LRLossReserves.com
Subscribe
Back to The WireWorkers Comp

WC Professional Services Without Fee Ceilings Cost 2.8x More

WCRI data show professional services with no fee schedule rate account for 4.8% of WC payments but only 1.7% of service volume; in 17 jurisdictions with no neurological testing ceiling, the premium embeds an NCCI benchmark blind spot that drives adverse development on late-reporting claims.

By Sam, EditorAugust 2026 · 3 min read

Workers’ compensation professional services billed without an established fee schedule rate account for 4.8% of all professional-service payments but only 1.7% of service volume, according to WCRI’s FlashReport “Trends in Non-Price-Controlled Services,” announced August 14, 2026 ahead of a September 3 webinar. The ratio implies a unit cost roughly 2.8 times what a fee-scheduled service costs. The study covers January 2019 through June 2025 across 44 fee-schedule states and Washington, D.C.

Among eight major nonhospital professional service categories, neurological and neuromuscular testing carries the highest uncovered payment share at 29.4%. In 17 jurisdictions those services have no established fee schedule rate at all. The structural reason: most state fee schedules are anchored to Medicare’s relative value scale. Services Medicare does not reimburse have no peg and remain uncontrolled unless a state acts separately. Neurological testing codes that fall outside Medicare coverage carry that exclusion into state workers’ comp schedules by default.

This article focuses on the professional-services finding. A companion piece published July 30 addresses the DME component, where uncovered codes account for 62% of all WC DME payment dollars.

Who It Affects

Self-insured employers in the 17 no-ceiling jurisdictions with active cumulative-trauma WC programs carry the most exposure. Neurological diagnostic testing accumulates on claims involving repetitive-motion injuries, occupational PTSD, and multi-system trauma, categories where diagnostic complexity and late reporting already push claim development past five years. States with the fastest-growing uncovered professional service shares include Louisiana, Maryland, and North Carolina, each of which saw uncovered expenditure share rise more than five percentage points between 2019 and 2025. Employers running multi-state programs that blend experience across those jurisdictions will see the effect diluted in aggregate but concentrated in state-level development triangles.

Reserve Mechanism

Standard actuarial benchmarks for WC medical severity, including NCCI state loss cost trends, do not separately identify the uncontrolled-service component. A self-insured employer benchmarking its medical severity trend against NCCI loss costs in a no-ceiling state applies a blended rate covering both fee-scheduled and uncontrolled services. When neurological testing unit costs grow faster than the blended rate, medical IBNR is understated, and the understatement does not surface until late-development triangles show actual paid losses running above projected. For cumulative-trauma claims, that emergence lag can reach five to seven years.

The workers’ compensation IBNR framework treats medical severity trend as a continuous assumption applied to open claim development. A persistent gap between that assumption and the actual unit-cost growth rate of uncontrolled neurological services embeds silently until it appears in paid-loss triangles at five-plus years of accident-year development, well after case reserves have been set.

A practical detection step: pull neurological CPT codes from open WC claims and compare actual reimbursements against CMS fee schedule equivalents. Where actual reimbursement consistently exceeds CMS rates, the difference represents uncontrolled cost growth. Tracking that differential across accident years reveals whether the premium is widening, which would signal emerging adverse development before the next actuarial review.

What This Means for Your Next Review

Ask your actuary whether the medical severity trend separates fee-scheduled from non-fee-scheduled service categories, or applies a blended state trend derived from NCCI loss costs. For programs self-insured in the 17 no-ceiling jurisdictions, request a breakdown of open-claim neurological diagnostic balances relative to actuarially projected payments. If your program carries significant cumulative-trauma exposure, the size of that gap approximates your undetected severity overrun. The WCRI September 3, 2026 webinar will present additional state-level utilization data that may sharpen the exposure picture.

Sources

More from The Wire
Workers Comp

WC Pharmacy Bills 67% Higher When Claims Skip the Network

Enlyte's July 2026 Drug Trends report finds out-of-network WC prescriptions cost 67% more than in-network fills; self-insured employers whose case reserves rely on managed-program benchmarks are systematically understating open medical liability in physician-dispensing states.

3 min read
Workers Comp

RAND Study: California UR Reform Did Not Cut WC Medical Costs

A RAND Corporation study released August 19, 2026 finds SB 1160 produced no statistically significant change in utilization review approval rates; California self-insured employers who built expected claim ratios on the assumption that UR was suppressing early medical costs are working with understated ECRs.

3 min read
Workers Comp

Maryland's Firefighter Hypertension Rule Creates WC Reserve Gap

Maryland SB 90 takes effect October 1, extending a dual occupational and disablement presumption for hypertension to active paid firefighters, the highest-frequency condition any first-responder WC statute has ever covered, and an actuarial deadline for self-insured Maryland counties and municipalities.

3 min read