Minnesota Medical Payments per Claim Hold Steady in 2025 After Two Years of Increases
Average medical payments per lost-time claim in Minnesota were stable in 2025, according to the Workers Compensation Research Institute, following two years of increases driven mainly by rising prices.
The stability resulted from steady nonhospital prices combined with declining hospital payments, partly reflecting cuts to the outpatient fee schedule that took effect in October 2023, WCRI found. Minnesota House File 2988, adopted in 2023, mandated a 10% reduction in hospital outpatient fee schedule rates phased in over three years: a 3% cut effective Oct. 1, 2023, another 3% cut effective Oct. 1, 2024, and a 4% cut effective Oct. 1, 2025. As a result, hospital outpatient payments per claim fell 5% for claims evaluated in 2025, WCRI reported.
Hospital Payments Decline While Nonhospital Costs Hold Flat
Hospital outpatient payments per claim dropped across several service types in 2025, including a 7% decline for minor radiology, 5% for facility services, 5% for evaluation and management, 4% for emergency department care, and 3% for physical medicine, according to WCRI. A separate WCRI study, the Hospital Outpatient Payment Index: Interstate Variations and Policy Analysis, 2026 Edition, found that despite the fee schedule reduction, hospital outpatient payments for common surgeries in Minnesota remained higher than most study states as of 2024, the first year the cuts applied.
Hospital payments per inpatient episode also declined from 2023 to 2025, reversing double-digit annual growth recorded from 2021 to 2023, WCRI found. The decrease was driven by a drop in payments for the top 20% of highest-cost inpatient episodes, which fell 17% from 2023 to 2025 after an 18% average annual increase from 2020 to 2023. Payments for the remaining 80% of episodes were stable over the same period, according to the report.
Prices paid for nonhospital professional services, meanwhile, were essentially flat in 2024 and 2025, per the WCRI Medical Price Index for Workers’ Compensation, after rising 5% from 2021 to 2023 following a 2022 fee schedule update. Utilization of most medical services increased or stabilized from 2022 to 2025 as pandemic-related declines reversed, WCRI said, with the rebound in service volume offsetting the drop in hospital payments.
Minnesota Trails Median State, With Mixed Drivers Underneath
Despite the national trend, Minnesota’s medical payments per claim remained below the 27-state median in 2025 at both 12 and 36 months of claim maturity, according to WCRI. At 12 months, Minnesota’s average medical payment per claim was $11,952, compared with a median of $13,834 among study states; at 36 months, it was $15,160 versus a median of $17,187.
Minnesota’s medical payments were also lower than in most other Midwest states studied, including Illinois, Indiana, Iowa and Wisconsin, though higher than Michigan at 36 months and similar at 12 months.
Nonhospital payments per claim, at $6,128, were 27% below the 27-state median, driven by the lowest utilization of nonhospital services among all study states, primarily tied to lower use of physical medicine, WCRI reported. The institute pointed to Minnesota’s regulatory limits on physical medicine and chiropractic treatment, along with a shortage of physical therapists cited by state system stakeholders, as potential contributing factors. Prices for nonhospital professional services were typical overall, though primary care office visit prices were notably higher due to the state’s fee schedule.
Ambulatory surgery centers were used less often in Minnesota, with 11.6% of claims receiving ASC facility services compared with a 15.8% median, yet ASC facility payments per claim of $10,319 were 21% above the $8,537 median, WCRI found.
Hospital outpatient payments per claim, at $6,676, were 17% above the $5,703 median, driven by higher utilization rather than price. Hospital inpatient payments per episode were typical of study states. Prescription drug payments per claim were the lowest among all states studied, at $186 compared with a $692 median for claims at 24 months, reflecting both fewer prescriptions and lower payments per prescription, according to WCRI.
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