Medicare and Medicaid Nursing Facility Quality Improvement Act of 2003 - Amends titles XVIII (Medicare) and XIX (Medicaid) of the Social Security Act (SSA) to revise the Federal survey and certification process of skilled nursing facilities.Revises requirements for nurse aide training and competency evaluation programs and for nurse aide competency evaluation programs to state that the prohibition against approval of a program offered by or in a skilled nursing facility which is operating under a waiver, subject to an extended survey, or has been assessed a civil penalty shall not be continued when the facility involved through on-site verification demonstrates compliance with the applicable standards.Authorizes the Secretary to: (1) waive the skilled nursing survey and certification process in order to test and implement innovative alternatives to the otherwise applicable survey process; and (2) continue payments for up to one year under certain conditions, pending remediation, to a nursing facility that no longer meets the specified requirements.Requires each State to establish an informal and independent dispute resolution process to allow facilities to settle disputes involving compliance with nursing facility requirements.Requires surveyors to defer to the diagnosis and treatment decisions of the resident's attending physician and of the facility's medical director. Requires the Secretary to implement programs to monitor and correct instances of failure of surveyors to do so.Declares that nothing shall be construed as precluding members of survey teams from providing information to faculty and staff on best or innovative practices for assuring quality care in nursing facilities.Requires the Secretary to provide incentives for operators with histories of good compliance to acquire facilities with poor compliance histories.Permits nursing facilities to appeal deficiency determinations.Requires the Secretary to establish a program that rewards skilled nursing facilities that provide the highest quality of care.
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