Medical costs, opioids and workers' comp

Medical care is the largest and most controllable part of what workers' compensation pays. NCCI's 2026 State of the Line report found that medical claim severity rose 4% in 2025, and that cost per claim for medical rose 6%, with price and utilization each contributing 3%. Opioid prescribing in comp has fallen sharply since 2012, but the rest of the medical bill, from surgery to physical therapy to pharmacy, still depends on state fee schedules, formularies and how fast a claim is managed.

How workers' comp pays medical bills

Under the no-fault bargain, the employer's policy pays reasonable and necessary medical treatment for a covered injury, usually with no deductible or copay for the employee. That is different from group health, where the patient shares cost. Because the injured worker is not price-sensitive, states regulate the price and the care:

• Fee schedules. Most states set maximum payments for physician, hospital and other services. Many tie them to Medicare's rates in some way; the effect varies by state depending on which service categories the schedule covers. In its 2026 analysis, NCCI noted that physician services and facility payment systems each make up about 40% of countrywide comp medical spending, and that the Medicare physician conversion factor rose 3.3% over its 2025 level, the first increase after five years of declines. NCCI expected the CMS factors not to be a significant source of upward pressure on overall comp medical costs.
• Treatment guidelines and utilization review. Many states adopt evidence-based guidelines (such as ODG or ACOEM) and require authorization for certain care.
• Provider choice. In some states the employer or insurer picks the doctor; in others the employee chooses; some use medical provider networks. This differs a great deal, so use the workers' comp and benefits requirements by state for each state where you have employees.
• Pharmacy rules. Some states use closed formularies that limit which drugs are paid without prior authorization. Texas adopted one for injuries on or after September 1, 2011, and NCCI has studied formulary effects in several states.

What the 2026 NCCI data show

Per NCCI's 2026 State of the Line guide:

• Medical claim severity grew 4% in 2025, matching indemnity severity; lost-time claim frequency fell 2%.
• Medical cost per claim rose 6% from 2024 to 2025, with price and utilization each contributing 3%. NCCI said medical severity has grown faster than its Workers Compensation Weighted Medical Price Index, which means price is only part of the story.
• Private carriers' calendar-year combined ratio was 91 for 2025 (see workers' comp trends: frequency, severity and rates in 2026). The accident-year combined ratio was 102.
• Medical benefits continue to account for a majority of total losses, and the share rises with claim size; in NCCI's earlier analysis, medical was about 90% of costs on claims of $5 million or more.

Those are national averages. A state with a heavily regulated fee schedule and a state without one can have very different medical severity, and your policy price follows your state's loss costs filings through NCCI or the state bureau.

Opioids and pain management

Comp was hit early by the opioid problem, because injured workers are prescribed pain medication and the payer rarely questions it. NCCI's research shows a steep fall since: among comp claims with at least one prescription, the proportion with an opioid dropped from 55% in 2012 to 26% in 2021, and NCCI's AIS 2025 materials say opioid use in comp has declined nearly 75% since 2012, while pain management cost per claim has been relatively flat (NCCI opioid research). NCCI attributes the decline to physician awareness, better pain management understanding and state laws on prescribing.

The decline does not remove the risk. Long-term opioid use can prolong disability, add dependence and complicate return to work; NCCI's AIS 2025 session asked what replaces opioids in treatment, since non-opioid pain care has costs of its own. Employers should treat medication as part of the claim plan: ask the adjuster whether the prescriber is following guidelines, whether a pharmacy benefit manager is reviewing, and whether a peer review is warranted.

What employers can influence

1. Report fast. Early reporting gets a nurse triage call and early treatment in the network, which is the lowest-cost point of intervention (reporting a workplace injury: what employers must do).
2. Use a panel or network where the state allows it. A posted panel of providers who know the employer's modified-duty program helps the doctor write specific restrictions.
3. Return people to work. Fewer days off means less indemnity and often a better recovery (return-to-work programs: how to build one).
4. Stay in the loop. Ask the adjuster for status at 30 and 90 days. Claims drift when no one asks, and a claim that outlasts the expected duration is a signal to check the treatment plan.
5. Know when to challenge. An independent medical examination or utilization review is the route for questions about necessity, not employer pressure on the treating physician.
6. Understand the long tail. Lifetime medical in some states stays open after an indemnity settlement unless it is closed out; see workers' comp settlements and the employer's role.

Hypothetical example

Say a 30-employee manufacturer has a shoulder strain that becomes a surgical case. The first-week authorization goes through the network, the surgeon follows the state guideline, and therapy visits are managed against the state's fee schedule. Pain is controlled with non-opioid medication under a formulary. The employee returns on restricted duty at week five. Compare that to the same claim reported on day 10, treated out of network with extended opioid prescribing and no modified-duty offer: the medical bill might be similar, but the indemnity and duration are worse. This is an illustration of mechanisms, not a typical cost.

Why it matters for your premium

Loss cost filings from NCCI and the state rating bureaus reflect medical trends, so a persistent rise shows up as rates after the lag in filings, and your own claims shape your mod. See how to lower your workers' comp costs for the full set of levers and the workers' comp premium calculator to see how rates and payroll interact.

Key takeaways

• Medical care is the majority of comp losses; NCCI's 2026 report puts 2025 medical severity up 4%, with price and utilization each adding 3% to cost per claim.
• State fee schedules, formularies, provider-choice rules and guidelines differ, so the medical experience of two states is not comparable.
• Opioid use in comp is down about 75% since 2012 per NCCI, but pain management and long-term medication remain active issues.
• Early reporting, return to work and regular claim reviews are the employer's main levers.
• Check the workers' comp and benefits requirements by state for the rules that apply to each of your states.