For qualified providers, the 2026 conversion factor will be $33.57, compared to $33.40 for non-qualified providers, representing an increase from the 2025 rate of $32.35. This adjustment includes a one-time budget increase of 2.5%, as well as a Budget Neutrality adjustment of +0.49%. The conversion factor is a critical component of the Medicare payment formula: Payment = Conversion Factor (CF) x RVUs x Geographic Modifier (GPCI).

The Budget Neutrality adjustment is another variable influencing the conversion factor. It is generally applied when projected RVUs differ from expectations.

Beginning in 2026, CMS will implement an Efficiency Adjustment, resulting in a negative 2.5% reduction for non-time-based services. CMS has stated that “physicians inevitably will become more efficient in delivering these services.” As a result, specialties such as orthopedics and neurosurgery may experience a 3% to 5% reduction in payments for non-time based (intra-service time) services.