The CMS conversion factor just went up for the first time in five years

For the first time in several years, the Medicare physician fee schedule conversion factor went up in 2026. For rehab therapy practices that watched it decline or stay flat through most of the early 2020s, this is real progress even if the increase does not fully offset what was lost over the prior years. 

Here is what changed, what it means for physical therapy, occupational therapy, and speech-language pathology billing, and what still needs to be on your radar. 

Does this change your paycheck?

For most practices with Medicare volume: yes, modestly. A higher conversion factor means slightly more reimbursement per visit on every timed and evaluation code billed under the physician fee schedule. How much depends on your payer mix, service volume, and whether you are also billing supplemental codes like RTM. Commercial rates do not automatically follow. More on all of this below.

What the conversion factor actually does 

Think of the conversion factor as the dollars-per-point rate Medicare uses. 

• Every billing code has a point value (called RVUs). 

• Medicare multiplies those points by the conversion factor to set payment. 

If the conversion factor goes up, all codes pay a little more. 
If it goes down, all codes pay a little less even if nothing else changes. 

What that looks like in practice 

• In 2025, each RVU was worth $32.74 

• In 2026, each RVU is worth $33.40 

That difference means: 

• About $0.30 more per unit (varies by code) 

• About $1.20 more for a 60‑minute session (4 units) 

• About $1,320 more per month for a practice billing 200 units per week 

Exact amounts depend on the final CMS RVU values for each code; these numbers are examples. 

What changed in 2026 & and why it matters 

Before 2026, the conversion factor had been going down or staying flat for years. Congress kept stepping in with short-term patches to prevent bigger cuts, but the cumulative result meant every Medicare visit was paying a little less than it used to. 

This year’s increase gives some of that back. The per-visit dollar change is modest, but for a practice billing hundreds of units per week, it adds up.  

The KX modifier threshold in 2026 

The KX modifier threshold is the annual Medicare dollar amount after which a therapist must add the KX modifier to claims to indicate that services above that level remain medically necessary. It is not a hard cap, and you can continue billing above it, but the documentation requirements increase and claims are subject to closer review. 

CMS updates this threshold annually. For 2026, the KX threshold is $2,480 for PT and SLP combined, and $2,480 for OT. Once a beneficiary exceeds the applicable threshold, each claim line above that amount must include the KX modifier to attest that services remain medically necessary. Missed updates mean some claims won’t be coded correctly from day one. 

What still has not changed 

The conversion factor increase matters, but it’s only one piece of a broader billing landscape that remains challenging for most outpatient rehab practices. 

Commercial insurance rates do not automatically follow Medicare. Whether this year’s increase affects your commercial revenue depends on when you last renegotiated your contracts and whether your rates are tied to a Medicare percentage. If they are not, the Medicare increase may not affect your commercial revenue at all. 

Prior authorization requirements, which remain one of the most operationally costly issues in outpatient rehab billing, are not affected by the conversion factor. Neither are Medicaid rates in most states, or value-based care arrangements that calculate payment differently. 

What practice owners should review now 

While the increase is modest, it is operationally relevant. Most practices should: 

• Confirm the 2026 conversion factor and KX thresholds are correctly loaded in billing systems. 

• Review commercial contracts tied to Medicare percentages to understand impact. 

• Incorporate the updated conversion factor into your 2026 financial modeling and forecasting. 

What to take from this 

Here’s the honest picture: the cumulative conversion factor cuts from 2021 through 2025 took real money out of Medicare billing. This year’s increase gives some of it back. But the gap hasn’t been fully closed. 

The APTA, AOTA, and ASHA are the most reliable ongoing sources for understanding where fee schedule policy is heading. Engaging with their advocacy efforts is one of the few ways individual practice owners can influence the bigger picture.

Frequently asked questions

What is the 2026 Medicare conversion factor?

For 2026, the standard Medicare physician fee schedule conversion factor is $33.40 for non‑qualifying APM participants and $33.57 for qualifying APM participants. Most outpatient rehab practices fall under the non‑qualifying APM category and use the $33.40 factor.

How does the conversion factor affect PT, OT, or SLP reimbursement?

Every CPT code billed under the Medicare physician fee schedule is calculated by multiplying the code’s total RVUs by the conversion factor. A higher conversion factor increases payment proportionally across evaluation codes and timed treatment codes for PT, OT, and SLP services.

Does the conversion factor change affect the KX modifier threshold?

No. The conversion factor and KX modifier threshold are set independently. For 2026, the KX threshold is $2,480 for PT and SLP combined and $2,480 for OT.

Will commercial payers adjust their rates automatically?

Commercial payers negotiate independently and do not automatically adjust when Medicare rates change. Only contracts explicitly tied to Medicare percentages may reflect the increase without renegotiation.