Catastrophic Claims Are Rising—But Employers Can’t Ignore MSK Costs
U.S. employers are bracing for a 10% increase in healthcare costs for 2026, according to new survey results from the International Foundation of Employee Benefit Plans (IFEBP). That’s up from an 8% increase projected for 2025. The top drivers? Catastrophic claims (31%) and high-cost prescription drugs (23%), including GLP-1s, cancer treatments, and gene therapies.
It’s no surprise that million-dollar claims are surging—Sun Life reported a 29% increase in $1M+ claims in 2024, and a 47% jump in $3M+ claims. These are the kinds of bills that dominate headlines and rattle CFOs. But here’s the reality: while catastrophic claims are unpredictable, the chronic conditions that rank just below them are both predictable and manageable.
Chronic Conditions and Provider Costs: A Controllable Piece of the Puzzle
The IFEBP survey shows that 15% of employers cite chronic conditions as a primary driver of cost increases, and another 11% point to provider costs. Combined, that’s more than a quarter of the projected increase for 2026. These aren’t once-in-a-lifetime events. They’re recurring, everyday cost drivers that employers face year after year.
Musculoskeletal (MSK) conditions—low back pain, joint injuries, repetitive strain—sit squarely in this category. They’re among the most common reasons employees seek care, and they’re consistently one of the top spend areas in employer health plans. Left unmanaged, they lead to unnecessary imaging, specialist visits, pain prescriptions, surgeries, and lost productivity.
Unlike catastrophic claims, MSK costs are an area employers can actually control.
Why Employers Should Focus on MSK Now
MSK conditions affect nearly half of U.S. adults each year. For employers, that means:
- High prevalence: a large portion of the workforce is impacted.
- Indirect costs: lost workdays and reduced productivity.
- Wasteful spend: patients often bounce between providers before reaching physical therapy—which is often the most effective, lowest-cost starting point.
When employees get the wrong care first, costs compound. When they start with physical therapy, outcomes improve and costs decline.
Provider Initiatives Are Part of the Solution
The IFEBP survey highlights provider and purchasing initiatives—such as telemedicine, care navigation, and centers of excellence—as one of the most effective cost-control strategies for 2026. Direct-to-employer MSK partnerships fit squarely in this bucket.
By connecting employees directly with high-quality local physical therapy providers, employers can:
- Reduce unnecessary imaging and surgeries
- Shorten recovery times and improve overall outcomes
- Expand access beyond what digital physical therapy solutions offer by giving employees the option for in-person, local solutions first
- Improve employee satisfaction with their benefits (and in turn, employee retention)
It’s a proactive way to manage one of the largest cost centers in any health plan—without waiting for catastrophic claims to hit.
A Balanced Strategy: Prepare for the Big, Manage the Everyday
Catastrophic claims and high-cost drugs will continue to put pressure on employer health plans. Stop-loss coverage and cost-sharing strategies may help cushion the blow, but they won’t solve the underlying issue: healthcare costs are rising faster than most businesses can absorb.
The path forward isn’t either/or. Employers need to prepare for the rare, high-dollar claims and address the chronic, predictable costs that add up year after year. MSK management is one of the best places to start.
👉 Second Door helps employers take control of MSK costs by partnering with trusted local PT providers. Learn more about our MSK solution and request a meeting here.
