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Digital EditionMedicare Rate Changes Signal Mixed Cost Outlook for Workers’ Comp: NCCI
Conversely, facility base rates saw moderate increases consistent with prior years. Hospital outpatient services will see a 2.0% rate increase, ambulatory surgical centers (ASC) a 2.6% increase, and hospital inpatient services a 1.9% increase, per the report. Unlike physician payments, these updates incorporate a market basket adjustment to account for inflation. Payments for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) will also rise by 2.4%, a figure similar to last year’s increase, the report said.
Impact on Medical Services and Providers
These top-line trends translate into specific challenges and opportunities within the workers’ compensation system, where physician and facility costs each account for approximately 40% of medical expenditures, according to the NCCI. While the physician conversion factor is decreasing, the report notes that Relative Value Units (RVUs) for the specific mix of services common in workers’ comp cases are expected to see slight increases. The interaction between these two factors may result in a small net decrease in physician costs in certain states.
A significant change in facility payments involves the reclassification of Medicare Severity Diagnosis-Related Groups (MS-DRGs) for spinal fusions, the report said. The previous five codes have been replaced with 10 more specific codes that differentiate between single-level and multiple-level procedures. Because single-level fusions are more common in workers’ comp—representing about 60% of cases—and will now be reimbursed at a lower rate, the average cost per spinal fusion is likely to decrease, the NCCI said.
State-by-State Implications
The ultimate financial impact of the 2025 CMS updates on workers’ compensation medical costs will vary significantly by state. The NCCI report underscores that the effect depends entirely on the degree to which a state’s fee schedule incorporates CMS rules and rates. States are generally categorized as “Medicare-Based,” “Partially Medicare-Based,” or “Not Medicare-Based,” and this determines how directly they are affected, the report noted.
For states that tie their physician fee schedules directly to the CMS conversion factor, the 2.8% reduction will have the most immediate effect. Similarly, states that adopt CMS base rates for facilities will likely experience moderate cost increases.
View the full report here. &
