To amend part B of title XVIII of the Social Security Act to improve payments for physicians' services and other outpatient services furnished under the Medicare Program, and for other purposes.

[AI summary unavailable — showing source text] Amends title XVIII (Medicare) of the Social Security Act (SSA) to revise updates for physicians' services for 2003 through 2005. Mandates that the Medicare Payment Advisory Commission submit to Congress a described report on the effect of refinements to the practice expense component of payments for physicians' services in the case of services for which there are no physician work relative value units, after the transition to a full resource-based payment system in 2002. Provides that, for purposes of payment under the physician fee schedule, for physicians' services furnished during 2004, in no case may the work geographic index otherwise calculated be less than 0.985. Amends SSA title XVIII to replace provisions under Medicare part B for a limited number of demonstration projects for competitive acquisition of items and services with provisions for a permanent program for the establishment of programs for competitive acquisition of described items and services, including provisions for a demonstration project for application of competitive acquisition to clinical diagnostic laboratory tests. Substitutes a new phase-in methodology for the ambulance fee schedule amount portion of t…