Medicare RVU & Physician Reimbursement Calculator
Calculate official Medicare allowable reimbursement for CPT and HCPCS codes. Adjust for work RVU, practice expense, malpractice expense, setting (office vs hospital), and local Geographic Practice Cost Index (GPCI) parameters.
Understanding the Medicare RVU Payment Formula
Under Section 1848 of the Social Security Act, Medicare reimburses physician services using the Resource-Based Relative Value Scale (RBRVS). The payment formula balances three separate components of medical service delivery, adjusts each component by local geographic cost factors, and scales the total through a universal dollar conversion factor.
1. Physician Work RVU (wRVU)
Reflects the physician time, technical skill, physical effort, mental effort and judgment, and psychological stress required to deliver the medical service.
2. Practice Expense RVU (peRVU)
Accounts for clinical staff payroll, rent, administrative supplies, and medical equipment. Differs significantly between independent clinic (non-facility) and hospital (facility) settings.
3. Malpractice RVU (mpRVU)
Reflects relative professional liability insurance premium costs associated with specific clinical specialties and risk profiles.
Why Facility and Non-Facility Rates Differ
When a physician performs an evaluation and management visit or surgical procedure in a private medical office, the practice pays for the exam room, nursing staff, clinical supplies, and utilities. Therefore, Medicare pays the higher non-facility practice expense RVU.
Conversely, when services occur within a hospital outpatient department (HOPD), emergency department, or ambulatory surgery center (ASC), the hospital bears the overhead and bills separately through Medicare Part A or OPPS. Consequently, the physician professional claim receives the reduced facility practice expense RVU.
Frequently Asked Questions: RVU Calculation
What is the current Medicare conversion factor for 2026?
The standard Medicare Physician Fee Schedule (PFS) conversion factor for calendar year 2026 is $32.74 per relative value unit.
How do Geographic Practice Cost Indices (GPCI) affect reimbursement?
CMS divides the United States into fee schedule payment localities. Each locality receives three GPCI indices reflecting local variation in physician earnings, office rent/staff wages, and liability insurance costs relative to the national average of 1.000.
Can private commercial payers use this RVU calculator?
Yes. Many commercial health plans (such as Blue Cross Blue Shield, UnitedHealthcare, and Aetna) contract reimbursement at a set percentage of Medicare allowable rates (for example, 120% or 140% of standard CMS PFS rates).