference in how payments were made, there were concerns that these medical education payments may not have been fully passed on by health plans to teaching facilities. To address this, Minnesota began to remove the medical education add-on payments from the PMAP/PGAMC rates that were paid to health plans through a process known as the PMAP carveout (PGAMC ended in March 2010).

These funds are now paid directly to MDH for distribution to medical education training facilities. We refer to this pool of money as the PMAP Medical Education Fund or the PMAP Fund. Historically, these funds were distributed using a different distribution formula and timeline than MERC grants; however, beginning in 2004 they were combined into one distribution.

PMAP Distribution

Note: Due to a change in the MERC statute (62J.692), as of July 1, 2003, all PMAP medical education funds received by MDH are being combined with MERC funds into a single annual distribution. We will no longer separately report on the distribution of PMAP funds on this page. The first combined MERC/PMAP distribution took place in July 2004 and included PMAP carveout funds received between July 1, 2003 and June 30, 2004.

PMAP History


In 1998, the Minnesota Legislature authorized removal of the 'medical education component' of Prepaid Medical Assistance Program (PMAP) and Prepaid General Assistance Medical Care (PGAMC) capitation rates and a transfer of these funds to the Minnesota Department of Health (MDH) for distribution through the MERC Trust Fund. The 1998 Minnesota Legislature directed the Commissioner of Health to work with stakeholders to develop a distribution process that would "recognize those teaching programs which serve higher numbers or high proportions of public program recipients to the legislative commission on health care access by January 15, 1998, on an allocation formula to implement this system."

That report, released in February 1998, recommended the use of a formula that would equally weight public program volume and teaching volume in the distribution of funds, and outlined the process through which the committee arrived at their recommendation. This "50/50" formula was put in statute during the 1998 legislative session.


Although a distribution formula for PMAP/PGAMC carveout funds was put in place by the 1998 legislature, the carveout itself could not commence until three months after the Minnesota Department of Human Services received a waiver from the federal Health Care Financing Administration (HCFA). The Department of Human Services received a waiver in August 2000, and carveout of medical education funds from capitated PMAP rates began in October, 2000.

Given ongoing debate about the appropriateness and impact of the current distribution formula for carved–out PMAP funds, which equally weighted public program volume and medical education volume, the 2000 Minnesota Legislature directed the Department of Health to establish a committee to evaluate the current distribution formula. On the advice of the MERC Advisory Committee, the MDH, during the fall of 2000, convened an Ad Hoc Committee on Medicaid Financing of Medical Education to reexamine the current formula.


The first distribution of funds generated by the carveout took place in June, 2001. This initial distribution, totaling $4,441,818, was comprised of funds that had been removed from capitated PMAP/PGAMC rates between October and December, 2001.


The 2003 Minnesota Legislature enacted new language that combines funds obtained from the PMAP/PGAMC carveout with funds received from the cigarette tax and from the University of Minnesota Academic Health Center, creating a combined MERC/PMAP Fund. Under the new legislation, funds from the combined pool will be distributed once a year using a combined distribution formula that weights relative education volume at 67% and relative public program volume at 33%. At the same time, the Legislature redirected funds from the PGAMC carveout to the General Fund, reducing the amount of funding available for the MERC/PMAP Fund. For more information about these and other revisions enacted by the 2003 Legislature, go to the MERC Legislative Summary page.

As a result of these changes, beginning in CY2004, PMAP funds will no longer be distributed separately from MERC funds but will be combined with MERC funds in a single annual distribution.


Updated Tuesday, April 24, 2018 at 04:07PM