To amend title XVIII of the Social Security Act to reform the Medicare physician payment update system through repeal of the sustainable growth rate (SGR) payment update system.

Summary: Preserving Patient Access to Physicians Act of 2002 - Amends title XVIII (Medicare) of the Social Security Act, with respect to the Medicare physician payment update system, to: (1) specify the update to the single conversion factor for 2003; (2) prescribe an update for years beginning with 2004; (3) direct the Secretary of Health and Human Services to establish an index that reflects the weighted-average input prices for physicians' services for a year; and (4) require the Secretary to estimate annually a productivity adjustment factor reflecting estimated growth in multifactor productivity attributable to both labor and nonlabor factors. (Thus eliminates the sustainable growth rate (SGR) payment update system).

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Preserving Patient Access to 
Physicians Act of 2002''.

SEC. 2. REFORM OF THE MEDICARE PHYSICIAN PAYMENT UPDATE SYSTEM THROUGH 
              ELIMINATION OF THE SUSTAINABLE GROWTH RATE (SGR) PAYMENT 
              UPDATE SYSTEM.

    (a) In General.--Section 1848(d) of the Social Security Act (42 
U.S.C. 1395w-4(d)) is amended by adding at the end the following new 
paragraphs:
            ``(5) Update for 2003.--The update to the single conversion 
        factor established in paragraph (1)(C) for 2003 is 2.5 percent.
            ``(6) Update for years beginning with 2004.--
                    ``(A) In general.--Unless otherwise provided by 
                law, subject to the budget-neutrality factor determined 
                by the Secretary under subsection (c)(2)(B)(ii), the 
                update to the single conversion factor established in 
                paragraph (1)(C) for a year beginning with 2004 is 
                equal to the product of--
                            ``(i) 1 plus the Secretary's estimate of 
                        the percentage change in the value of the input 
                        price index (as provided under subparagraph 
                        (B)(ii)) for the year (divided by 100); and
                            ``(ii) 1 minus the Secretary's estimate of 
                        the productivity adjustment factor under 
                        subparagraph (C) for the year.
                    ``(B) Input price index.--
                            ``(i) Establishment.--Taking into account 
                        the mix of goods and services included in 
                        computing the medicare economic index (referred 
                        to in the fourth sentence of section 
                        1842(b)(3)), the Secretary shall establish an 
                        index that reflects the weighted-average input 
                        prices for physicians' services for a year. 
                        Such index shall only account for input prices 
                        and not changes in costs that may result from 
                        other factors (such as productivity).
                            ``(ii) Annual estimate of change in 
                        index.--The Secretary shall estimate, before 
                        the beginning of each year (beginning with 
                        2004) the change in the value of the input 
                        price index under clause (i) from the previous 
                        year to the year involved.
                    ``(C) Productivity adjustment factor.--The 
                Secretary shall estimate, and cause to be published in 
                the Federal Register not later than November 1 before 
                the beginning of each year (beginning with 2004), a 
productivity adjustment factor that reflects the Secretary's estimate 
of growth in multifactor productivity in the national economy, taking 
into account growth in productivity attributable to both labor and 
nonlabor factors. Such adjustment may be based on a multi-year moving 
average of productivity (based on data published by the Bureau of Labor 
Statistics).''.
    (b) Conforming Amendments.--Section 1848 of the such Act (42 U.S.C. 
1395w-4) is amended--
            (1) in subsection (d)(1)(A), by striking ``subparagraph 
        (B))'' and all that follows and inserting the following: 
        ``subparagraph (B))--
                            ``(i) for years before 2001, adjusted by 
                        the update (established under paragraph (3)) 
                        for the year involved;
                            ``(ii) for 2001 and 2002, multiplied by the 
                        update (established under paragraph (4)) for 
                        the year involved;
                            ``(iii) for 2003, multiplied by the update 
                        (established under paragraph (5)) for that 
                        year; and
                            ``(iv) for 2004 and each subsequent year, 
                        multiplied by the update (established under 
                        paragraph (6)) for the year involved.'';
            (2) by striking clause (i) of subsection (d)(1)(E) and 
        inserting the following:
                            ``(i) cause to have published in the 
                        Federal Register not later than November 1--
                                    ``(I) of 2000 and each subsequent 
                                year, the conversion factor which will 
                                apply to physicians' services for the 
                                succeeding year;
                                    ``(II) of 2000 and 2001, the update 
                                determined under paragraph (4) for such 
                                succeeding year and the allowed 
                                expenditures under such paragraph for 
                                the succeeding year;
                                    ``(III) of 2002, the update 
                                determined under paragraph (5) for 
                                2003; and
                                    ``(IV) of 2003 and each subsequent 
                                year, the update determined under 
                                paragraph (6) for the succeeding year; 
                                and'';
            (3) in subsection (d)(1)(E)(ii), by inserting ``(for years 
        before 2003)'' after ``the sustainable growth rate'';
            (4) in subsection (d)(4)--
                    (A) in the heading, by striking ``years beginning 
                with 2001'' and inserting ``2001 and 2002'';
                    (B) in subparagraph (A), in the matter preceding 
                clause (i), by striking ``for a year beginning with 
                2001'' and inserting ``for 2001 and 2002'';
                    (C) in subparagraph (C)(iii), by striking ``Years 
                beginning with 2000.--The allowed expenditures for a 
                year (beginning with 2000)'' and inserting ``2000 and 
                2001.--The allowed expenditures for each of years 2000 
                and 2001'';
                    (D) in subparagraph (E), by striking ``beginning 
                with 2001'' and ``for a year beginning with 2001'' and 
                inserting ``2001 and 2002'' and ``for 2001 and 2002'', 
                respectively; and
                    (E) in subparagraph (F), by striking ``subparagraph 
                (A)'' and all that follows and inserting ``subparagraph 
                (A), for each of 2001 and 2002, of -0.2 percent.''; and
            (5) in subsection (f)--
                    (A) in paragraph (1)(B), by striking ``November 1 
                of each succeeding year'' and inserting ``November 1, 
                2001,'';
                    (B) in paragraph (2), by inserting ``and ending 
                with 2002'' after ``beginning with 2000'';
                    (C) in paragraph (3), by striking ``for a year 
                beginning with 2001'' and inserting ``for 2001 and 
                2002'';
                    (D) by striking subparagraph (C) of paragraph (3); 
                and
                    (E) in paragraph (4)(C)(ii), by inserting ``and 
                ending with 2002'' after ``beginning with 2000''.
    (c) MedPAC Report on Payment for Physicians' Services.--Not later 
than 1 year after the date of the enactment of this Act, the Medicare 
Payment Advisory Commission shall submit to Congress a report on the 
effect of refinements to the practice expense component of payments for 
physicians' services, after the transition to full resource-based 
payment system in 2002, under section 1848 of the Social Security Act 
(42 U.S.C. 1395w-4) that examines the following matters by physician 
specialty:
            (1) The effect of such refinements on payment for 
        physicians' services.
            (2) The interaction of the practice expense component with 
        other components of and adjustments to payment for physicians' 
        services under such section.
            (3) The appropriateness of the amount of compensation by 
        reason of such refinements on physicians.
            (4) The effect of such refinements on access to care by 
        medicare beneficiaries to physicians' services.
            (5) The effect of such refinements on physician 
        participation under the medicare program.