SB 256-PHYSICIAN NEGOTIATIONS WITH HEALTH INSURER CHAIRMAN KELLY announced that two proposed amendments are before the committee; one sponsored by Senator Pete Kelly and the other by the Department of Law (DOL). SENATOR MILLER moved to adopt the amendment proposed by Senator Pete Kelly. That amendment reads as follows. A M E N D M E N T OFFERED IN THE SENATE BY SENATOR PETE KELLY TO: CSSB 256(FIN) Page 4, lines 10 - 11: Delete ", or a particular physician type or specialty" Page 4, line 15: Delete "and" Insert a new paragraph to read: "(7) the attorney general may limit the percentage of practicing physicians represented by an authorized third party; however, the limitation may not be less than 30 percent of the market of practicing physicians in the geographic service area or proposed geographic service area; when determining whether to impose a limitation described under this paragraph, the attorney general shall consider the provisions described under (h), (i), and (j) of this section; this paragraph does not apply if the market of practicing physicians in the geographic service area or proposed geographic service area consists of 40 or fewer individuals; and" Renumber the following paragraph accordingly. SENATOR ELLIS objected to the adoption of the amendment. CHAIRMAN KELLY noted that unless the DOL amendment to Senator Kelly's amendment is offered at this time, the vote will only pertain to Senator Kelly's amendment. SENATOR ELLIS moved to adopt the DOL amendment which reads as follows. A M E N D M E N T - VERSION 2 OFFERED IN THE SENATE BY DEPARTMENT OF LAW TO: CSSB 256(FIN) [Page 4, lines 10-11: Delete ", or a particular physician type or specialty"] Page 4, line 15: Delete "and" Insert a new paragraph to read: "(7) the attorney general may limit the percentage of practicing physicians or a particular physician type or specialty represented by an authorized third party; [however, the limitation may not be less than 30 percent of the market of practicing physicians in the geographic service area or proposed geographic service area;] when determining whether to impose a limitation described under this paragraph, the attorney general shall consider the provisions described under (h), [(i), and (j)] of this section; [this paragraph does not apply if the market of practicing physicians in the geographic service area or proposed geographic service area consists of 40 or fewer individuals;] and" Renumber the following paragraph accordingly." SENATOR MILLER objected to the adoption of DOL's amendment. SENATOR PEARCE asked for an explanation of the amendment. SENATOR PETE KELLY, sponsor of SB 256, explained that the problem with DOL's amendment is that it essentially guts the bill. It turns policy decisions over to DOL. The wording of the amendment will allow DOL to declare that no one is eligible to participate in the negotiations. DOL's amendment gives DOL way too much authority over the negotiations. MS. JULIA COSTER, Assistant Attorney General, Department of Law, responded that the first part of DOL's amendment actually returns the bill to what it was originally. On page 4, subsection (6), the bill originally allowed the number of physicians to be limited to 30 percent, both in the general and specialty markets. The second part of the DOL amendment allows the physician group to be limited not only on the entire market but also with the specialty market which was in subsection (6) also. She thought that Senator Pete Kelly was referring to the deletion of the limit in DOL's amendment. She did not agree that it guts the bill; it allows the Attorney General to have the percentage of physicians be less than 30 percent if it meets the criteria under subsection (h), which means the Attorney General would determine whether or not the anti- competitive effects of a larger group of people outweigh the benefit. It would allow the Attorney General to engage in a balancing test. That same provision is required under the Texas legislation. Number 357 SENATOR PETE KELLY asked that Mike Ford, the legal drafter of SB 256, address DOL's amendment. He noted that Mr. Ford provided committee members with his analysis of DOL's objections to the bill. MR. MIKE FORD, Division of Legal Services, Legislative Affairs Agency, stated that after reading DOL's amendment, he cannot see how one can maintain that it does not allow the Attorney General to go to a zero percentage. It does not set up a mechanism that would limit the Attorney General's authority. It removes the bottom cap that prevents the limitation from being less than 30 percent. He agreed that it leaves in the consideration of subsection (h) but that does not preclude the Attorney General from determining that a percentage may be one or two percent. SENATOR MILLER continued to object to DOL's amendment. The motion to adopt DOL's amendment failed with Senators Leman, Miller and Pearce voting "nay," and Senators Ellis and Kelly voting "yea." SENATOR LEMAN moved to adopt Senator Pete Kelly's amendment. There being no objection, the motion carried. SENATOR LEMAN moved to calendar all Senate versions of SB 276 at the Chairman's discretion. SENATOR ELLIS objected. The motion to calendar all versions of SB 276 carried with Senators Miller, Pearce, Leman and Kelly voting "yea," and Senator Ellis voting "nay."