WASHINGTON – House and Senate panels voted last week to advance legislation that would repeal Medicare’s physician payment system and avoid looming cuts in reimbursements to physicians participating in the Medicare program.

Both chambers of Congress marked up bills Thursday that would repeal the sustainable growth rate (SGR) formula and replace it with a system moving Medicare toward value-based payments.

The SGR system, created by the Balanced Budget Act of 1997, ties Medicare’s physician-related spending per beneficiary to U.S. gross domestic product growth. Beginning in 2002, the formula was supposed to cut physician payments. Instead, every year Congress has bypassed the cuts by passing a temporary fiscal maneuver known as the “doc fix.”

If the SGR formula took effect on Jan. 1, 2014, Medicare managers would have to cut the pay of the physicians enrolled in the traditional Medicare program by more than 20 percent.

The House Ways and Means Committee unanimously approved legislation Thursday morning that would not only cancel the SGR but also replace it with a payment system that rewards quality and performance over volume. The Senate approved its own version of the bill later that day.

The bills, which include many similarities, provide a 0.5 percent payment increase through 2017 and keep payments stable from 2018 through 2023. After 2023, Medicare professionals would receive annual updates of 1 percent, while those in an alternative payment model would receive a 2 percent update.

“Enough is enough. After a decade of Band-Aid solutions, it is time for this committee to act. This bill reflects input from the entire medical community. We all share the same goal,” Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee, said during a meeting to discuss the bill.

Since 2003, Congress has patched the SGR mechanism 15 times, at a total cost of $150 billion.

The bills have many supporters from several medical groups, including the American Osteopathic Association, the American Academy of Family Physicians, and the American College of Physicians.

“Today’s strong, bipartisan votes by the Senate Finance and House Ways and Means committees…show that there is overwhelming, bipartisan support for ending SGR in a fiscally responsible manner and closing the book on the annual cycle of draconian Medicare physician payment cuts and short-term patches,” Ardis Dee Hoven, president of the AMA, said in a statement.

During the bill’s markup session, the committee adopted an amendment by Sens. Debbi Stabenow (D-Mich.) and Roy Blunt (R-Mo.) that would expand access to mental care services throughout the country. The amendment is a scaled-back version of a bill they introduced earlier this year. The bill passed on Thursday would establish federally funded pilot programs in 10 states to increase access to mental-health care.

Last week, the Congressional Budget Office (CBO) lowered yet again the 10-year price tag for doing away with the SGR to $116.5 billion. The previous estimate, made in February, was $139 billion.

“Though the score is the lowest ever, it must be paid for,” House Ways and Means Committee Chairman Dave Camp (R-Mich.) said.

“And I am of no illusion that finding pay-fors will be an easy task; it will be very difficult,” he added. “Which is why we must keep the cost low, not just to make this more likely it will pass, but also to ensure limited taxpayers’ dollars are spent wisely.”

Lawmakers have yet to find and agree how to pay for the cost of reform.

Nevertheless, Sen. Orrin Hatch (R-Utah) stressed that the overhaul would be paid for, and vowed to sit down with his House counterparts to discuss their options once the bills pass out of committee.

While some lawmakers expected the lower price tag would provide the impetus to approve a permanent doc fix by the end of the year, the government shutdown and other bills overtook that agenda.

The CBO estimates legislation that would protect physicians from 24 percent Medicare reimbursement reductions next year would cost about $8.3 billion from 2014 to 2018.

A three-month doc fix passed alongside the budget agreement by Rep. Paul Ryan (R-Wis.) and Sen. Patty Murray (D-Wash.) Thursday evening.

The Senate will consider a temporary patch as part of the overall budget deal, setting the stage for SGR repeal in 2014.