Guide · Updated Jul 6, 2026
How Medicare Pays: The PFS Formula
Medicare’s Physician Fee Schedule turns a code into a payment with one formula: multiply each RVU component by its geographic index, add them, and multiply by the conversion factor. Whether the code pays at all is decided first by its status indicator.
Current conversion factor — Q3 2026 release
- Standard (non-QP)
- $33.4009
- Qualifying APM participant (QP)
- $33.5675
From the Q3 2026 PFS release as published by CMS — dollars per total geographically-adjusted RVU.
The formula
Payment = (work RVU × work GPCI + practice expense RVU × PE GPCI + malpractice RVU × MP GPCI) × conversion factor. The practice expense RVU used is the non-facility or facility value depending on the setting. National amounts use a GPCI of 1.000 for all three components. To see it computed line by line with real numbers, open any code page — for example, CPT 99213.
Status comes first
Before any arithmetic, the status indicator decides whether a national amount exists. Payable statuses (A, R, T) produce an amount; carrier-priced status C has no national amount; other statuses are not separately payable. A blank RVU never becomes zero — it makes a payable calculation impossible and is reported as such.
Then the optional adjustments
Sequestration, a roughly 2% reduction, is applied last and only when requested, so the same code can be shown gross or net. Every figure is tied to the specific quarterly release that produced it, so a rate is always reproducible and auditable back to its source.
Try the formula
Enter a code's RVUs (from any code page on this site), your locality's GPCIs (1.000 for the national amount), and the conversion factor. For example, RVUs of 1.30 work + 1.05 practice expense + 0.10 malpractice at national GPCIs total 2.45 adjusted RVUs — at a $32.00 conversion factor that is 2.45 × $32.00 = $78.40.
Fill in the RVUs and conversion factor to see the computed amount. The conversion factor is prefilled with the current standard (non-QP) figure, $33.4009. Sequestration is not applied here.
Frequently asked
What is the Medicare PFS payment formula?
Payment = (work RVU × work GPCI + PE RVU × PE GPCI + MP RVU × MP GPCI) × conversion factor, using the facility or non-facility PE RVU depending on the setting.
What decides whether a code pays at all?
The status indicator. A, R, and T are payable; C is carrier-priced with no national amount; the rest are not separately payable.
Related
Sources
- CMS Physician Fee Schedule overview (cms.gov)
- CMS Medicare Physician Fee Schedule Relative Value Files
Written from primary CMS sources — see how we source, compute, and verify everything on this site.