A WCRI FlashReport published July 28, 2026, quantifies a structural blind spot in how most actuaries measure workers’ compensation medical severity: services with no established fee schedule rate now account for 62% of WC durable medical equipment (DME) payments, yet they sit entirely outside the price indexes used to project medical IBNR.
The report, “Trends in Non-Price-Controlled Medical Services,” examined DME and professional services billed by non-hospital providers across 36 states from 2019 through June 2025. Spending on these uncontrolled services grew in most study states over that period, driven by both higher utilization and higher prices per service line.
That growth is occurring as the headline index reads its softest in years. NCCI’s Workers Compensation Weighted Medical Price Index (WCWMI) fell to 1.0% year-over-year in June 2026, down from 1.8% in December and well below the three-year rolling average of 2.5%. Hospital outpatient costs were flat year-over-year; drug costs fell 2.3%. Both categories are governed by fee schedules or negotiated rates and carry heavy weighting in the WCWMI. Non-fee-schedule services are not in the index.
In 2025, 50% of WC DME service lines had no established fee schedule rate, and those lines generated 62% of total WC DME payments, a share that has risen. In median fee schedule states, uncovered DME spending grew from 58% to 63% of total DME payments between 2019 and 2025, while the utilization share of uncontrolled lines climbed from 41% to 48%. State variation is wide: 36% of DME payments fell in uncontrolled codes in Arizona versus 92% in Connecticut. Two billing codes drove roughly half of uncovered spending: E1399 (miscellaneous DME, averaging $300 per day in rental charges) and E0676 (intermittent limb compression, averaging $1,862 per day). Professional services show a smaller but parallel pattern: uncontrolled codes represent 1.7% of service lines but 4.8% of payments, with neurological and neuromuscular testing at 29.4% uncovered share and pain management injections at 11.7%.
The root cause is structural. Most state fee schedules are anchored to Medicare’s relative value scale. Services that Medicare does not reimburse have no peg, so they remain uncontrolled indefinitely unless a state takes separate action.
Who it affects
Self-insured employers with chronic-injury WC profiles carry the most exposure: back injuries, soft-tissue claims with ongoing treatment, and PTSD claims accumulate DME rentals and non-hospital professional visits over multiple years. Employers in states with less comprehensive fee schedule coverage, charge-based jurisdictions like Connecticut, face both higher uncontrolled service volumes and faster cost growth within those volumes. Public entities, construction employers, and healthcare systems with significant lost-time WC programs in multi-state operations are the most exposed.
Reserve mechanism
Actuaries projecting open WC medical claims to ultimate apply a medical severity trend, typically anchored to the WCWMI or the BLS hospital services CPI. Both reflect fee-schedule-governed services. Non-fee-schedule DME and professional billing are outside both indexes. If that category is growing faster than the headline number, the severity trend applied to open claims is understated and medical IBNR is deficient. The understatement compounds on long-tail claims and surfaces only when five-to-seven-year development data runs above the selected trend. The workers’ compensation IBNR framework treats medical severity as a continuous development assumption; a persistent gap between the index and actual spend embeds silently until late-development triangles reveal it.
The same dynamic appeared in NCCI’s inpatient utilization data: the WCWMI read 1.0% while inpatient utilization rose 6%, a reminder that the index measures price, not the volume of services accumulating on open claims.
What this means for your next review
Ask your actuary which medical severity trend anchors your WC reserves and whether any adjustment is made for services outside the WCWMI or BLS index. For multi-state programs, ask for a jurisdiction-level breakdown identifying states where fee schedule coverage is less comprehensive. Those states warrant a separate severity assumption, not a blended national trend applied uniformly. Watch WCRI’s next CompScope benchmark edition for state-level data showing whether uncontrolled service spending is accelerating or plateauing; state legislative action expanding fee schedule coverage would reduce the gap, but until that happens the benchmark blind spot is structural.
Sources
- WCRI FlashReport: Trends in Non-Price-Controlled Medical Services (July 28, 2026)
- WorkCompWire: New WCRI Report Examines a Potential Driver of Workers’ Comp Medical Costs
- Risk & Insurance: Uncovered Medical Services Are Driving Up Workers’ Comp Costs, WCRI Finds
- NCCI Medical Inflation Insights, July 2026