The Centers for Medicare and Medicaid Services (CMS) updates its reimbursement rules and rates for medical services each year. NCCI highlights some of the most relevant changes in the 2026 update for the following service categories:
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%.
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.
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.
What Else
The impacts of these changes on WC medical costs vary by state. As in 2025, the factors published by CMS are not expected to be a significant source of upward pressure on overall WC medical costs.
Learn More
For additional research findings: 2026 CMS Medicare Fee Schedule Update and Workers Compensation Medical Costs.
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