MERC: Historical Context

1. MERC: Historical Context Diane Rydrych |Director, Health Policy Division August 6, 2018

2. Introduction MERC founding principles & goals Brief history of MERC formula changes/incentives Historic MERC workforce activities Policy questions/tensions

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

4. “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 revenuefor 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. 1995 MERC Task Force: Guiding Principles • Medical education benefits society at large, not just direct health care stakeholders. • MN is a national leader in health professionals training, and should remain so. • The cost of medical education should not be borne by only a few hospitals or medical centers, but fairly allocated across the health care system.  • The public also benefits, and should help finance these activities through general revenues or other broad-based funding mechanisms.

6. 1995 MERC Task Force: Guiding Principles • In return for public funding, training programs should be responsive to public policy goals on medical education and research. • Medical education policies 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 Financing • What is appropriate state contribution to gap? • MDH estimated funding gap of $40M for FY1993 • Initial funding in 1998: General Fund and HCAF dollars • Broad public funding + support from provider & premium taxes • Funding now from multiple streams: cigarette tax, general fund, Medicaid matching funds, PMAP carveout, and health care access fund.

8. MERC Formula Timeline MERC 1998-2003: 100% Cost/FTE PMAP 2001-2003: 50% Cost per FTE / 50% MA volume 2004-2007: Combined MERC/PMAP - 67% cost/FTE, 33% MA volume 0.5 FTE/program cutoff (2004-2005) - 10% discretionary fund 2007-2011: 100% MA volume - 20% bonus for high volume - Direct payments 2011-2012: Direct payments end – minimum grants established 2013 – present: New provider types added – 2-year stepdown of 20% bonus payments – FTE minimum established – expenditure/grant cap added

9. MERC Advisory Committee • Advisory Committee “to provide advice and oversight on the distribution of funds appropriated for distribution under this section.” • Consider the interests of all stakeholders • Include both rural & urban, inpatient & ambulatory members • Include public/private medical researchers, public/private academic centers representing various professions, MCO, employers, consumers, & others. • Advisory Committee language repealed 2007 Optional Tagline Goes Here | mn.gov/websiteurl

10. MERC Activities: Health Professional Workforce • Workforce committee: 2000 – ~2004 • To examine issues related to health workforce needs in Minnesota • To determine whether it would be appropriate and feasible for MERC to take a more proactive role in workforce issues • Through a modification of the distribution formula to incent in-state retention or other policy goals, or • Through the establishment of a new funding mechanism that could more explicitly provide incentives for the training of specific provider types, specialties or geographic areas. • Identified need for more data by specialty, geography – and more data on how individuals make practice decisions

11. MERC Funding: now Administration $149,500* *Allowed up to $150,00 per 62J.692 Medicaid Match $3,787,500 Tobacco Tax $3,937,000 Tobacco Funding $7,575,000 PMAP Carveout $49,552,000 General Fund Appropriation $1,000,000 P Health Care Access Fund $1,000,000 MERC Formula Grant $59,127,000

12. MERC Activities: Dental Innovations Pool • New revenue stream to MERC began in January 2002 • Approx. $1.3 M per year • Competitive distribution process based on RFP • Targeted at programs providing/expanding dental services to underserved populations and at innovative clinical training models. • Has funded safety-net dental clinics, training for DT/ADT students, teledentistry

13. MERC Activities: Health Professional Workforce • Trainee Exit Surveys • Set of 6 surveys (physician, dental student/resident, pharmacy student/resident, APN, PA, chiropractic) • Modeled on NY resident exit survey • Conducted from 2001 - 2005, with guidance from MERC workforce committee • Questions covered: • Educational debt • Future plans (employment type, location, expected salary, hours, mix of activities, etc) • Job search experience (factors in search, challenges, search area)

14. Related GME/Workforce Recommendations Legislative Health Care Workforce Commission (2014 – 2016) The legislature should increase funding for Family Medicine residencies & similar programs, including both rural family medicine programs & those serving underserved urban communities. Funding should include support of APRN and PA clinical placements in rural & underserved areas. The legislature, higher education institutions and health care employers should increase the number of available clinical training sites for medical students and APRN, PA & mental health students in Minnesota. The legislature should consider preceptor incentives such as tax credits and other approaches that respond to challenges recruiting and retaining preceptors. Researchers should continue to seek complete information on the number of health professions preceptors in Minnesota The legislature should examine the role of state law and regulation in assuring students obtain required clinical experiences & precepting, including supporting the expanded use of simulation training methods to stretch training capacity. The legislature and the Office of Higher Education should strengthen and/or enforce education program responsibilities to ensure placements. Optional Tagline Goes Here | mn.gov/websiteurl

15. Related GME/Workforce Recommendations Legislative Health Care Workforce Commission (continued) The legislature, MDH, DHS and other relevant state agencies should monitor and evaluate the effects of the growth of team models of care, Accountable Care Organizations, health care homes, and other new developments on the state’s workforce supply and demand. Data is becoming available on the cost effects of these new models, but little analysis is yet being conducted on the workforce effects. Executive branch agencies, led by MDH, and other entities engaged in health workforce data collection, should establish a formal structure to coordinate and integrate the collection and analysis of health workforce data to provide the legislature and other policymakers integrated health workforce information and analysis. Optional Tagline Goes Here | mn.gov/websiteurl

16. Issues & Challenges • CMS holds strings on any matched $. New approaches would likely need to involve new $ or foregoing match – and statutory change • Federal issues: • Medicare is still biggest GME funding source • Caps on clinical training sites • Should MERC be a vehicle to advocate for change at federal level? • Pressures on hospital budgets – can we all still get along? • Balancing ‘greater good’ vs organizational needs

17. Potential MERC policy questions • What do we want from our graduate health care education programs? Are we getting it? Can MERC help us get it? • Can/should MERC funds be a part of the solution to: • Shortages, maldistributions, or other workforce challenges? • Provision of certain types of content (multi-disc training, safety principles, health equity, care coordination, etc) related to today’s skill needs? • How do we know MERC is “working?” Do we have the right data to guide decisions? What would (someone) need to know? • Are the founding principles still true?