merge into tmp_a1 d
  using (select 11 a1, 'aaa' a2, 'mylog' log1 from DUAL) s
  on (s.a1 = d.a1)
  WHEN MATCHED THEN
      UPDATE SET
         d.a2 = TestINS(s.a2, s.a1, s.log1);
  WHEN NOT MATCHED THEN
      INSERT
        (d.a1,d.a2)
      VALUES
        (s.a1, TestINS(s.a2, s.a1, s.log1));

SQL> drop table tmp_a1 purge
  2  /

Table dropped.

SQL> create table tmp_a1(
  2                      a1 number,
  3                      a2 varchar2(30),
  4                      log1 varchar2(30)
  5                     )
  6  /

Table created.

SQL> create or replace
  2    function testins(
  3                     p_a2 varchar2,
  4                     p_a1 number,
  5                     p_log1 varchar2
  6                    )
  7      return varchar2
  8      is
  9      begin
 10          dbms_output.put_line(p_log1);
 11          return p_log1;
 12  end;
 13  /

Function created.

SQL> set serveroutput on
SQL> -- update only
SQL> merge
  2    into tmp_a1 d
  3    using (
  4           select 11 a1, 'aaa' a2, 'update' log1 from dual
  5          ) s
  6    on (s.a1 = d.a1)
  7    when matched
  8      then
  9        update
 10           set d.a2 = testins(s.a2,s.a1,s.log1)
 11    when not matched
 12      then
 13        insert(d.a1,d.a2)
 14        values(s.a1,testins(s.a2,s.a1,s.log1))
 15  /
update

1 row merged.

SQL> -- insert only
SQL> merge
  2    into tmp_a1 d
  3    using (
  4           select 12 a1, 'bbb' a2, 'insert' log1 from dual
  5          ) s
  6    on (s.a1 = d.a1)
  7    when matched
  8      then
  9        update
 10           set d.a2 = testins(s.a2,s.a1,s.log1)
 11    when not matched
 12      then
 13        insert(d.a1,d.a2)
 14        values(s.a1,testins(s.a2,s.a1,s.log1))
 15  /
insert

1 row merged.

SQL> -- insert and update
SQL> merge
  2    into tmp_a1 d
  3    using (
  4           select 12 a1, 'ccc' a2, 'update' log1 from dual union all
  5           select 13 a1, 'ddd' a2, 'insert' log1 from dual
  6          ) s
  7    on (s.a1 = d.a1)
  8    when matched
  9      then
 10        update
 11           set d.a2 = testins(s.a2,s.a1,s.log1)
 12    when not matched
 13      then
 14        insert(d.a1,d.a2)
 15        values(s.a1,testins(s.a2,s.a1,s.log1))
 16  /
update
insert

2 rows merged.

SQL>