To amend part B of title XVIII of the Social Security Act to assure equitable payment for physicians services under the Medicare Program.

Summary: Medicare Physician Payment Reform Act of 2005 - Amends title XVIII (Medicare) of the Social Security Act to provide that the update to the single conversion factor in the formula for payment of physicians' services for 2006 and 2007 shall not be less than 1.5%.

Directs the Medicare Payment Assessment Commission (MEDPAC) to report to Congress on approaches to controlling aggregage spending for physician services in order to maximize efficiency and maintain beneficiary access to high-quality care under Medicare part B (Supplementary Medical Insurance).

Repeals Medicare cost containment provisions under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicare Physician Payment Reform 
Act of 2005''.

SEC. 2. MINIMUM UPDATE FOR PHYSICIANS' SERVICES FOR 2006 AND 2007.

    (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 
paragraph:
            ``(6) Update for 2006 and 2007.--The update to the single 
        conversion factor established in paragraph (1)(C) for 2006 
        shall not be less than 1.5 percent and for 2007 shall not be 
        less than 1.5 percent.''.
    (b) Conforming Amendment.--Section 1848(d)(4)(B) of the Social 
Security Act (42 U.S.C. 1395w-4(d)(4)(B)) is amended, in the matter 
preceding clause (i), by striking ``and paragraph (5)'' and inserting 
``paragraphs (5) and (6)''.
    (c) Not Treated as Change in Law and Regulation in Sustainable 
Growth Rate Determination.--The amendments made by this section shall 
not be treated as a change in law for purposes of applying section 
1848(f)(2)(D) of the Social Security Act (42 U.S.C. 1395w-4(f)(2)(D)).
    (d) Premium Transition Rule.--Notwithstanding any other provision 
of law--
            (1) 2006.--
                    (A) Premium.--Nothing in this section shall be 
                construed as modifying the premium previously computed 
                under section 1839 of the Social Security Act (42 
                U.S.C. 1395r) for months in 2006.
                    (B) Government contribution.--In computing the 
                amount of the Government contribution under section 
                1844(a) of the Social Security Act (42 U.S.C. 1395w(a)) 
                for months in 2006, the Secretary of Health and Human 
                Services shall compute and apply a new actuarially 
                adequate rate per enrollee age 65 and over under 
                section 1839(a)(1) of such Act (42 U.S.C. 1395r(a)(1)) 
                taking into account the provisions of this section.
            (2) 2007.--
                    (A) Premium.--The monthly premium under section 
                1839 of the Social Security Act for months in 2007 
                shall be computed as if this section had not been 
                enacted.
                    (B) Government contribution.--The Government 
                contribution under section 1844(a) of the Social 
                Security Act for months in 2007 shall be computed 
                taking into account the provisions of this section, 
                including subparagraph (A).

SEC. 3. MEDPAC REPORT ON MEDICARE SPENDING ON PHYSICIAN SERVICES.

    (a) In General.--Not later than March 15, 2007, the Medicare 
Payment Assessment Commission shall submit to Congress a report (in 
this section referred to as the ``report'') on approaches to 
controlling aggregate spending for physician services in order to 
maximize efficiency and maintain beneficiary access to high-quality 
care under part B of the Medicare program.
    (b) Report Details.--
            (1) The report shall include recommendations on--
                    (A) the appropriate categorization or level of 
                analysis (such as group practice, hospital medical 
                staff, type of service or specialty, geographic area, 
                outliers, or any other approach or combination of 
                approaches);
                    (B) standards to assess volume growth; and
                    (C) how volume control policies should be 
                implemented, including the extent to which the policies 
                should be codified in law.
            (2) The report shall address the appropriate level of 
        discretion for the Secretary of Health and Human Services to 
        make necessary adjustments to alter physician payments or 
        otherwise intervene to affect provider behavior.
            (3) The report shall also include findings and 
        recommendations on the work of the Centers for Medicare & 
        Medicaid Services and the Relative Value Update Committee 
        (RUC), including--
                    (A) whether the current pricing system accurately 
                reflects resource costs;
                    (B) whether adjustments should be made to practice 
                expense to better estimate marginal cost;
                    (C) identification and review of overvalued 
                services;
                    (D) the effectiveness of the five-year review 
                process;
                    (E) comparison of relative values among categories 
                of services;
                    (F) the ability for such Centers to develop and 
                utilize external resources (including as medical 
                directors from carriers or health plans) to determine 
                appropriate pricing;
                    (G) strategies that should be available to such 
                Centers to make adjustments to payments when necessary;
                    (H) any additional recommendations for reforming 
                the current pricing system, such as whether bases other 
                than resource costs should be considered in determining 
                the relative value of services in the physician fee 
                schedule; and
                    (I) the extent to which alternative payment methods 
                should be used for certain types of providers or 
                patients (such as payment by episode and payment by 
                capitation or partial capitation).
            (4) The report shall evaluate the effect that Medicare and 
        private plan payment policies have on the development and 
        maintenance of the physician workforce.

SEC. 4. REPEAL OF MEDICARE COST CONTAINMENT PROVISIONS.

    Subtitle A of title X of the Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003 is repealed and the 
provisions of law amended by such subtitle are restored as if such 
subtitle had not been enacted.