Financing GME In Minnesota:
MERC Program Activities
Diane Rydrych
Office of Health Policy, Statistics & Informatics
MN Department of Health
Minnesota Rural Health Conference
June 19, 2005
Overview of presentation
MERC 101 – background, legislative
authorization
What we know about GME and training
of other health professionals in MN
How to apply for and use funding
Special initiatives
What is MERC?
Medical Education and Research
Costs Fund
Established in 1997, funded in 1998
Focuses on funding graduate medical
education, as well as education of
dentists, pharmacists, advanced
practice nurses, chiropractors, and
physician assistants.
1993 MnCare Legislation
“Subdivision 1. Purpose. The legislature
finds that all health care stakeholders, as
well as society at large, benefit from medical
education and health care research. The
legislature further finds that the cost of
medical education and research should not
be borne by a few hospitals or medical
centers but should be fairly allocated across
the health care system.”
Direction to MDH: 1993
Study impact of health care reform on
medical education and research
financing
Define scope of education/research in
MN and identify need for alternative
funding mechanisms
Explore funding mechanisms to
preserve medical education capacity
Laying the Groundwork for MERC
 MDH worked with teaching hospitals around
the state in the early 1990’s to estimate the
size of the funding gap for clinical medical
education
– Estimated gap for 1993: $40M
 Governor proposed using Health Care
Access Fund, funded by provider tax, to
establish MERC
– What is appropriate state contribution to gap?
MERC Activities:
Estimating the GME Revenue Gap
GME Funding Gap, 1998
Revenue
Costs
Benefit
W*Without
$277,500,006
($535,375,437)
$82,867,403
($175,008,028)
1998 MERC grants, gap would have
been 10% higher ($193M)
Current MERC Funding Sources
Cigarette tax
revenues (2.5
cents/pack)
Medicaid
Matching
Funds
$4.85M to/from AHC
PMAP
Carveout
MERC
Prepaid Medicaid (PMAP)
Carveout
Managed Care
Organizations
Premiums
Carveout
Medicaid
Negotiated
Rates, no
GME
MERC
Medicaid FFS with GME
Teaching
Hospitals
How is MERC funding targeted?
 To replace patient care revenues lost due to
increased competition with non-teaching
facilities
 To cover a portion of clinical training costs
for trainees at sites in Minnesota
 Funds are passed from sponsoring
institutions to clinical training sites
 Only training sites that provide care to
Medicaid population are eligible
MERC/PMAP Distribution
 Over 2,000 eligible trainees each year
 Formula calculates costs per trainee for each
discipline, then reimburses percentage of
costs
– MERC/PMAP funds cover, on average, about 1520% of clinical education costs at funded sites.
 Since 1998, a total of ~$275M has been
distributed.
– Average of ~$45-$50M per year
Where do MERC funds go?
HCMC
FUMC
ST MARYS (ROCH)
MAYO
REGIONS
ROCH METHODIST
UM DDS SCHOOL
ABBOTT NW
NORTH MEMORIAL
CHILDREN'S MPLS
TOTAL FUNDS
$
42,771,481
$
36,914,595
$
38,256,951
$
31,410,718
$
21,115,957
$
15,267,194
$
11,450,867
$
6,877,228
$
4,483,200
$
4,367,711
$
212,915,903
%
16%
13%
14%
11%
8%
6%
4%
3%
2%
2%
77%
• The majority of MERC/PMAP funding, since
1998, has gone to 10 facilities – 7 of them in
the metro area
Where do MERC funds go?
 Almost all funding (95%) since 2003 has
gone to Hennepin, Ramsey, Olmsted, St.
Louis, Anoka and Stearns counties.
ME R C/ P MAP
Blue Earth
$
Kandiyohi
$
Mower
$
Crow Wing
$
Freeborn
$
Waseca
$
Itasca
$
Otter Tail
$
Beltrami
$
McLeod
$
Funds re ce ive d 2003-2005
721,687 Lyon
$ 179,701
389,587 Carlton
$ 174,620
345,633 Steele
$ 166,819
301,940 Isanti
$ 165,077
300,608 Cass
$ 154,273
252,083 Wabasha $ 150,728
226,310 Brown
$ 143,101
214,658 Aitkin
$ 123,079
208,498 Goodhue $ 120,104
190,750 Mille Lacs $ 113,748
• Rural
counties
have still
seen large
grants
relative to
population.
How are MERC funds used?
 All funds are passed through to clinical
training sites, which can use grants for any
purpose related to clinical education.
– Training sites use funds to cover incidental costs,
supplies, salaries/stipends, etc.
– Depending on provider type, available funds and
relative costs, grant per FTE can range from
$6,000 to nearly $30,000.
– In 2004/2005, small training sites were ineligible
for funding; they are now back in.
How are MERC funds used?
 Starting in 2004, 10% of each institution’s
grant is ‘discretionary:’ institutions can award
these funds to any eligible clinical training
site, using their own criteria.
– Some institutions use these funds to support
safety-net facilities, some to support innovative
models or sites or to incent training in certain
areas
– In 2004, $586K to 154 rural sites
Interdisciplinary/Rural Training
 UM: $200,000 to facilities for rural
interprofessional education:
– Chippewa County Montevideo Hospital
• Pre-natal care
– Gateway Family Health Clinic
• Geriatric Care
 $360,000 to Walker Methodist and CUHCC
(Mpls) for interdisciplinary training
 $150K to Hibbing dental clinic
Dental Innovations Grants
 18 grants to 10 organizations since 2003
– ~$3 million awarded
– Recipients include MSU - Mankato, Northfield
Community Action, Houston County Public
Health, UM/Hibbing Dental Clinic, Apple Tree
Dental, Children’s Dental Services, CUHCC
– Teledentistry, mobile dentistry, outreach to
underserved communities, rotations in
schools/nursing homes, projects to increase
interest in public health dentistry
MERC Activities:
Health Professional Workforce
 Trainee Exit Surveys
– Set of 6 surveys (physician, dental
student/resident, pharmacy student/resident,
APN, PA, chiropractors)
– 4th year of surveys (2000-2003, 2005) just
finishing now
– Reports including practice plans, demographics,
job search experiences, factors in practice
decisions available on MDH website
How can I get MERC funds for my
facility?
 Annual application process begins in August
 Lag time for eligibility; application collects
data from 2 years earlier
 Work with sponsoring institution to make
sure that your facility is eligible and is
included as part of institution’s application
 Need to be currently active Medicaid
provider
 Need to be affiliated with accredited
program(s)
For more information:
http://www.health.state.mn.us/divs/hpsc/
hep/merc/merc.htm
Diane Rydrych
Minnesota Department of Health
651-282-6349
diane.rydrych@health.state.mn.us