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 2005 - Amends title XVIII (Medicare) of the Social Security Act with respect to payment for physicians' services to: (1) eliminate the sustainable growth rate payment update system; and (2) establish in its place an update to the single conversion factor for 2006 of at least 2.7 percent, and a formula for an update to the single conversion factor for years beginning with 2007.

Requires the Secretary of Health and Human Services, in calculating the formula for the single conversion factor, to establish an input price index and estimate annually a productivity adjustment factor.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Preserving Patient Access to 
Physicians Act of 2005''.

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:
            ``(6) Update for 2006.--The update to the single conversion 
        factor established in paragraph (1)(C) for 2006 shall not be 
        less than 2.7 percent.
            ``(7) Update for years beginning with 2007.--
                    ``(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 2007 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 
                        2007) 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 2007), 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 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, 2002, and 2003, multiplied 
                        by the update (established under paragraph (4)) 
                        for the year involved;
                            ``(iii) for 2004 and 2005, multiplied by 
                        the update (established under paragraph (5)) 
                        for that year;
                            ``(iv) for 2006, multiplied by the update 
                        (established under paragraph (6)) for that 
                        year; and
                            ``(v) for 2007 and each subsequent year, 
                        multiplied by the update (established under 
                        paragraph (7)) 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, 2001, and 2002, the 
                                update determined under paragraph (4) 
                                for such succeeding year and the 
                                allowed expenditures under such 
                                paragraph for the succeeding year;
                                    ``(III) of 2003 and 2004, the 
                                update determined under paragraph (5) 
                                for 2004 and 2005;
                                    ``(IV) of 2005, the update 
                                determined under paragraph (6) for 
                                2006; and
                                    ``(V) of 2006 and each subsequent 
                                year, the update determined under 
                                paragraph (7) for the succeeding year; 
                                and'';
            (3) in subsection (d)(1)(E)(ii), by inserting ``(for years 
        before 2006)'' after ``the sustainable growth rate'';
            (4) in subsection (d)(4)--
                    (A) in the heading, by striking ``Years Beginning 
                With 2001'' and inserting ``2001, 2002, and 2003'' ;
                    (B) in subparagraph (A), in the matter preceding 
                clause (i), by striking ``for a year beginning with 
                2001'' and inserting ``for 2001, 2002, and 2003'';
                    (C) in subparagraph (C)(iii), by striking ``years 
                beginning with 2000.--The allowed expenditures for a 
                year (beginning with 2000)'' and inserting ``2000, 
                2001, and 2002.--The allowed expenditures for each of 
                years 2000, 2001, and 2002''; and
                    (D) in subparagraph (E), by striking ``beginning 
                with 2001'' and ``for a year beginning with 2001'' and 
                inserting ``2001, 2002, and 2003'' and ``for 2001, 
                2002, and 2003'', respectively; and
            (5) in subsection (f)--
                    (A) in paragraph (1)(B), by striking ``November 1 
                of each succeeding year'' and inserting ``November 1 of 
                each year before 2005'';
                    (B) in paragraph (2), by inserting ``and ending 
                with 2003'' after ``beginning with 2000'';
                    (C) in paragraph (3), by striking ``for a year 
                beginning with 2001'' and inserting ``for 2001, 2002, 
                and 2003''; and
                    (D) in paragraph (3)(C), by striking ``for 2003 and 
                succeeding years'' and inserting ``for 2003'' and by 
                striking ``a year after 2002'' and inserting ``2003''.