Workers’ Compensation Medical Price Growth Slows To 1.0% In June, NCCI Reports

Medical price growth across three major indices tracked by the National Council on Compensation Insurance eased over the second quarter, even as broader consumer inflation remained elevated.

NCCI’s Workers Compensation Weighted Medical Index (WCWMI) fell to 1.0% year over year in June, down from 1.5% in May and 1.8% in December, and well below its 3-year and 5-year rolling averages of 2.5%. The adjusted CPI Medical Care measure came in at 3.1% in June, while the Producer Price Index for Health Care Services registered 2.2%. NCCI said medical price growth has largely ignored broader economic inflation trends, a pattern the organization compared to the 2022 inflation shock.

Headline CPI, meanwhile, softened to 3.5% in June from 4.2% in May, which NCCI attributed to declining energy prices, though energy costs remained up 16% year over year. Core CPI, which excludes food and energy, eased to 2.6% in June from 2.9% in May, a level NCCI described as close to its pre-energy-shock trend. NCCI said core inflation has remained “stubbornly around 2.5% for some time,” with moderating services prices offset by higher goods prices that NCCI attributed most likely to tariffs.

Hospital And Drug Prices Drive The Slowdown

NCCI identified two primary drivers behind the WCWMI’s softening in June: hospital outpatient care and medicinal drugs. Hospital outpatient care prices, which carry a 28% weighting in the medical care details that NCCI tracks, showed essentially no year-over-year change in June, down from 2.1% in December and a marked slowdown from the roughly 4% annual growth NCCI said the category had shown in the past. NCCI cautioned that while prices for comparable services have changed little over the past year, “upcoding to more complex services may still lead to higher costs for outpatient stays.”

Medicinal drug prices, which make up 7% of the tracked components, fell 2.3% year over year in June and have now declined for six consecutive months, according to NCCI. This came despite concerns that tariffs would push drug prices higher. NCCI attributed the decline to the Medicare Drug Price Negotiation Program combined with the proposed Most-Favored-Nation pricing policy, which it said have led to lower prices for many commonly used drugs.

Other components moved in different directions. PPI Physician Care, weighted at 39%, held steady at 1.4% in June, little changed from recent months. Hospital inpatient care, at a 12% weighting, ran hotter than other categories at 3.8% in June, up from 3.3% in April. CPI Medical Equipment and Supplies fell to essentially 0% in June from 2.9% in January, and the “other” category, representing long-term care services such as home, hospice and nursing home care, held at 3.4% in June.

Outlook Points To A Rebound

Despite the recent softening, NCCI said it expects the WCWMI’s decline to be temporary, projecting the index will move back up toward a 2.0% to 2.5% range over the next several quarters. NCCI also noted that consumer-facing medical prices have grown faster than producer-side and workers’ compensation-specific indices, which it said may reflect changing trends in the health insurance landscape. The adjusted CPI Medical Care measure, which strips out CPI Health Insurance, has run at a 3.2% three-year average and 3.1% five-year average, compared with the WCWMI’s 2.5% averages over the same periods. NCCI added that overall inflation is expected to remain volatile for the remainder of the year.

View the full report here. &