The way Medicare determines how much it will pay physicians, based on the resource costs needed to provide a Medicare-covered service. The RBRVS is calculated using three components: physician work, practice expense and professional insurance. The Medicare payment to physicians is determined by multiplying the combined costs by a conversion factor set by the Centers for Medicare and Medicaid Services, adjusted for geographical differences in the cost of resources. Physician work typically accounts for 50 percent of the value while practice expense accounts for 45 percent.