Preparing for the 2026 Proposed MPFS Dual Conversion Factors and Value-Based Payment

By Ronda Ash, MHLW, CPC, CPMA, CHC, CIHFA, Vice President of Coding 

The 2026 Medicare Physician Fee Schedule (MPFS) Proposed Rule marks one of the most significant shifts in Medicare reimbursement in over 30 years. For the first time, CMS is proposing separate conversion factors for Qualifying Providers/Participants (QPs) in Advanced Alternative Payment Models (APMs) and those who are not QPs, aligning payment rates more closely with value-based performance.

This shift underscores Medicare’s commitment to moving our healthcare insurance systems from volume-based reimbursement to quality-based reimbursement, which will have immediate, real-world implications for physician cash flow.

Practices that know their Merit-based Incentive Payment System (MIPS) or Advanced APM participation status – and whether they meet the QP thresholds – will be better positioned to optimize their revenue under the new system. In this article, I break down what these changes mean, how the new conversion factors work, and what your practice can do now to prepare for this reimbursement shift.

How we got here

In 1992, the Centers for Medicare and Medicaid Services (CMS) officially implemented the Resource-Based Relative Value Scale (RBRVS). These relative value units (RVUs) are used to value a service that includes physician work, malpractice costs, and practice expenses.

To determine the reimbursement amounts from Medicare, these RVUs are multiplied by a conversion factor, with a geographic qualifier in the formula, to determine the appropriate reimbursement amount. Over the years the industry has seen these conversion factors rise and fall based on statutory requirements and congressional influence. Although there have been years when the conversion factor changed mid-year, Medicare has never before proposed or used two conversion factors at the same time.

The upcoming changes to rate-setting and conversion factor calculations will directly impact how RVUs are translated into actual payments. Key updates and changes to the conversion factors are highlighted below.

2026 proposed rate setting and conversion factors explained

The 2026 MPFS Proposed Rule introduces several key updates to how Medicare sets physician payment rates. While the proposed updates may seem technical, they carry real financial implications. Understanding how the new conversion factors work, and how your practice’s QP status influences them, can help you prepare for the impact on cash flow.

Practices may choose to partner with an experienced RCM organization to ensure accurate reporting and optimized reimbursement, while others may manage these functions internally. Either way, now is the time to assess your participation status and plan strategically to protect your revenue.

Four of the most significant proposed updates are summarized below.

1.  Two separate conversion factors: QPs and non-QPs
   • Why it matters:
     This is the first time Medicare will pay different amounts based on participation in Advanced APMs, affecting claim-level reimbursement.
     
     
   • What the proposed rule states:
     “As required by statute, beginning in CY 2026, there will be two separate conversion factors: one for qualifying alternative payment model (APM) participants (QPs) and one for physicians and practitioners who are not QPs. By statute, QPs are those that meet certain thresholds for participation in an Advanced APM, which means generally that the payment model has features to ensure accountability for quality and cost of care. The update to the qualifying APM conversion factor for CY 2026 is +0.75 percent while the update to the nonqualifying APM conversion factor for CY2026 is +0.25 percent. The changes to the PFS conversion factors for CY 2026 include these updates as required by statute, a one-year increase of +2.50 percent for CY 2026 stipulated by statute, and an estimated +0.55 percent adjustment necessary to account for proposed changes in work RVUs for some services.”
     
     

2. Qualifying APM conversion factor: $33.59 (+3.8%)
   • Why it matters:
     QPs will receive slightly higher payments per claim, creating a financial incentive to participate in Advanced APMs.
     
     
   • What the proposed rule states:
     “The proposed CY 2026 qualifying APM conversion factor of $33.59 represents a projected increase of $1.24 (+3.8%) from the current conversion factor of $32.35.”
     
     

3. Non-qualifying APM conversion factor: $33.42 (+3.3%)
   • Why it matters:
     Practices not in Advanced APMs will see smaller increases, highlighting the importance of understanding participation status.
     
     
   • What the proposed rule states:
     “Similarly, the proposed CY 2026 nonqualifying APM conversion factor of $33.42 represents a projected increase of $1.07 (+3.3%) from the current conversion factor of $32.35.”
     
     
4. Updates to GPCIs and malpractice RVUs
   • Why it matters:
     Geographic and practice-cost adjustments may affect payment calculations regionally and for different specialties.
     
     
   • What the proposed rule states:
     “Per statutory requirements, we are also proposing updates to the geographic practice cost indices (GPCIs) and malpractice RVUs.”

The CMS graphic below shows how Medicare will apply separate conversion factors, reflecting different payment paths under the new statute.

What are the criteria for achieving QP status?

For a specific provider or practice to take advantage of the higher conversion factor for Medicare payments, they will need to be a QP. The criteria below outline the thresholds clinicians must meet to qualify for QP status under Medicare’s rules.

• For eligible clinicians, that means that the provider receives at least 50% of Medicare Part B payments or sees at least 35% of Medicare patients through an Advanced APM entity.
  
  
• If the eligible clinician is participating in an Advanced APM, they need to receive at least 40% of Medicare part B payments or see at least 25% through an Advanced APT entity.
  

What does this mean for your practice?

There are two key takeaways for what this means for your practice. First, QPs in Advanced APMs will receive slightly higher Medicare reimbursements per claim than non-QPs, reinforcing the financial incentive to participate in value-based models.

Additionally, beginning in 2026, your MIPS or Advanced APM participation status will directly impact reimbursement on each claim, replacing the prior two-year lag. Practices that actively track participation and optimize reporting will be better positioned to protect cash flow and maximize payments.

With real-time cash flow now tied to participation status, some practices may find that working with experienced revenue cycle organizations can help them navigate reporting requirements, optimize payments, and avoid penalties.

Take action now to protect and optimize your revenue

With the 2026 MPFS changes on the horizon, practices that understand their MIPS or Advanced APM status now will be better equipped to safeguard revenue and take advantage of potential payment increases in the future.

Here’s how to prepare:

1. Confirm your MIPS participation status.
   
   • Visit the Quality Payment Program (QPP) Participation Status Tool and enter your NPI number to verify whether you’re included in MIPS for the current year.
     
     
   • Review your historical performance to understand how future payment adjustments could impact your reimbursement.
     
     

2. Evaluate your APM participation status.
   
   • Review your existing payer contracts to determine if any of them are part of an Advanced APM.
     
     
   • Review the QPP list of eligible APMs to determine eligibility or current participation status.  
     • If you are a current participant, contact your APM Entity for details on your status, reporting requirements, and expected payment impacts.
       
       

3. Understand your Medicare patient mix.
   • Analyze your 2025 data to determine what percentage of your revenue comes from traditional Medicare Part B.
     
     
   • A higher Medicare mix may amplify the impact of conversion factor changes on your overall cash flow.
     
     

The bottom line

The 2026 MPFS Proposed Rule represents a pivotal moment in Medicare reimbursement, directly tying payment rates to participation in value-based care models. Practices that proactively manage their MIPS/APM status will be better positioned to optimize reimbursement and protect cash flow under the new dual conversion factor system.

Practices that partner with an experienced revenue cycle experts may find they can more confidently navigate their MIPS/APM reporting, safeguard cash flow, and capitalize on payment opportunities.

Health Prime can help your organization prepare for the regulatory changes ahead. To learn more, please send us an email or visit us at hpiinc.com.

As Vice President of Coding at Health Prime, Ronda Ash leverages her deep expertise in healthcare compliance and law to help clients achieve accuracy, efficiency, and peace of mind in their revenue cycle. With a master’s degree in healthcare law (Nova Southeastern University, summa cum laude) and a bachelor’s in business administration (Northwood University, with honors), Ronda ensures coding integrity and regulatory adherence across all Health Prime programs. Her leadership in auditing, compliance, and reimbursement strategy helps clients minimize risk, reduce denials, and optimize financial performance.