1. Medical Education and Research Costs (MERC) Program
Legislative Commission on Health Care Access Work Force Shortage Working Group November 17, 2010

2. MERC Overview Original goals/authorizing language Eligibility Timeline
Distribution overview
Formula changes and impact
Potential policy questions

3. MERC Timeline 1993-1995: MERC study, task force 1996: MERC Trust Fund
Advisory Committee
1997: MERC funded
$5M GF, $3.5M HCAF
1998: First MERC distribution
2000: PMAP Carveout begins

4. Original MERC Goals
“The legislature finds that medical education and research are important to the health and economic well being of Minnesotans. The legislature further finds that, as a result of competition in the health care marketplace, these teaching and research institutions are facing increased difficulty funding medical education and research.”
“ to help offset lost patient care revenue for those teaching institutions affected by increased competition in the health care marketplace and to help ensure the continued excellence of health care research in Minnesota.”

5. Original MERC Goals
Medical education benefits society at large, not just direct health care stakeholders.
The cost of medical education should not by borne by only a few hospitals or medical centers, but fairly allocated across the health care system.

6. 1995 MERC Task Force
Teaching institutions should be responsive to evolving workforce needs related to specialty, profession and skill mix;
Health workforce should support cost, access and quality goals;
Public policy incentives should be developed to promote training of generalists, resolve maldistributions, and influence gender/diversity mix.

7. MERC Eligibility
An accredited clinical medical education program conducted in Minnesota by a teaching institution to train physicians, doctor of pharmacy practitioners, dentists, chiropractors, APN’s or physician assistants is eligible for funds under subdivision 4 if the program:
is funded, in part, by patient care revenues and is a Medicaid site;
occurs in patient care settings that face increased financial pressure as a result of competition with nonteaching patient care entities; and
emphasizes primary care or specialties that are in undersupply in Minnesota.

8. Use of MERC Funds Over $450M distributed since 1998
Sites must have Medicaid revenue
Facilities must confirm payments to training sites within 60 days
“No strings attached” for training site
Can be incentive to encourage sites to take on trainees

9. 2009 MERC Distribution 2009 FTE 2009 Grant 2009 Grant/ FTE HCMC 376.5
2009 FTE
2009 Grant
2009 Grant/
FTE
HCMC
376.5
$ 8,610,068
$ ,869
UMMC-FV
438.5
$ 6,133,173
$ ,986
Regions Hospital
147.2
$ 4,274,220
$ ,047
Children's Mpls
43.4
$ 4,056,677
$ ,511
St. Marys Hospital
453.2
$ 3,003,265
$ ,627
North Memorial
38.4
$ 2,731,179
$ ,123
Abbott Northwestern
72.3
$ 2,357,761
$ ,614
United Hospital
14.6
$ 2,137,475
$ ,625
St. Cloud Hospital
10.7
$ 2,061,360
$ ,413
Children's St. Paul
42.7
$ 1,695,051
$ ,733

10. MERC Formula Timeline MERC 1998-2003: 100% Cost/FTE
PMAP : 50% Cost/FTE % MA volume
: Combined MERC/PMAP
67% cost/FTE, 33% MA volume
0.5 FTE/program cutoff ( )
10% discretionary fund
2007-present: 100% MA volume
20% bonus for high volume
Direct payments

11. MERC Distribution 2000 2007 2009 % Grant % FTE Hennepin 45% 46% 47%
2000
2007
2009
% Grant
% FTE
Hennepin
45%
46%
47%
Ramsey
14%
13%
12%
21%
11%
Olmsted
37%
30%
28%
32% 6%
33%
St. Louis 2% 3% 5%

12. MERC Distribution

13. MERC Distribution

14. MERC Distribution (2009) FTE Grant Grant/FTE Site A 0.39 $ 935,945
 (2009)
FTE
Grant
Grant/FTE
Site A
0.39
$ 935,945
$ 2,399,860
Site B
0.0383
$ ,814
$ 2,240,586
Site C
1.6
$ ,153
$ ,865
Site D
364
$ 304,175 $
Site E
178
$ ,368 $
Site F
9.4 $ $
Site G
15.6 $ $

15. Potential MERC policy questions
Should MERC funds be used to incent:
Training of certain types of providers?
Training of larger numbers of providers?
Training in ambulatory sites?
Training in greater MN or in shortage areas?
Provision of certain types of content (team training, safety principles, care coordination, etc) related to today’s skill needs?