Boca Raton, FL – The Centers for Medicare and Medicaid Services (CMS) updates its reimbursement rules and rates for medical services each year, and NCCI has released a new report highlighting some of the most relevant changes in the 2026 update and their 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 depending on 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.
The report highlights the 2026 changes to CMS fee schedules for the following service categories:
The Physician Fee Schedule
Physician costs account for about 40% of countrywide WC medical expenditures. Unlike the Facility Payment Systems, there is currently no inflation-linked adjustment reflected in the annual update to the physician conversion factor. In 2026 the Medicare Economic Index, CMS’s measure of physician practice cost inflation, increased by 2.7%.
The Facility Payment Systems
In WC, facility costs also account for about 40% of countrywide medical expenditures. In 2026, the final market basket update is a 2.6% increase, made up of a 3.3% inflationary increase offset by a –0.7% adjustment for increases in productivity.
The Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Fee Schedule
The share of costs that DMEPOS represents varies by state, ranging between 4% and 13% of WC medical costs. The majority of DMEPOS payments in WC are for codes not subject to the CMS Competitive Bidding Program.
Key Findings
- Driven by a temporary 2.5% payment increase, the 2026 physician conversion factor increased by 3.3% from the 2025 conversion factor, marking the first increase following five years of declines
- The 2026 physician Relative Value Units (RVUs) were rebalanced, resulting in increased payment rates for Evaluation and Management services and decreased payment rates for Surgical services
- Facility base rates saw moderate increases that were in line with the changes seen in prior years
- The 2.0% increase to the CMS DMEPOS update factor in 2026 is in line with the increase from last year
Looking Ahead
The increase to the 2026 physician conversion factor is largely driven by a one-year increase of 2.5% required by statute. NCCI will continue to monitor CMS reimbursement rules and rates that impact WC medical costs.
As in 2025, the factors published by CMS are not expected to be a significant source of upward pressure on overall 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 play a role in how each state is impacted.
Read the full report: NCCI: Medicare Fee Schedules and Workers Compensation in 2026 (PDF)
Source: NCCI