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NCCI: WC Medical Price Growth at 1.8% Won't Hold, Report Warns

NCCI's April 2026 Medical Inflation Insights shows workers' comp medical prices grew just 1.8% year over year, well below CPI medical at 4.0%, but the agency warns the pace is temporary and expects reversion toward 2.5% as hospital outpatient costs normalize.

By Sam · May 2026 · 3 min read

NCCI’s April 2026 Medical Inflation Insights, published April 24, reports that the Workers Compensation Weighted Medical Price Index (WCWMI) grew just 1.8% year over year in March 2026. That is well below consumer medical CPI at 4.0% and the PPI healthcare index at 2.4%. NCCI warns the low reading “is unlikely to be sustained” and expects the index to trend closer to its 2024 and 2025 levels as hospital outpatient care prices stabilize around their longer-term annualized path.

The risk: a self-insured employer that anchors its medical severity assumption to the current 1.8% pace will understate future medical payments if the index reverts to its one-year average of 2.2% or three-year average of 2.6%.

Who it affects

Self-insured employers carrying workers’ compensation medical severity risk inside their retention layer. Public entities, hospital systems, and manufacturers with mature claim inventories are especially exposed because their older claims carry proportionally more medical equipment and long-term care cost, the two subcategories growing fastest. Captive programs and large-deductible structures that retain the medical tail face the same anchoring problem.

The reserve mechanism

This is a severity trend selection issue. The headline 1.8% reading is driven almost entirely by hospital outpatient care (28% of the index), which decelerated from 2.9% in September to 0.9% in March. That single component masked acceleration elsewhere:

  • Medical equipment and supplies (8% weight): 4.1% year over year, flagged by NCCI as a potential tariff-related impact.
  • Hospital inpatient (12% weight): 3.7%, well above the 2015-2019 average of 2.1%.
  • Long-term care (6% weight): 3.1% in March with a one-year average of 4.1%.
  • Drugs (7% weight): negative 0.2%, a temporary offset from federal price-containment programs.
  • Physician care (39% weight): 1.4%, stable and close to its one-year average.

For a Bornhuetter-Ferguson or expected-claims estimate, the medical severity trend drives the expected loss pick for every immature accident year. If that trend was set at 1.8% or even 2.0% based on the current WCWMI snapshot, and the index reverts to 2.5% in the second half of 2026 as NCCI projects, accident years 2025 and 2026 will develop above the estimate. The effect compounds on mature claims where equipment and long-term care carry more weight than hospital outpatient visits.

What this means for your next review

Ask your actuary whether the medical severity trend in your current reserve estimate reflects the 1.8% spot reading or a rolling average that accounts for NCCI’s reversion forecast. For programs with large mature claim inventories, request a subcategory-weighted trend that gives appropriate weight to equipment (4.1%) and long-term care (3.1%) rather than anchoring to the physician-dominated headline. A stress test adding 70 to 80 basis points to the current trend pick will bracket the reversion scenario NCCI describes.

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