Good morning. The House Appropriations Committee will come to order. Will the clerk please take the roll? Chair Boland? Here. Representative Maddock? Here. Green? No. Jenkins Arno? Here. Kelly? Here. Marconan? Here. Mueller? Here. Van Werkom? Here. Biesen? Here. Horton? Here. Roth? Here. Cabot? Here. Desena? Here. Coon? Here. Steele? Here. Robinson? Here. O'Neil? Present. Rogers? Here. Stanfill? Present. Edwards? Here. Martis? McKinney? Here. Morgan? Here. Price? Here. Snyder? Here. Longjohn? Here. Madam Chair, you have 27 members present.
You do have a quorum. Thank you, very much. Good morning, everybody, and, welcome to this meeting. The committee today is going to begin with taking testimony on the 02/2025 Natural Resource Trust Fund recommendations, which is house bill forty three ninety two sponsored by representative Borton. Joining Representative Borton today will be Austin Scott from House Fiscal Agency. Representative, can you and Austin come forward, please, and give us an overview of the bill? Thank you, madam chair, members of the committee. Appreciate you allowing me to give this testimony today. I'm here today to,
in support of House Bill 4,392, which allocates funding for the twenty twenty five Michigan Natural Resources Trust Fund projects. This legislation provides funding to help protect and enhance Michigan's natural resources. As you know, the trust fund is financed through revenues generated from oil and gas leases and severance taxes on state owned lands. These funds come from private companies that lease mineral rights for exploration and production following a competitive auction process.
The resulting revenue is constitutionally dedicated to the Michigan Natural Resources Trust Fund and reinvested directly into our state's outdoor heritage. Each year, this funding supports projects across Michigan that expand public access to recreation, improve wildlife habitats and enhance the quality of life in communities both large and small. Grants are awarded to local governments and state agencies to develop parks, trails and other outdoor infrastructure that benefit residents and visitors alike.
Timely passage of House Bill 4,392 is critical. Approving this legislation now ensures that projects approved for 2025 can move forward without delay, allowing construction to begin during this year's building season. These projects not only preserve Michigan's natural beauty but also generate local and community development. Thank you for your time and consideration, and community development. Thank you for your time and consideration, and I'll turn things over to House fiscal analyst Austin Scott.
Thank you, sir. Austin Scott from the House fiscal agency. The bill before you, in committee this morning is house bill four three nine two. It is a supplemental appropriations bill that would provide funding for recreation projects, some at the local and some at the state level. There are two types of projects. There are what are called acquisition projects, which is the acquisition of ownership rights to land. And there are also development projects, which are, projects for the the development, renovation, expansion, of public recreation opportunities on land where the ownership is already secured for its intended
purpose of public recreation. In this bill specifically, the gross appropriation is $41,800,000. The totality of that is from the Michigan Natural Resources Trust Fund, which is a state restricted fund established in the constitution. There are, 85 projects. In total, 17 of those are land acquisition projects and the balance 68 projects are development projects. The 17 land acquisition projects total 19,300,000 and the 68 land, development projects total 22 and a half million dollars. They're matching funds provided by,
the receiving entities at the state and local level. Those total $52,300,000. So the total project cost is 94,100,000.0. Again, of that 94,100,000.0 total cost for these projects, the portion that's in the bill, the portion that's up, in for consideration by the committee this morning is 41,800,000.0. I wanna echo something that representative Borton mentioned, and I'll return the floor to the chair. The Natural Resources Trust Fund provides financial assistance to local units of government qualifying non
profits, and to state agencies, typically the Department of Natural Resources, for public acquisition of lands, resource protection, public outdoor recreation. So those are the the purposes, for each of these projects. And I'm happy to field any questions at the chair's discretion. Thank you very much. Do any members have questions? Alright. Thank you very much. With that, thank you. I am we do have some cards, here on House Bill forty three ninety two. Chris Semerneck, Department of Natural Resources, does not wish to speak, supports the bill. Nicole Fisher from MParks, not wishing to speak, supports the bill.
Mike Campagnoni, representing SEMCOG, supports the bill, does not wish to speak. Brad Kirsten, Chesterfield Township, supports the bill, not wishing to speak. And David Lossing from the Huron River Watershed Council, not wishing to speak, also supporting the bill. So thank you for those. They will be, put into the record. And with that, we do have some amendments. And the first one is from Representative Price. Representative Price, would you like to provide an overview of your amendment? Yes. Thank you, Chair. I would like to offer an amendment today to appropriate $129,000,000
in federal funding made available to Michigan through federal grant funds, funds that are critically important for clean energy infrastructure, economic development, and community improvements across the state. This funding was originally requested in a supplemental appropriations bill last year, but it was not included. It is now our responsibility as a legislature to appropriate these dollars so that communities throughout Michigan, many of them small towns in rural areas, can assess the resources they need for projects like road repairs, public safety upgrades,
and public building improvements. We know that, to date, dollars 20,600,000.0 in initial investments have already gone to 29 Michigan communities, including three in the Upper Peninsula and six north of the 40 fifth parallel. The majority of these dollars have supported communities represented by the Republican members of our legislature. These are tangible, visible projects that matter to local governments and the people we represent. This is not a partisan issue. These funds directly support local infrastructure, workforce development, and economic growth. Michigan taxpayers have already paid into this program.
And if we do not act, those dollars will go to other states. So this amendment provides us with the opportunity to correct the emission from last year and deliver meaningful investments to communities all over Michigan. I respectfully urge my colleagues to support this amendment and make these resources available for the good of our state. Thank you. Representative, do you move your amendment? I do. Thanks. Alright. Representative Price, moves her amendment. Clark, will you please take the vote? On the motion to amend, Chair Bolin? No. Representatives Maddock? No. Green? No. Frankincanzano? No.
Kelly? No. Markkanen? No. Mueller? Slaugh? No. Van Workum? Beeson? No. Orton? No. Roth? No. Cabot? No. Coon? No. Steele? No. Robinson? No. Farhat? Yes. O'Neil? Yes. Rogers? Yes. Steckloff? Yes. Glanville? Yes. Edwards? Yes. McKinney? Yes. Morgan? Yes. Price? Yes. Snyder? Yes. Longjohn? Yes. Madam Chair, you have 12 yeas, 16 nays and zero passed. The amendment is not adopted. Thank you. And, representative Glanfel, you have an amendment. Would you like to speak to your amendment? Yes. Thank you, madam chair.
My amendment, seeks to include the $55,000,000 that we have heard quite a bit about to make our health plans whole, in our services to Medicaid that we have, contracted with them for. I think it is relevant to attach it here to the, the DNR trust grants given that so many of these grants and we even heard, our colleagues speak how these grants support, access to recreation and quality of life. We all know how important those two, pieces are to physical and mental health.
And as we strive to make Michigan healthy again, I would encourage my colleagues to support my amendment so that we can not only fund, important and critical recreational areas but also health care that comes behind those to support the people of the state of Michigan. I urge my colleagues to adopt my amendment and move to, move the amendment. Thank you, representative. This is an issue that, I do feel is completely unrelated, although important. With that, clerk, will you please take the vote? On the motion to amend, Chair Boland?
No. Representative Zmattick? No. Green? No. Jenkins Arno? No. Kelly? No. Mueller? No. Slaw? No. Van Werkom? No. Bison? No. Orton? No. Roth? No. Cabot? No. Desana? No. Coon? No. Robinson? No. Farhat? Yes. O'Neil? Yes. Rogers? Yes. Stancloff? Yes. Glenville? Yes. Edwards? Yes. McKinney? Yes. Morgan? Yes. Price? Yes. Snyder? Yes. Longdrawn? Yes. Madam Chair, you have 12 yeas, 17 a's, zero passed. The amendment is not adopted. Thank you. And Representative Rogers, would you, have also,
have an amendment? Would you like to address it? Yes, please. The first one is a hundred million dollars for PIHPs statewide. We heard testimony in the Medicaid and behavioral health appropriations subcommittee a few weeks ago about the financial, issues that they are facing, through lack of, rate adjustments. I think a lot of this was from the Medicaid unwinding, and fewer individuals are on Medicaid in our state, since the unwinding. And, some of the PHPs, it's a pretty serious matter, are facing fiscal insolvency. So I would like to move my amendment for $100,000,000
for statewide PHPs through DHHS. Thank you. And we have a question. Representative Maddock? Thank you, Madam Chair. I'm just adding up all these land acquisitions that the State of Michigan makes every year. This year, it's 2,700 acres approximately. But I have a question for you regarding item priority item number seven, the sturgeon I'm sorry, number eight, the Michiganme Highlands Conservation Eastman acquisition. The 73,000 acres that is mentioned in this line item, are we purchasing 73,000 acres?
Or is that already land that the State of Michigan owns that we're changing something on? Just one minute, Rep. Manek. We will come back to your question. In general, we're addressing the amendment. Okay. Thank you. Any questions on the amendment? Representative Steele. Thank you, Madam Chair. Just a real quick question. The paper before me says $10,000,000 She says $100,000,000 Just want to know what the difference There are two amendments, that will be that are in front of you. One is for $100,000,000 Oh, thank you.
The first one is the $100,000,000 Yes. Any other questions on the amendment? Clerk, will you please take the vote? On the motion to amend, Chair Bolin? No. Representatives Maddock? No. Green? No. Jenkins Arnaud? No. Kelly? No. Marconan? No. Mueller? No. Slaw? No. Van Werkom? Beeson, Fortin, Roth, Cabot, Desana, Coon, Steele, Robinson, Farhat? Yes. O'Neil? Yes. Rogers? Yes. Secwath? Yes. Landville? Yes. Edwards? Yes. McKinney? Yes. Morgan? Yes. Price? Yes. Snyder? Yes. Longjohn? Yes. Madam chair, you have 12 a, 17 a.
No pass. The amendment is not adopted. Thank you. And representative Rogers, would you like to, give us an overview of your additional amendment? Yes. Thank you. This is the one that is $10,000,000. It's a separate page stand alone, on your desks. And, it is for the SOS maternal network in Michigan, which stands for, Synergy of Scholars. So Michigan has a higher maternal mortality rate than the country, nineteen point four deaths per 100,000 live births. And across The United States, the average is twelve point nine million.
This is a program that was set up originally, out of Wayne State, and they have had some really positive, health outcomes for moms. And they're seeking to they had already expanded into the Lansing area. But this $10,000,000 would go across the state towards other, maternal health deserts and particularly help some of our rural communities. I move my amendment. Thank you, representative. Are there any questions on the amendment? Hearing none, will the clerk please take the vote? On the motion to amend, Chair Bolin? No. Representatives Maddock? No. Green?
No. Kelly? No. Markkanen? No. Mueller? No. Slaw? No. Beeson? No. Fortin? No. Cavett? No. DeSana? No. Coon? No. Steele? No. Robinson? No. Farhat? Yes. O'Neil? Yes. Rogers? Yes. Steckloff? Yes. Glanville? Yes. Edwards? Yes. Okay. Edwards? Yes. Martis? Yes. McKinney? Yes. Morgan? Yes. Price? Yes. Snyder? No. Longjohn? Yes. Madam chair, you have 12 ayes, 17 nays. No pass. The amendment is not adopted. Thank you. And, back to questions on the bill itself. Representative Maddock? Thank you,
madame chair. You probably obviously heard my question. Every year, the state of Michigan acquires or purchases thousands and thousands of acres of land. This year, it's about 2,700 acres. But my question is regarding item number eight, the 73,000 acres mentioned in the Michigami Highlands conservation easement acquisition. Are we purchasing another 73,000 acres? Or is that land already owned by the state of Michigan that we're modifying the easements on? My understanding is that it's it is not the purchase of 73,000 acres, but rather an easement or access for public recreation purposes to the land in question.
I would yield to my friends from the trust fund board and the natural resources excuse me, Department of Natural Resources for additional information at the chair's discretion, but that is my understanding. So the direct answer to your question is no, not the acquisition of those 73,000 acres for, ownership by the state through the department, but rather an easement or access to the land for public recreation purposes. Thank you very much. Yes. I believe we have a DNR representative. Do we have somebody? Could you come forward please and state your name and, if you could address this, Vice Chair Maddox question, please? Good morning.
John Mayes, Recreation Grants Unit Manager, Michigan DNR. Good morning. Clay Summers, Grants Management Section Manager, Michigan DNR. Yes. Thank you for the question. The 73,000 acres, it's a conservation easement. Over those acres is private corporate timberland, and the easement is going to provide public recreational access both motorized and non motorized. The corporation will continue to have the rights to manage that timber and bring it to market. So it's a great partnership between providing public access to the people and private corporate land ownership.
That was my second question. I want to make sure this don't we're not stopping the harvesting of any timber on that land. No. Okay. Appreciate it. Thank you. Thank you very much. Representative Beeson? Thank you, Chair, and thanks, guys, for being here. With this land, we're not doing this for solar by chance, are we? In the DNR, we're not acquiring this and get it timber it off and then put solar in there for a period of time? That's correct. As I said, the private corporation maintains the timber management rights. And the solar, if they chose to do that, I mean, I'm not sure whether they have the rights to do that.
That would be in the specifics of the conservation easement, but that would be the private corporation. The department would not be installing solar on top of that. But you guys could put that in your language if we're going to give this kind of money out that we don't want to see it turn into solar. Can you put that in your language from the I'd have to consult with the real estate experts about that. Representative Slaw, did you have a question? The committee will go at ease. All right. So we are going to move on to our next presentation. You can return to your seats. So we'll come back to this. And, appreciate that. A little shift here. The next, the committee is gonna hear from various entities on the Well Pass Services contract with
the Michigan Department of Corrections. We have heard many of us members have heard about this. We've heard references today here, even at this table, about some of these issues that have surfaced, from previous fiscal years, that we are trying to sort through. And, with that, we're gonna have a few presenters, and we're gonna start with Kyle Kaminski from the Michigan Department of Corrections. Thank you very much, Madam Chairwoman. With your blessing, I'd like to ask if DTMB could potentially join me for the initial part of this presentation as well because I think the plan was for both DTMB and MDOC
to speak about the history of this contract. Thank you. Is it Jared Ambrosier? Good morning, everyone. I'm Jared Ambrosier, the Chief Procurement Officer for DTMB in the State of Michigan. I'm going to walk you through the procurement overview today, how we go through procurement process, all of that. Thank you. Sorry about that. If you didn't hear me, Jared Ambrosier, Chief Procurement Officer from DTMB. I'm gonna walk everyone through the procurement process today, and how we go about, contracting for goods and services. Oh, it's a PDF. There we go. Oh, there we go. So, as you may know, the Management and Budget Act is who gives DTMB the authority to procure Public Act
four thirty one. Section two sixty one provides DTMB Central Procurement Services the authority to purchase all goods and services where the legislature has not otherwise expressly provided authority. So what does this mean? This means that DTMB has the authority to procure when agencies do not have their own statutory authority. So some instances of other agencies having statutory authority, MDOT for all roadway related procurement, DHHS, related to its powers under the Social Welfare Act. Lottery has statutory authority for gaming related procurement,
and then there's over a 50 other very narrow statutory authorities that agencies can utilize for procurement efforts. Procurements that are done under those statutory authorities are not subject to oversight or review by DTMB. And then DTMB design and construction and real estate leasing have separate sources of procurement authority within, Public Act four thirty one. The Public Act allows for DTMB to provide authority to the agencies, in the form of delegated authority. So currently, Central Procurement Services delegates $500,000 in authority to state agencies to use under our authority.
They may request specific authority for specific of procurements in excess of that. And then procurements done under delegated authority are under review and oversight. My office, we review them in about a once a year basis to ensure they're following all process and procedures along with the law. So what does the the act actually do? What does it require of us? The main thing that it requires of us is competitive solicitation. There are a few very narrow exceptions in regards to emergencies, but, generally, we have to competitively solicit bids for goods and services across the state.
We use multiple methods of competitive solicitations. So request for proposal is probably the one you are most familiar with. Very standard. We put out a request. Bidders submit proposals. We review those proposals and award a contract. Competitive proof of concept, try before you buy situation in which we trial, a product or service generally in the IT space to see is this going to be a good fit, or to compete multiple solutions against each other directly before making an award. Simple request for quotes for low dollar, non complex solicitations,
a direct solicitation, which is for kind of a smaller group of vendors, or where we may have, concerns around privacy on kind of that bid. For example, something in the line of, like, security guards or, maybe a direct solicitation where we want to keep some of that, information out of the the public eye. And then invitation to negotiate where we say there's only one vendor that can do what we want to do, and we are confirming with the market that there is only one vendor that can do this. Give other companies an opportunity to say, no. I can do that as well,
before we enter into a contract. And then finally, central procurement services may utilize contracts from cooperative organizations or other public entities if they meet our competitive solicitation requirements. The competitive solicitation process is pretty well defined within policy. My office, central procurement, works with agency procurement and the agency subject matter matter experts to develop the solicitation. So they give us their requirements, what they wanna see, what do they need, and then we help structure, the solicitation around those needs to ensure that we're driving value to the department.
Solicitations are posted for a minimum of two weeks, but the majority are posted anywhere from four to eight weeks. The solicitation may contain a pre bid meeting where we will bring vendors in beforehand, potential bidders, and talk about the bid with them, answer questions that they may have, highlight specific things that they may have to do in their bid response. All solicitations contain a question and answer period for potential bidders to submit written questions to the state, and then we would reply with a response. And then the state may request clarifications from bidders or issue a deficiency if the
bid needs to be amended. So this is we get bids in, and we're like, you answered it this way, but your answer is a little unclear. We want a clarification. Or you answered it this way based on how we pose the question. We realize we need to reframe the question. We issue a deficiency, and the bid is amended. How do we evaluate these bids once they come in? I think this is probably what really everyone really cares about. So if it's a simple we're buying some of the a commodity, let's say gravel, for instance, or road salt, it's low cost. There's not a lot of value add in some of these simple,
commodity purchases. So these are awarded based on price alone. That's very few solicitations that we do within central procurement are based on low price. Best value is where we really hang our hat, and what is the value that is bringing being driven to the state, and how are these goods and services being delivered. So this could include components such as price, quality, expertise, the timing of it, what terms and conditions they're willing to accept, cost, the supply situation, economic impact to the state, really who is going to do the best job for the money that we are
putting out there. That is what we are looking for consistently. And, really, when we think about it, best value is how we buy pretty much everything in our private lives. Right? You don't necessarily buy the cheapest house or the cheapest car. You find what meets your needs, right, based on your budget that you have, and you make a selection that you think brings the most value to you. That's how we evaluate bids as well. And this evaluation is done in an a joint evaluation committee, which pairs, the requesting customer group or the agency subject matter experts with procurement to comprehensively
evaluate bids. And that's all I have for you today. Thank you. Can you please, give us an overview of, as it relates to the procurement process and the Department of Corrections with the well path contract, please? Yes, absolutely. So picking up kind of from where Jared left off, the first sort of as background, the Michigan Department of Corrections utilizes a hybrid system for prisoner health care. So we have certain services that are provided directly by state employees, such as RNs and other folks who are state employees working within our facilities, to provide services. But then we contract for specialty care,
for higher level providers, for pharmacy, for off-site care, etcetera. That is not a new concept for the State of Michigan. The exact structure of those contracts have changed a little bit over time, but not significantly. We've had, that type of arrangement now for many, many years. So as we went through, the request for proposal process that Jared laid out a few years ago, we ultimately selected Grand Prairie Health Systems as the initial winner of that request for proposals. They were selected based on that best value concept.
So these are this, I think, is safe to say, is one of the more complex and large state contracts across any department. And so they were ultimately selected and granted a multiyear contract with the Department of Corrections. We I have to do it that second. Oh, there we go. Okay. So, the RFP was issued in 2020, and we, selected them, kind of towards the end of that year, beginning of twenty twenty one, and then we started the transition period. So we had another incumbent provider with a similar contract that had been in place
for several years, was ultimately being replaced by Grande Prairie. Grande Prairie officially took over as the MDOC's health care contractor in September of twenty twenty one and served in that role until early twenty twenty four. Ultimately, and and I'll discuss this a little more. Ultimately, the Michigan Department of Corrections and Grand Prairie mutually decided not to have Grand Prairie serve in that role for the full contract term. So we actually switched contractors midterm. The trajectory of that contract from our perspective was not the right trajectory in terms
of the quality of services being provided by the contractor. You're going to hear some concerns raised today probably later in testimony by folks, and that was certainly very much on the MDOC's radar. But there were also other concerns that we had that made us move forward with the decision to ultimately end our relationship with Grande Prairie. When we did that, we found another contracted provider, VitalCorp, who came in and essentially assumed the existing contract. So we did not do a new RFP. Instead, they agreed to take on the terms of Grande Prairie's contract and essentially move into
that role. So we had that transition in early twenty twenty four where VitalCorp stepped in to that existing contract and took over those services. And as of May of twenty twenty four, Vital Corps was then our, our health care contractor. Well, the screen is lagging a bit. But, so just just to let folks know, when we work with any contractor at the Department of Corrections, we actually have a monitoring unit that, oversees these contracts. So there's the process under which we, form a relationship with the contractor, both the RFP and the contract negotiation.
And that was when when we start that relationship, we then shift our, focus internally to our contract monitoring, services. As I mentioned, we have both state employees and the contractors working side by side in our facilities. So that's one of sort of our oversight mechanisms that we utilize. But we also have a centralized process where we're keeping track of contractor performance. We use what we call service level agreements. We have these on all MDOC contracts. They will differ based on the nature of the contract. There may be more or less depending on the complexity of the contract, and these service level agreements will be specific to depending on the complexity of the contract, and these service level agreements will be specific to the types of services that are
provided under the contract, but they are always in place. Because this is a larger comp contract and, as I mentioned, more, complex. There's actually 16 different service level agreements that the contractor had to agree to meet, on an ongoing basis while they're under contract. This the screen will catch up. But, ultimately, the contractor did not meet all of those service level agreements. One of those service level agreements was the payment timely payment of subcontractors. So maybe it's worth, taking a moment here to kind of explain. The contractor will directly hire health professionals to work within our facilities, doctors, other providers,
etcetera. They will generally then contract with a pharmacy provider who will take care of all the pharmacy supplies and sort of, that are necessary to operate our system. And then they will create sort of an a ecosystem of providers in the community, specialists, emergency services, hospital services, etcetera, because it's not gonna be feasible for them to directly provide all those services around the state. So they will subcontract with those various entities, and and form their own relationships with those entities, to pay them for the services that they provide to Grande Prairie.
One of the SLAs, as I mentioned, is the timeliness of payment from Grande Prairie to those subcontractors. The MDOC is not a direct party to those contractual relationships, but we do wanna make sure that, our contractors are paying timely, which under the contract terms are forty five days from receiving a clean claim. In total, across all SLAs for this contract, we ended up levying about $1,500,000 against, Grand Prairie. These are generally referred to as credits, but the credit accrues back to the state and to taxpayers. So, essentially, we reduce their invoice by that amount,
to reflect that they're not hitting their service level agreements. In addition, we issued 15 corrective action plans. So these are specific, issues where we've noticed a performance level on the contract that is not sufficient in our opinion, and we're demanding direct resolution of that by the contractor. So again, from a contract management perspective, this is a contract that we monitor very closely and are not afraid to use our tools that are available to us to try to get compliance and positive performance out of the contractor. When it comes to that issue of untimely payments to subcontractors,
we ultimately, levied $60,000 in service level agreement credits against Grande Prairie. In their first six months of the contract, they were not, subject to a service level agreement for that because that's a transition period. In the second six months of the contract, they were actually timely with their payments to their subcontractors, so there was no SLA. But at each of the following six quarters, they were not timely on that standard, and so they received a service level agreement, essentially penalty for each of those quarters. So May I ask Yeah. Absolutely. So you're referencing these credits Yeah. And that they didn't meet their,
contract requirements or these local service agreements. And so the contractor received the credit. Why wasn't the provider the local service agreement So so actually yeah. I I certainly understand the question. The credit actually accrues to the state. So it reduces what the state has to pay Grand Prairie in this situation. As far as why does that not go to the subcontractor, well, ultimately, the contractual relationship is between Grand Prairie and the subcontractor. We don't have a relationship to make payment to those subcontractors. So what we're using is we're using the service level agreement to try to prod the prime contractor,
Grand Prairie, into the action that we wanna see. Okay. You don't have the authority to pay them through these subagreements? I just wanna understand this so we can all understand that. Correct. There Yet, you have the authority to take a credit from the total amount that's been contracted for a service. We do for the sake of trying to get the contractor compliant with that. So in total, the state taxpayers made payments of about $365,000,000 to Grand Prairie for the services they provided in the just over two two years that they were the state's contractor on this.
The state made payment on all of the required payments to Grand Prairie. And I think that's an important thing because I know there's gonna be testimony about Grand Prairie's payment practices, which I certainly understand are are very problematic. But I wanna be clear that the state met its contractual obligations to the contractor, that taxpayers have already paid these bills once. And so I just wanna make sure that's very clear. Ultimately, as I said, we made the decision not to continue the relationship with Grand Prairie even though their contract term had not expired yet. It was a mutual decision. They stepped out.
VitalCore stepped in. And so far with VitalCore, although there's as you'd expect, there's always some transition period with some challenges in the transition period. Overall, we think VitalCore's performance is significantly better than Grande Prairie's, not just from a clinical care perspective but also a payment and timeliness of payment perspective to their subcontractors. The current contract is the initial term of the current contract is set to expire in September of twenty twenty six. The state does have some options to add additional years to that. A decision will be made about what strategy the state will use as we get
a little closer to that. That. But the MDOC has already secured the services of a consultant with expertise in this area to help us better understand sort of the national landscape and options for these types of contracts, to determine sort of what's the best format or if any changes are necessary to the structure of these contracts, as we get ready for our next contract. With that, I'm happy to take questions from the committee. Thank you. Representative Beeson? Representative Madock? Thank you. You explained, you went into great detail explaining the evaluations that take place in the department to give us the best outcomes.
Based on your evaluation, is Wellpath the best value for us? I think what we're seeing here as, as legislators is a is a tremendous increase in our cost of corrections and a decrease in our our population our prison population. And there's a bankruptcy involved. It appears we have a very adversarial relationship with our provider at this point. How is this gonna what how is this gonna end? And what can we do to improve this relationship so we don't have such conflict with our providers?
So I I appreciate the question. So at the time that Wellpath was select or Grand Prairie was selected, they were considered to be the best value of the bidders. There were several bidders, at the time. Well, Grand Prairie brought some, at the time, what we thought were creative solutions that seemed to offer the possibility of some cost containment, some other benefits. They were also from a pricing perspective. Their pricing was, more competitive than than the other bidders were. But they're going they're they're they filed for bankruptcy. That may maybe explains why their price was lower. I won't comment on that necessarily,
but you are correct that they have subsequently filed for bankruptcy. So just to understand sort of what happened after, the department made the decision not to continue the relationship with, Grand Prairie. So we made the decision, to move to Vital Corp, who is our current contractor. After, we ended the relationship with Grand Prairie, the state made the decision, which I think is relatively rare, to file litigation against Grand Prairie. So they are our former contractor, but we have filed litigation against them on a few different counts. One of them is their payment practices to their subcontractors. Another is their data sharing back to the MDOC. They have not,
sufficiently, in our belief, shared the information we need from a claims perspective to understand, their costs. So there is not a ongoing relationship between Grand Prairie and the MDOC in terms of care being provided. But there is obviously this continuing litigation at the state level, and they have declared bankruptcy in another state. You know what I think the solution is? We need to close two prisons so we can afford our our increase in health care to take care of our to take to take care of our prisoners. I think that's the solution here. We have to we have to find some way to cut costs within your department because this health health care message is gonna continue to to to be a problem
and increase cost for us. Thanks. Representative McKinney. Thank you, chair. Thank you, Kyle and everybody for your testimony and presentation. You know, I was on the budget MDOC budget last term, with former chair O'Neil, and we got to visit some of these facilities, across the state. And I'm hearing time and time again, about the lack of care people are receiving, and it's still translating to this day. And I've I've heard on firsthand accounts, seen pictures of what's going on in some of these facilities, in particular, the woman Woman's Huron Valley facility,
in Ypsilanti, with a woman named Crystal Clark and how she is literally dealing with being poisoned by mold. And it is very disheartening to see, the lack of care some of our, members are receiving while being in in in our facilities. And I want you to talk about what is what are things are being done, because to me, I don't think our tax dollars should go, to, ensuring the the care and protection, of some of our members of our society.
This is I I think it's it's it's a it's a lot of atrocities happening, to say the least. And, I just want you to shed some light about what the department is doing to ensure that everybody receives quality care. And this is about money as well, but this is about quality care, ensuring people do not die in these facilities. And so what is the department doing to address that? I appreciate the question. I will respectfully disagree, though, with the assertion that the department is not providing quality care. I mean, we have state employees and contractors who are working every day in our facilities,
in our health care operations, to provide extremely high quality care, to those that we serve. The rally is this. We have about 32,000 people incarcerated in state prisons in Michigan. The state has a constitutional obligation to provide health care, at the community standard of care. We are clearly doing that, and I think we're doing that quite well as an agency. The reality is many of the people who come into our system have not had access to routine health care before they come into the criminal justice system. And so because of that, we're dealing with a lot of chronic conditions. We're dealing with folks who have,
you know, essentially put a lot of stress on their bodies through decisions that they've made, and and just, you know, the stresses that come along. Obviously, there's a high correlation between poverty and and, placement in the criminal justice system. So the stresses that just come along from not being able to access care consistently in the community. We would invite any of the members to come to our facilities and come see health care operate. Come talk to the people who are providing that health care. And I think you'll find that the quality of care is there. It's consistent. We have a lot of different strategies in place. Obviously, we have folks who are at different levels of need.
We have chronic care case loads for folks. We have specialty clinics for folks. And ultimately, I think folks are getting the care that they need in that setting. And I think because of that, you know, they have the opportunity to be healthier while they're there or when they come back into the community. Quick quick follow-up, Jerry. Okay. Just wanna, Kyle, push back on that. I've been talking with the ombudsman, looking at the grievances, from some of our inmates, and there are some grave discrepancies to what you describe and what's actually happening day to day in our facilities. So whatever we can do, and I'm willing to work with you.
And I think it's a crime where we, as legislators, can't show up unannounced anymore to these facilities. It has to be scheduled. And so I wanna go whatever we need to do because I'm seeing pictures, and I can show it to you firsthand of what some of our members and what some of our men and women are going through and the care or the lack thereof, and attention they're being provided. So just want to say that and, looking forward to working with you, brother. Thank you, Representative Kinney. And, just, the committee, we are here to discuss the well path
situation. And I think that Representative brings up a very good point about this. And you are referring to the care within the hospital. But what we're finding ourselves is in this situation with WellPath. We want to make sure that we have access to that additional care that cannot be provided within the prison. And that is what is at issue here. And if we cannot find providers or the providers go belly up, that access to that care is going to be eliminated. And so I think the issue is a very serious one and that one that
we do want to work with you to resolve, but we cannot just let this go. There needs to be some accountability from the prisoner and the correctional facility and their access to the care. And to provide a credit, the Department of Corrections, the states gets out of it. But what you're going to do is eliminate the care. And so I just wonder, I have a question about the quality control. And you mentioned, Jared, about the oversight of the contracts. You periodically go in. So my question is, one, did you delegate your authority to the Department of Corrections
for the approval of this contract, the execution of this contract, the monitoring of this contract? And then, if that is the case, did you come back in and audit it and realize some of these ongoing problems? Thank you for the question. No. We did not delegate authority on this contract. This was a joint procurement run by the central procurement services team within DTMB with the subject matter matter experts from corrections. We did the whole process together. We evaluated. Once the contract is awarded, that is when corrections contract monitoring unit takes over the day to day operations of
the contract. That's not to say my team isn't involved, but corrections contract monitoring handles the day to day. They bring us in, as issues arise in regards to performance, whether that's corrective actions or meeting with the vendor or negotiating with the vendor. All those types of things are, kind of the resources that central procurement provides once the contract is established. Thank you. Representative Green. Thank you, madam chair, and thank you, both right here. Thank you both for being here. I know you have a a large responsibility that has been delegated to you.
One of my issues is each and every one of us here as legislators represent 90,000 people in a specific community. I have a prison in my district. I have many, individuals who work at that prison. So it's not like legislators are just ignorant of issues and topics. We talk to people even though there has been the revoking of some of the, privileges of the bureau or of employees to talk to legislators, but many of them defy it and come talk to us.
So as I'm looking at this contract, who made the decision under the best value to award the contract to WellPath or to, whatever the name is? So who made the who individually made the recommendation to the committee? Because my understanding after research is that Wellpath, under various names and doing and DBAs, is well known across the country to undercut the bid process and underperform their contract. My understanding from my contacts is that before this contract was offered to Wellpath,
another contractor was asked to take it at that price, and their response was something like, we can't do the contract for that price and neither can they. So my understanding was that the department, whether it's Department of Crashes or DTMB, was already made aware that this company could not do the this at that price, yet we move forward. And so we can blame it on a committee. We can blame it on I want to know who had papers in their hand and said, I think this contract should go there and then the committee rubber stamped it.
There is not a singular decision maker. The joint evaluation committee is joint. It is a consensus decision. Who made the motion for that committee? There is no motions made. There is not a formal committee in that sense. There is no, motions made. There's no voting. It is a discussion group. Thank you. Representative Farhat. Thank you, madam chair. I you know, this is an issue where I've heard about it from providers who, are left holding the bag in the excess of $30,000,000
40 million dollars And I know you mentioned earlier that the state met its obligation by paying WellPath as a I don't necessarily think that's where our obligation ends necessarily. It should be to make sure that these contractors that we're getting, Wellpath or whoever, pay out claims in a timely manner. I also think that our obligation to the taxpayers of our state is also to those who are in our care. I I appreciate what you're saying about the work, and I I I lean on my colleagues here for their expertise who dig dive into these budgets and these subcommittees here.
What exactly is your message to providers who trusted this private company that we brought in to manage this care and are now stuck with invoices in excess of $50,000,000 In some cases, if you add the hospitals and ambulatory. What is it that what are we telling them as a state and how are we making sure that some of them aren't going to go belly up because of this? So we fully acknowledge that this is a challenging situation for those providers. We we have never made any statements other than that. But, ultimately, you have to keep in mind that as an agency and as agencies,
we have to comply with state law. And when we enter into a contract, we have to honor what's in the contract. And that's ultimately what we did. We used every tool available to us under that contract to try to push the contractors' performance when it comes to their own subcontractors, but we don't have those direct contractual relationships. And and that's part of the reason that we have these contracts is we need somebody to manage that. Ultimately, VitalCorp came in. They formed relationships with many of those same providers. Quite honestly, because of what Ram Prairie had done,
the cost for those providers have increased to to VitalCorp and to the state. And so we're trying to repair those relationships on an ongoing basis by ensuring that our current contractor remains current on their payments and otherwise complies with the contract. But ultimately, that that relationship and I know it's difficult, and I know it's a very challenging situation, but that relationship does you know, or the responsibility for those payments once taxpayers make that payment to that contractor, it's on that contractor to make their subcontractors whole.
And that's why the state took the unprecedented step of actually filing litigation. I don't know that that has happened, you know, frequently in the past to file litigation against one of our own contractors over their practices when it came to their subcontractors. Madam Chair, if you have a quick follow-up, just a quick follow-up for that. So, okay, it's great we file litigation, that's fine. But again, if you go back to your chart and I would like a copy of this presentation, by the way, if you can give to the chair and just send it to us. But when you look at this again, I'm looking at this chart. You see Vital Health and these different groups. They're all going belly up. They're all doing something wrong here.
At what point do we look at maybe bringing back this management in house, doing it ourselves? We've privatized the management of this aspect. And we're not we're clearly not, I don't think, seeing the savings or the headache freeness that it was supposed to bring. Right? I mean, at what point do we consider bringing it in house or doing it ourselves or just going direct to these providers. Right? I mean, is that a discussion you folks are having at, you know, looking at, you know, maybe going privatizing this was not the right decision? We're certainly having those discussions. That's why we've hired a consultant to help us better understand sort of the landscape
nationally around these contracts. I think Michigan's approach on this is pretty consistent with how other state correctional agencies have done this. But you know, we are certainly open to looking at what future contracts would look like and how they'd be structured. I would say, though, just just so this committee is aware, one of the great challenges is hiring people with professional degrees, under the current civil service pay scales, Finding doctors, finding other folks with advanced degrees and hiring them as direct state employees is very challenging. We have that challenge with dentists. We quite honestly have that challenge with registered nurses,
although we've made some progress on that with Office of the State Employer. So simply bringing it in house may not be the solution that ultimately fixes some of these challenges. It might essentially invite a different set of challenges. But ultimately, yes, as these contracts come up on their expirations, we certainly do look at what's the the right structure for the next four or five years and sort of what's the evolution of the approach that we're seeing nationally. Thank you. And we are going to move on just in respect time. I do think that we want to hear from the providers who have found themselves
in harm's way with their contracts and get back to the DNR trust fund. But I do think that this is something that our oversight committee should take a deeper dive into. I think there are a lot of unanswered questions. And I think it's extremely important that we really work towards a solution. Something went sour here, and a lot of people have with no control have been left holding the bag. So thank you very much for being here. I appreciate that. I'm sorry to cut off colleagues' questions, but we are just so we can hear from the providers themselves.
Next up, we are going to hear from Jeff White from Richmond Lennox EMS, Ron Slagle from the Emergent Health EMS, and Russ Adams for Lapeer EMS. And, as you come forward, please, when you do get, please note that the microphone has to be turned on and you have to sit kind of close to it so, so that we are able to hear you. And, as you speak, if you could just introduce, just say who you are so we know. We can put your face with your name. Thank you. Whoever would like to start. Madam chair, members of the committee, it's always an honor and a privilege to be here in Lansing,
and we thank you we all thank you for the allowing us the opportunity to speak. My name is Jeff White, and I serve as the chief of emergency services for Richmond and Lenox Township in Northern Macomb and Saint Clair County. My agency also serves the state department of corrections facility located in Lenox Township. Additionally, I have the honor of serving as the legislative chair for the Michigan Association of Ambulance Services. Our association represents nearly a hundred EMS agencies that cover 85% of Michigan's land mass. These agencies provide about three quarters of the ambulance transportation that occurs in this state.
Through this process, there are now a few familiar faces here. So if we sound a little repetitive, our message hasn't changed much for you. Having said that, as an instructor and an educator as well, I'm told that adult learners have to hear things three times before they completely understand them. And I saw somebody suggest maybe five. If only it was that simple. So we're we're hopeful since this is our third committee, we're making some third time in front of committee, we're making some progress. Let me explain our challenge because ours is somewhat different than other health care providers.
By state statute and law, our agencies are required to respond to all emergency calls within our geographic response areas. Even if it wasn't the law, it would be morally and ethically obligated to go. We respond because that's what public safety professionals do. But again, I need to stress that the state law requires we respond and our failure to respond would result in the revocation of our life support agency licenses to provide service within our communities. This is unlike
pharmacies, doctors, optometrists who can choose whether or not to subcontract with the state to serve the prison population. EMS agencies, again, are mandated by law to respond. We don't have the option to say no. I find it a bit disingenuous to suggest we have a subcontractor arrangement with Wellpath. When the only pathway made available to us by the state for treating incarcerated individuals was a vendor that the state told us we had to build. So I didn't know that that's really a subcontractor arrangement. That's a no option arrangement.
The gentleman that spoke before mentioned that the state had met its obligations to the contractor to to Wellpath or Grand Prairie. One of the representatives stole my thunder a little bit by saying, but we haven't met our obligations to our taxpayers who are ending up footing the bill for unpaid prison cost and causing reductions in our service and response. Separately, and I think recently published, I learned there's an internal state document. You'll have to forgive me, I'm unfamiliar with all of the state bureaucracies from the OAG.
But as I saw that document in the last day, it seemed to make clear there had been inadequate oversight of the well path contract. So this failure is now forcing EMS agencies like mine to reduce staffing, delay equipment purchases, and defer critical maintenance. These cuts are not theoretical any longer. They are happening day to day. We respond to the state prison in my community frequently. In fact, the facility that we serve has a greater population than some of the small cities where we provide service. And without compensation,
it's just not inmates who are at risk, it's the residents of our communities who've lost a part of their safety net that they, and I suspect all of you, believe is intact. If we were allowed to ask questions of this body, and Madam Chair, I know I am not. So rhetorically, let me ask, why is this so difficult to understand? Do you understand that we're not looking for a rate increase or funding for some new program? We're just looking to get paid for services that we that we provided in good faith. And if it isn't difficult to understand,
why hasn't the state done the right thing and paid our local public safety heroes for the service we are required by law to provide? Recently, this has all become like peeling back an onion, I read someone in government said we should wait for a lawsuit filed by the state against their insolvent provider to work itself out and eventually, we might get paid. I learned through talking to my township's legal counsel that the current state law has been stayed, put on indefinite hold. There is no state action currently.
It is pending federal bankruptcy proceedings, which will take years to litigate and at the end of which we may receive fractions of pennies on the dollar. You see based on information that is public, Wellpath is a firm with $100,000,000 in assets and $640,000,000 in debt and we are unsecured creditor. In English, that means quarters of cents on a dollar. As I grow older, I've learned to appreciate the little things, Like the chance to sit in this remarkable chamber,
in this beautiful building, in a seat that few citizens ever get to spend time on. But as I look around this room, I can't help but wonder if the state had failed to pay the Board of Power and Light for nearly two years, would we all be sitting here in the dark? With that, I'll turn things over to my colleagues. Thank you. Excuse me. My name is Ron Slagle. I'm the president and CEO for Emergent Health Partners, which is the parent organization over four nonprofit ambulance services in Southern Michigan, Huron Valley Ambulance,
Jackson Community Ambulance, Life Care Ambulance, and Monroe Community Ambulance. We provide EMS services to state prison complexes in Jackson, Milan, Lakeland, and Ypsilanti. Our HVA organization is owed $430,000 Our Jackson operation is owed $630,000 and LifeCare is owed $193,000 These are for claims that remain unpaid from 2023 and 2024 and we know it's now 2025.
As my colleague just pointed out, waiting for federal bankruptcy and then the state litigation and then we'll probably not get anything anyway, there's no point. This has an impact on our services. I have had to cancel an order for a large amount of medical equipment, which we were used to serve not just our prisons, but our local communities because of this failure to pay. This has impacted services all across the state. I want to recognize in the audience Renee Gray, the, director of the Kinross EMS. She testified in front of the Corrections and Judiciary Committee on the significant impact this
failure has impacted their daily operations, including the fact they have ten days of operating cash where they are the sole provider in this rural Upper Peninsula community. They've had trouble attracting new EMTs and paramedics because those EMTs and paramedics are concerned if they can't get paid, will I get paid? And this is impacting response times if you're short staffed that it's happening today. We acknowledge the state has paid their contractor, but as we know, Wellpath has not paid us. We've talked about the litigation and the impacts it has if we wait to do
this. The reality is this legal maneuvering will take years and with little results for us. Is the state of Michigan gonna pay us interest while we wait for years? In the remote chance that we actually get any money through those legal processes, we would certainly as providers return that to the state. But what we're asking is for action by the state. We understand the need to investigate how this happened and how to prevent it from happening again in the future, but don't hold EMS hostage while you undertake this review. We have been raising this alarm for well over a year.
I think everyone understands the issues we are here talking about this morning. As we've talked to individual legislators over the past weeks and months, I have not met one who said, Yes, EMS needs to be paid, we need to resolve this. But we need to take action. We can't just keep talking about it and having sympathy and support for our EMS and first responders, we need action by the state to get us that money that it's owed us. People often ask, what keeps you up at night? I will tell you. This does. I was awake this morning at four a.
M. Not because I was nervous to testify. I've been up here many times before. This is a passionate issue. How do I address my staff going, I don't know how we're gonna come up with more money for for for razors neck this fall. I don't know because we're owed by four companies $1,200,000 We are one of Michigan's largest EMS agencies. We're responsible for over a million Michigan residents when they call 911. We can't just keep talking about this, we gotta take action. I urge you to take action and get EMS out of the middle.
We provide, we provided emergency care to inmates of Michigan's prison. It was noted that Michigan constitutionally is required to provide healthcare to take care of prisoners. We provided that care. We need to be paid. We are vastly overdue for this payment. It's time for the legislature to do the right thing and pay us for our services that we have rendered. Thank you. And I'll turn on my microphone. I'm not as versed at testifying in a committee hearing like this as my colleagues are. My name is Russ Adams. I'm honored to be the director of Lapeer County EMS. I wanna talk to you a little bit about my agency,
my involvement in this circumstance and how it affects our communities. That's Lapeer County EMS. I'm a municipal authority owned by 13 cities and townships in my county. Many of you individuals started out in local politics, maybe as clerks, maybe as supervisors. It's these agencies, these municipalities that own my agency. We are a public service. It's interesting to say, as I heard, that Wellpath or Grand Prairie, as their parent company is,
was to create a ecosystem of service around the state penitentiaries that they served. No one ever approached my agency. Not one. I am not a subcontractor for these services to the Michigan Department of Corrections. Neither is my agency. We never solicited to provide this care. And when the correctional facility in my community determined to open a medically fragile unit in my community, serving hundreds of inmates, I raised the question to that community organization,
is this going to impact our services? Do we have the resources required to care emergently, not preparedly, but emergently for these inmates? I was told it would not impact my community service. My agency is currently owed a hundred and $38,000. In the grand scheme of the $50,000,000 that we're speaking on, that's a small portion. I would hope that any of you would be able to remember your small municipal
budgets, before you became responsible for the vast budget that you are today. As I hear my tone increasing, I can hear advisors before saying, Russ, don't let angry Russ show up. Be passionate, but don't be offensive. I'm trying to speak with passion and and empathy to not only your role, but my organization's role. A hundred and $38,000 is 6% of my revenue. Could any of you expect to take a 6% cut?
Is the Michigan Department of Corrections willing to take a 6% cut in their budget today, in order to honor this? So it is a broad, vast dollar amount that we're speaking on, but it reflects individual municipalities and individual care. The last thing that I want you to focus on when I speak about that, it is not immediately the community surrounding the prison that is affected. My colleagues spoke about the number of residents and citizens within our state that are
affected by this. I serve 670 square miles, 27 separate municipalities and 90,000 residents. Very, very similar to a representative's district. Those residents, let's say in North Branch or Burlington Township, the very north edge of my of my community, are immediately impacted by this failure. The state of Michigan has filed suit. We've heard about the length and breadth of what that's gonna take.
But I need you to hear something else. The hundred and $40,000 excuse me, I exaggerated. It's a hundred and $37,785. That amount is the equivalent of nearly three townships millage assessment, or 1,400 homes. Their tax dollars have gone to provide this care that Wellpath has chose not to distribute. Ladies and gentlemen of this committee, I'm a tax payer in this state as well. I'm furious that my tax dollars have been exploited and taken.
I am furious, but I cannot go to my citizens, my community, my local elected representatives and say, well, sometime in three to five years, we may see pennies on the dollar. This is a bill that the Michigan State Legislature is responsible for. I hope and pray that you hold those accountable that are negligent in this act. I'm sorry for my tone if it became assertive, but I am passionate about this. We need to act.
6% of my budget disappeared. My colleague in the in the in the auditorium here, 10% of their budget for rural EMS care in The United in in the UP. I thank you for your time. We are available as a team for any questions you may ask. Thank you very much. And, one, I wanna thank you for your service, in protecting us and the willingness to do that, each and every one of us and the people throughout the state of Michigan. This is a very difficult situation. I could I certainly have my own personal opinions that I won't state here.
But, I do want you to know we are working on this. While you said this is a yearlong program, please know that, it is something, in my opinion, should have been fixed last year. But here we are, and we are trying to adjust the problem. You have my commitment and I think the commitment of the Appropriations Committee that we are going to do that. We do have to hear testimony from two others that are affected by this, and then we need to get back to our DNR issue. We have another committee coming into the meeting. So thank you again. Appreciate it. I do believe your passion is certainly necessary and real.
Thank you. Next up, we will be hearing from Adam Carlson from Michigan Health and Hospital Association and also via Zoom by Helen Johnson from the Helen Newberry Joy Hospital. And I am going to ask you to keep your comments, each of you, just to one or two minutes. And I think that we could spend several hours here more, but I think we definitely understand the full impact of this issue. Absolutely. Thank you, Madam Chair, and thank you especially to, the gentlemen who testified before and their passion for this.
I know my members absolutely agree with that passion. I'm Adam Carlson here on behalf of the Michigan Health and Hospital Association. We represent every single hospital in the state. Similar to our ambulance colleagues, not only do we have a moral obligation to care for folks, we also have a legal obligation. Federal EMTALA laws say that we care for everyone who shows up regardless of who they are or where they come from. Many people in organizations across the state rely on hospitals for the delivery of health care. Department of Corrections is no exception. And in fact, hospitals are required to include prison populations in their community service and emergency preparedness plans.
Department of corrections, as everyone has now heard, contracted with Wellpath to deliver these services. Hospitals had no say in that. We didn't get to choose the con the contractor. We were not consulted. Unfortunately, they stopped paying. From January 2022 through May of twenty twenty four, Michigan hospitals provided $35,000,000 in health care services that has been unreimbursed. We have received no money for those services. Again, $35,000,000. Wellpath entered bankruptcy court. As the previous gentleman noted, we are also last on the list to provide to get reimbursement through that process.
We have very little hope of ever receiving any reimbursement. We know the state is suing. We hope they're successful, but a hospital's budget and its community members should not have to wait for the lengthy legal process to play out, and we'll commit to repaying any extra funds received. It's unreasonable to ask hospitals to pay and provide free services to Michigan prisoners and make up the failures of a state contractor. These costs are now uncompensated care and add to the already large burden on other payers in our health care system. The outstanding debts are already impacting access to care,
and that's why I wanna invite up now, via Zoom, Helen Johnson, CEO of Helen Newberry Joy, talk more about her specific piece of this 35,000,000 problem for hospitals. Good morning, Chair Bolin. I will be, as brief as I can be. And members of the committee, thank you, Mr. Carlson, for contacting me to share this issue with you. We are having a difficult time hearing you. I'm sorry. I will get closer to the next question. Much better. Thank you. Better? Thank you. Good morning, Chair Boland and members of the committee. Thank you, Mr. Carlson, for contacting me to share the impact this issue is having on hospitals across the
state by using Helen Newberry Joy Hospital as an example. My name is Helen Johnson, and it's my privilege to serve as the CEO at Helen Newberry Joy Hospital. I'd like to share a little bit about this organization and community to set the tone for my remarks. This critical access hospital has 25 beds, 39 long term care beds, one operating room, and five emergency department rooms. We are a proudly independent hospital that has served the Luce County area and all visitors to our beautiful part of the state for over sixty five years. Luce County has a population of just over 6,000
people, and 20.2% of them live at or below the poverty level. Helen Newberry Joy is the third largest employer in our area. Newberry Correctional Facility is the second largest employer in our area and the prison houses approximately 1,000 inmates. Our hospital and prison are key economic engines for this area. The hospital is a great partner to the local prison, assuring their inmates, fellow Michiganders, are receiving safe, high quality care. There are a couple hundred visits each year to our facility from inmates who are
accompanied by our hardworking prison guards. Our problems began when a poorly researched state contract with a with a company called Well Path. It's already been discussed that this, Nashville, Tennessee based Grand Prairie Health Services is providing care at $590,000,000 over five years. This private equity company works in partnership with Wellpath and is one of the largest prison health providers in the country. I was a little disturbed to hear that, there was such an extensive competitive
solicitation process when Wellpath had widely reported issues in 2019 where they were accused of contributing to seventy deaths in the preceding four years. They are currently fighting more than 1,500 lawsuits. Thankfully, the state ended that contract in 2024, but that was after Wellpath and Grand Prairie had taken $366,000,000 of taxpayer money to provide care to Michigan inmates. For the hospitals who had a duty to care for these members of our community, we were shorted $35,000,000
I remember hearing for the first time from our accounting department that my hospital was owed close to $800,000 from this company called Wellpath. I started digging in to try and understand what impact that would have on us. What I found out was each year, our hospital is considered successful. If we can achieve a margin 2% higher than our expenses, this would be about $350,000 per year. We use that money to make investments in equipment, the building, and most importantly, dollars 800,000 or most importantly, our staff. The $800,000
Helen Newberry Joy Hospital is still owed would be potentially three years of our margin. To put it in people terms, it represents wages for approximately 10 nurses. That is 25% of our nursing staff. Our staff and our community are counting us counting on us not only for health care, but for the financial stability and a struggling environment. We are not asking for any extra money. We just wanna be paid for the care we have already provided in good faith. The hospitals of Michigan had no say in contracting with a for profit,
out of state company who holds us at arm's length through the shenanigans of bankruptcy. If you go to Wellpath's website, in an article intended to assure their investors, it states WellPath expects its operations to continue as usual through the court supervised sale process. The current executive team remains in place, and the process is not expected to impact WellPath and Recovery Solution employees. That sounds pretty good for them. I urge you to provide the 35,000,000 to pay for care provided by Michigan hospitals. The $800,000
that is still owed to my little hospital will help me make the same assurances to my staff and community that Wellpath has made to their investors. Thank you for this opportunity to share my heartfelt comments on this issue. Thank you very much. And again, to the committee members and to those testifying, I'm sorry that we can't entertain questions from the committee. But we do very much appreciate you being here and explaining a little bit more in detail in this forum with all of us here your plight. And we stand with you and are going to continue to fight to make sure
these bills are paid. With that, we are going to return to House Bill 4,392. And Representative Beeson, you have an amendment. Would you like to speak to your amendment? Yes. Thank you, Chair, for the quick amendment. And, I would like to, because this is already the practice with the Michigan Department of Natural Resources that I want to, make sure that none of our trust fund is used for, scale solar or development of wind in this. And I know that you guys have said that this is already the practice. I just like to make sure to reassure that all the people know that we're
not going to be seeing solar pipe up with these great, great projects all over the state are because it doesn't matter whether if you're ORV or if you're hunting, there's nothing worse than the dust on a solar. I have a whole solar system at my cabin and there are some issues that I deal with every day that's off the grid And these are some of the things and I'm looking at this going, all these acres. Right? And even if we put the trails in, boy, it doesn't take very long if we have a, off road vehicle making the dust not to get the large scale solar. And I look at that as,
like, okay. We can either get rid of the vehicles or, just make it a walking path. So I'm excited because of this. I wanna move my amendment. Thank you. Mr. Mays or Mr. Summer, do you have anything to add to that? Okay. Thank you. Clerk, please take the vote on the amendment. On the motion to amend, Chair Bolin? Yes. Representative Zmadeck? Yes. Green? Yes. Trancanzarno? Kelly? Markkanen? Yes. Mueller? Yes. Morton? Yes. Cavitt? Yes. Desana? Yes. Coon? Yes. Robinson? Yes. Farhat? Yes. O'Neill? Yes. Rogers? Pass.
Steckloff? Yes. Glanville? Yes. Edwards? Yes. Martis? Pass. McKinney? Yes. Morgan? No. Price? No. Snyder? No. Longjohn? Pass. Item chair, you have 17 yeas, three nays, nine passed. The amendment is adopted. Thank you. Representative Beeson moves to report House Bill 4,392 as amended as an H1 substitute. Will the clerk please call the roll? On the motion to report, Chair Bolin? Yes. Representatives Maddock? Yes. Green? Yes. Jenkins Arno? Yes. Kelly? Yes. Markkanen? Yes. Schall? Yes. Van Werkom? Yes. Biesen? Yes.
Roth? Yes. Kavett? Yes. Desana? Yes. Kuhn? Yes. Steele? Here. Robinson? Yes. Farhat? Yes. O'Neil? Yes. Rogers? Yes. Steckloff? Yes. Glanville? Yes. Edwards? Yes. Martis? Yes. McKinney? Yes. Morgan? Yes. Price? Yes. Snyder? Yes. Longjohn? Yes. Madam Chair, you have 29a0 nay, zero pass. House Bill 4,392 is reported with the recommendation as amended as a new substitute. Thank you. Seeing no further business, we come before the committee. The committee is adjourned.