The Energy and Commerce bill would repeal the SGR and create options for doctors to be paid based on the quality of their care rather than the volume of services they provide.
This strategy is expected to gradually lower healthcare costs over time. Providers who remain in the traditional, volume-based "fee for service" model would see a permanent 5 percent pay cut under the bill.
While Tuesday's vote is a step forward for SGR repeal, lawmakers have still not decided on how to pay for the move, and healthcare stakeholders are clamoring to avoid shouldering the cost.
The current short-term "doc fix" expires Dec. 31, meaning lawmakers could once again have to step in to avoid a physician pay cut.
On Tuesday, Health subcommittee Chairman Joe Pitts (R-Pa.) praised his panel for its progress.
"The time of temporary fixes and kicking the can down the road has ended," Pitts said in a statement. "The bipartisan committee draft we approved today permanently repeals the SGR and places us on a path to paying for innovation and quality, not volume of services, and puts doctors not bureaucrats, back in charge of medicine."
—This post was updated at 3:43 p.m. with Pitts's statement.