S. 2000 would replace the Sustainable Growth Rate (SGR) formula, which determines the annual updates to payment rates for physicians’ services in Medicare, with new systems for establishing those payment rates. CBO estimates that enacting S. 2000 would increase direct spending by about $138 billion over the 2014-2024 period, as shown in the following table. This estimate is relative to the CBO’s February 2014 baseline projections of spending under current law. (The legislation would not affect federal revenues or spending subject to appropriation.) The costs of this legislation fall within budget functions 570 (Medicare) and 550 (health).