Report Summary: Medical Education and Research Costs (MERC), Study Recommendations and Progress Report to the Legislature December 1996

The following is a summary of the December 1996 MERC legislative report.  To obtain a copy of the complete report, please contact the HEP staff at health.hep@state.mn.us.


The Medical Education and Research Costs (MERC) project has continued to move forward under the direction of the Minnesota Legislature and the Commissioner of Health. The MERC Advisory Task Force, which represents key stakeholders, transitioned to the newly-created MERC Advisory Committee in 1996, and has assisted the commissioner since its inception in 1993. The Task Force has provided an overview of the problems and challenges associated with the funding of medical education and research in this state. In doing so, a preliminary estimate of the costs of medical education was developed. While the numbers are still considered only a preliminary estimate and focused only on medical education, the estimate did indicate a need for supplementary funding to maintain the current level of activities associated with medical education.

The legislature recognizes the importance of medical education and research to the state and its economy. Therefore, based upon the recommendations made in the February 1996 report, "Medical Education and Research Costs (MERC): A final report to the Legislature," the 1996 Minnesota Legislature established a Medical Education and Research Trust Fund. Although established, the Trust Fund was not funded and the legislature required the MERC Advisory Committee to "make recommendations to the commissioner of health...on potential sources of funding for medical education and research and on mechanisms for the distribution of such funding sources." Those recommendations are the primary focus of this report. A secondary focus of this report is to provide a progress report on the MERC project.

The recommendations of the MERC Advisory Committee are to accept the current MERC legislation, as written with minor changes. All of the recommendations presented in this section are based upon that legislation. The Commissioner of Health accepted all of the MERC Advisory Committee's recommendations on the mechanisms for distribution for the Trust Fund.  However, the Advisory Committee's recommendations for a primary funding source for the Trust Fund were modified by the Commissioner of Health. The commissioner's recommendations to the legislature are presented for consideration as follows:

Recommendations on Potential Funding Sources:

The commissioner met with the MERC Advisory Committee to participate in their discussion of a recommendation for a funding source for the Trust Fund. The commissioner acknowledged that the Advisory Committee is opposed to use of the Health Care Access Fund (HCAF) for the reasons stated in their subcommittee report, and that if possible, she would support their recommendations, contingent on what appeared most feasible at the time of the release of the report. After further consideration, the commissioner deemed it necessary to modify Recommendation 1.

As noted previously, the commissioner has accepted all of the Advisory Committee's recommendations, without modification, except for Recommendation 1. The Advisory Committee recommended only the use of the General Fund. The commissioner has, however, modified that recommendation to include the HCAF. While the rationale for use of the General Fund is included in the Revenue/Financing Subcommittee Report, the commissioner's rationale for the inclusion of the HCAF as an additional source follows the recommendation.

Recommendation 1: The MERC Trust Fund should be financed by a combination of General Fund and Health Care Access Fund (HCAF) dollars.

Rationale for HCAF recommendation: The inclusion of the HCAF for consideration as a possible funding source is based on the fact that the fund is adequate, stable, and appropriate. The fund contains adequate funds to meet the request for funding of this project. Further, it is a stable source of funding, unlike the General Fund which projects structural deficits in the future. Finally, the HCAF is also an appropriate source as it is redistributing money collected from health care for health care-related activities. There is also a precedent for the use of the HCAF for medical education since the University of Minnesota receives funding from that source for the Primary Care Training Initiatives program. The most recent appropriation for that program was approximately $2.6 million.

Recommendation 2: Direct the medical education "add-on" funds from the Pre-Paid Medical Assistance Program (PMAP) to the Medical Education and Research Trust Fund for distribution.

Recommendations on Mechanisms For Distribution:

Recommendation 3: All programs for which application is being made to the Medical Education and Research Trust Fund must already be accredited by an appropriate accreditation body at the time of application.

Recommendation 4: The 1996 MERC legislation regarding the formula for distribution should be implemented as written without further incentives or factors being added at this time. The basic formula then becomes the average clinical cost per trainee (by provider type), multiplied by the number of trainees in each program, multiplied by a uniform percentage of costs with total disbursement equaling the amount available for education in the Trust Fund for that year.

Recommendation 5: Funding from the Medical Education and Research Trust Fund should be directed to the sponsoring institution or consortium responsible for the accredited program(s) that incur the cost of training. The dollars will then be used to support the designated programs and affiliated sites.

Recommendation 6: The 1996 MERC legislation regarding the application requirements (see Minn. Stat. section 62J.69, subd. 2(c) below) should be implemented as defined in items 1 through 7 for the first year of Trust Fund distribution.

"Eligible applicants for funds are accredited medical education teaching institutions, consortia, and programs. Applications must be received by September 30 of each year for distribution by January 1 of the following year. An application for funds must include the following:
  1. the official name and address of the institution, facility, or program that is applying for funding;
  2. the name, title, and business address of those persons responsible for administering the funds;
  3. the total number, type, and specialty orientation of eligible trainees in each accredited medical education program applying for funds;
  4. audited clinical training costs per trainee for each medical education program;
  5. a description of current sources of funding for medical education costs including a description and dollar amount of all state and federal financial support;
  6. other revenue received for the purposes of clinical training;
  7. a statement identifying unfunded costs; and
  8. other supporting information the commissioner, with advice from the advisory committee, determines is necessary for the equitable distribution of funds."

For item 8, the only additional information the subcommittee recommends collecting at this time is documentation of program accreditation, the name of the accrediting body, and a complete description of the accounting methodology used to audit the costs being reported in the application. After the first year of distribution, the requirements may be revisited to determine if adequate information was collected or if additional supporting information is necessary.

Recommendation 7: The 1996 MERC legislation regarding the annual cost and program report requirements (see Minn. Stat. section 62J.69, subd. 2(e) below) should be implemented as defined in items 1 through 5 for the first year of Trust Fund distribution. For item 6, the only additional information the subcommittee recommends collecting at this time is a description of the allocation process used to distribute the money to the programs, including specific amounts designated for each program for which funding was granted from the Trust Fund. After the first year of distribution, the requirements may be revisited to determine if adequate information was actually collected or if additional supporting information is necessary. The appropriate reporting level for these reports is the sponsoring institution. This reporting allows for a coordinated report from all programs within that institution and designates a centralized point of accountability.

"Medical education programs receiving funds from the trust fund must submit annual cost and program reports based on criteria established by the commissioner. The reports must include:
  1. the total number of eligible trainees in the program;
  2. the type of programs and residencies funded;
  3. the average cost per trainee and a detailed breakdown of the components of those costs;
  4. other state or federal appropriations received for the purposes of clinical training;
  5. other revenue received for the purposes of clinical training; and
  6. other information the commissioner, with advice from the advisory committee, deems appropriate to evaluate the effectiveness of the use of funds for clinical training. The commissioner, with advice from the advisory committee, will provide an annual summary report to the legislature on program implementation due February 15 of each year."

These recommendations are discussed more fully in the two sections of this report titled, "Revenue/Financing Subcommittee Report to the Commissioner" and "Eligibility/Reporting Subcommittee Report to the Commissioner." Those sections, as mentioned previously, also detail the rationale behind the recommendations presented in this report.

*Note that all bibliographical references are contained in the complete copy of the report summarized here, which can by obtained by contacting the HEP staff at health.hep@state.mn.us

Updated Tuesday, 16-Nov-2010 12:25:24 CST