The Centers for Medicare and Medicaid Services (CMS) updates its reimbursement rules and rates for medical services each year. This report highlights the most relevant changes in the 2025 update and the potential impact on workers compensation (WC) medical costs.
Medical cost trends continue to be top of mind for industry stakeholders, and each year NCCI monitors changes in CMS reimbursement rules and rates that impact WC medical costs.
The impacts of these changes on WC medical costs vary by state. The medical service categories covered by medical fee schedules, the extent to which each fee schedule incorporates the CMS rules and rates, and the distribution of medical costs all influence how each state is impacted.
This report highlights the 2025 changes to CMS fee schedules for the following service categories:
- Physician—Physician costs account for about 40% of countrywide WC medical expenditures. Physician fee schedules in WC are often based on factors published in the annual CMS Physician Fee Schedule.
- Facility—Facility costs also account for about 40% of countrywide WC medical expenditures. In 2025, the market basket update is a 3.4% increase.
- Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS)—The share of costs that DMEPOS represents varies by state, ranging between 4% and 14% of WC medical costs.
Key Findings
- The physician conversion factor was updated to 32.3465, a 2.8% decrease from the 2024 conversion factor of 33.2875
- Facility base rates saw moderate increases that were in line with the increases seen in prior years
- Changes to the rural floor and low wage hospital policy in the wage index calculation have impacted wage indices in recent years
- The 2.4% increase to the CMS DMEPOS update factor in 2025 is in line with the increase from last year
As in 2024, the factors published by CMS continue to not be a source for significant upward pressure on workers compensation medical costs.
For additional research findings, check out the
complete report.
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