To amend title XVIII of the Social Security Act to improve payments for home health services and for direct graduate medical education, and for other purposes.

Title VI (sic): Provisions Relating to Parts A and B - Subtitle A: Home Health Services - Amends title XVIII (Medicare) of the Social Security Act (SSA) to: (1) eliminate the 15 percent reduction in payment rates under the prospective payment system; and (2) modify update provisions, changing to a calendar year update, increase payments by two percent for 2003, by 1.1 percent for 2004, and by 2.7 percent for 2005.

(Sec. 602) Limits the total amount of outlier payments or payment adjustments for home health care in a fiscal year to no more than three percent of total projected payments, beginning in 2003.

(Sec. 603) Directs the Secretary of Health and Human Services to establish and appoint the OASIS Task Force to examine the data collection and reporting requirements under the Outcome and Assessment Information Set (OASIS) required under the Balanced Budget Act of 1997.

(Sec. 604) Directs the Medicare Payment Advisory Commission (MEDPAC) to study and report to Congress on payment margins of home health agencies under the home health prospective payment system.

(Sec. 605) Directs the Secretary to review and report to Congress on the standards used, by fiscal intermediaries in paying for home health services, in allowing infrequent or short duration absences from the home for individuals eligible for such services, especially individuals with permanent and severe disabilities requiring technological assistance or the assistance of another persons, or both, to leave home.

Subtitle B: Direct Graduate Medical Education - Amends SSA title XVIII to modify the adjustment in rate of increase for hospitals with full time equivalent approved resident amounts above 140 percent of locality adjusted national average, extending the applicable cost reporting period for such adjustment through FY 2012.

(Sec. 612) Requires the Secretary to determine if a hospital's resident level (the total number of full-time equivalent residents, before the application of weighting factors, in the fields of allopathic and osteopathic medicine) is less than the otherwise applicable resident limit for each of the reference periods, effective for cost reporting periods beginning on or after January 1, 2003. Requires redistribution to other hospitals of 75 percent of the difference between such applicable resident limit and the reference resident level, if a hospital's resident level is less than such limit. Authorizes the Secretary to increase the otherwise applicable resident limit for any other hospital that has applied to the Secretary for such increase. Requires the Secretary to take into account the need for such an increase by speciality and location involved, and to first distribute the increase to programs of hospitals located in rural and small urban areas on a first-come-first-served basis based on a demonstration that the hospital will fill the positions made available.

Subtitle C: Other Provisions - Requires MEDPAC to: (1) examine the budget consequences of its recommendations before issuing them; (2) review the factors affecting expenditures for the efficient provision of services in different sectors; (3) study and report to Congress on the need for current data, and sources of current data available, to determine the solvency and financial circumstances of hospitals and other Medicare providers of services; and (4) report to Congress on investments and capital financing of hospitals participating under the Medicare program and related functions and access to capital financing for private and for not-for-profit hospitals.

(Sec. 622) Directs the Secretary to: (1) conduct a project to demonstrate the impact on costs and health outcomes of applying disease management to certain Medicare beneficiaries with diagnosed diabetes; and (2) establish within HHS a working group consisting of HHS employees to oversee the project.

Requires the Comptroller General to compare and report to Congress on Medicare disease management programs with those conducted in the private sector.

(Sec. 623) Mandates that the Secretary establish a demonstration project which shall permit a home health agency to provide medical adult day care services as a substitute for a portion of home health services that would otherwise be provided in the beneficiary's home.