The House Ways and Means and Senate Finance committees today approved different versions of bipartisan legislation to permanently repeal and replace the Medicare Sustainable Growth Rate formula for annual payment updates under the Physician Fee Schedule. While the Congressional Budget Office estimates that replacing the SGR will cost about $116 billion over 10 years, neither bill specifies a funding source. Both bills would replace the SGR with a value-based payment program starting in 2017 and streamline duplicative requirements in current physician incentive programs, among other changes. The House bill would provide a 0.5% annual payment update through 2017, while the Senate bill would freeze current payment levels through 2023. In addition, the Senate bill would extend the Medicare Dependent Hospital Program and inpatient payment adjustment for low-volume hospitals, and address the issue of direct supervision of outpatient therapeutic services for critical access hospitals, among other provisions. The MDH/LVH hospital amendment was offered by Sens. Charles Schumer (D-NY) and Charles Grassley (R-IA). The House and Senate are not expected to reconcile or take up the bills until after the holiday recess.