Conversion Factor 2024 | Everything You Need To Know About

The Medicare Fee Schedule plays a crucial role in determining reimbursement rates for medical services covered by Medicare. At the heart of this system is the Conversion Factor (CF), a key element that influences how healthcare providers are compensated. In this guide, we’ll delve into what the Conversion Factor is, how it is calculated, and Conversion Factor 2024.

Conversion Factor 2024

Conversion Factor 2024

The 2024 payment schedule conversion factor has been set at $32.74, reflecting a 3.39% reduction compared to the 2023 factor of $33.89.

What is Conversion Factor in Medicare Fee Schedule?

The Conversion Factor is a multiplier used to translate Relative Value Units (RVUs) into actual payment amounts under the Medicare Fee Schedule. RVUs are assigned to medical procedures based on their complexity, resources required, and other relevant factors. By multiplying the RVUs with the Conversion Factor, a dollar amount is determined, representing the reimbursement for a specific medical service.

The CF serves as a nationwide dollar multiplier, employed to “transform” the geographically adjusted RVU for calculating the Medicare-allowed payment for a specific physician service. It is utilized independently to establish payment amounts for both facility and nonfacility services.

How Is the CF Calculated?

The calculation of the Conversion Factor involves several steps. It is essential to understand the components contributing to its determination:

  • Update for Economic Factors:

Annually, the Centers for Medicare & Medicaid Services (CMS) considers economic factors, such as inflation, market changes, and healthcare expenditure. The update ensures that the Conversion Factor aligns with the current economic landscape.

  • Geographic Practice Cost Indices (GPCIs):

The GPCIs adjust the RVUs based on the geographical location where the medical service is provided. Factors like labor costs, rent, and other expenses can vary significantly between regions. Moreover, GPCIs help tailor the Conversion Factor to reflect these variations accurately.

  • Budget Neutrality:

To maintain budget neutrality, CMS adjusts the Conversion Factor to ensure that changes in RVUs or other payment components do not result in an overall increase in Medicare spending. Additionally, this adjustment prevents unintended financial impacts on the Medicare program.

  • Sustainable Growth Rate (SGR):

Historically, the SGR was a formula used to control Medicare spending. Although it has been replaced by the Medicare Access and CHIP Reauthorization Act (MACRA). But its legacy still influences the annual update to the Conversion Factor.

Read More: Medicare Deductibles 2024 – For Part A & Part B


In Conclusion, staying informed about updates from CMS and changes to the Medicare Fee Schedule is essential for healthcare professionals to optimize their financial strategies and provide high-quality care to Medicare beneficiaries.

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