Conversion factor

The conversion factor is the one number that turns the fee schedule’s relative values into dollars. Each service’s work, practice expense and malpractice RVUs are multiplied by their geographic indexes and added, and the total is multiplied by the conversion factor to give the payment amount for that code in that locality. Because it applies to every service at once, it is the figure most watched when a new fee schedule comes out.

Since 2026 there have been two. CMS finalized $33.57 for clinicians who are qualifying participants in an advanced alternative payment model and $33.40 for everyone else, increases of 3.77 and 3.26 percent over 2025¹. Those figures combine a small annual update that differs between the two groups, an adjustment for revalued work RVUs, and a one-year 2.5 percent increase the statute applied to 2026 only¹. A temporary bump like that disappears the next year unless the law is changed again, so a rise in one year can be followed by a drop in the next with no change in your coding.

The mistake is updating the conversion factor and nothing else. A new year can also bring new RVUs, new practice expense values and new geographic indexes, so expected payments have to be rebuilt code by code from the new files rather than scaled by the change in the factor. Contracts priced as a percentage of Medicare need the same check: confirm which year’s schedule the payer is applying before you call a payment short.