Fee Schedule Gaps That Inflate Your Workers Comp Mod
WCRI's July 2025 FlashReport finds 44 states plus D.C. use fee schedules, but services outside fixed reimbursement can push reserves before unit-stat and inflate your mod for years.
Workers comp fee schedules control prices on most medical services in 44 states plus D.C. (WCRI, July 2025), but durable medical equipment, professional services, and other non-price-controlled services can carry reimbursement amounts well above scheduled rates. When a carrier reserves a claim at those higher amounts before the unit-stat valuation date, the inflated reserve enters your experience modification. One $25,000 reserve increase on a single lost-time claim can cost $25,000 to $75,000.
Most contractors in the Southeast assume a state fee schedule caps their workers comp medical exposure. It mostly does. But WCRI's July 28, 2025 FlashReport highlights a gap that turns a claim-review issue into a multi-year mod and premium problem.
The report covers medical services delivered from January 1, 2019 through June 30, 2025 across 44 states plus D.C. that use fee schedules (WCRI, July 2025). The finding that matters to your worksheet: not every service falls under fixed reimbursement. Durable medical equipment and certain professional services can be priced outside the schedule, and carriers reserve accordingly.
What the fee schedule actually covers
A workers comp fee schedule sets a maximum reimbursement rate for specific medical services. Most hospital, surgical, and evaluation codes are controlled. The schedule gives carriers a ceiling when they set reserves, which are the carrier's estimate of what a claim will ultimately cost. That ceiling is what keeps most medical-only claims from ballooning on your experience modification rate.
The gap is everything outside the ceiling. WCRI's analysis of non-price-controlled services shows that certain categories, including durable medical equipment and some professional services, can carry charges that exceed what a fee schedule would allow for comparable controlled services (WCRI, July 2025). When a carrier sees an open claim with uncontrolled reimbursement exposure, the reserve reflects the uncertainty. That reserve sits on your NCCI worksheet at the unit-stat valuation date, the snapshot moment that locks claim values into your mod calculation.
How one claim becomes a three-year problem
Here is the mechanism. A contractor files a lost-time claim involving a back injury. The treating physician orders a custom spinal orthotic and ongoing physical therapy. The orthotic falls under durable medical equipment. Some of the professional service codes billed alongside it sit outside the fee schedule's fixed rates. The carrier, unsure what the final reimbursement will be, bumps the reserve by $25,000 to cover the exposure.
That $25,000 hits your worksheet at the next unit-stat date. For a contractor with a split point at the NCCI standard, the inflated reserve crosses from primary into excess, where it carries less weight but still moves the mod. For a smaller contractor whose total claim value stays under the split point, the full $25,000 sits in primary losses and hits at maximum impact.
The dollar consequence compounds. A $25,000 reserve increase on one lost-time claim can cost $25,000 to $75,000 or more over three policy years. That figure accounts for the mod multiplier applied to your premium across the experience period, carrier schedule credit or debit adjustments triggered by the elevated mod, and bid eligibility effects when a 1.05 mod crosses above a project's 1.00 threshold. The claim itself might settle for far less. The reserve that entered your worksheet at valuation is what the mod remembers.
Why the gap is quiet
Fee schedules get credit for holding down workers comp medical costs, and the credit is mostly earned. WCRI's data spanning January 1, 2019 through June 30, 2025 shows that price-controlled services in fee-schedule states generally trend lower than non-price-controlled alternatives (WCRI, July 2025). The problem is that the averages hide the outliers. A single claim with uncontrolled DME or professional services doesn't move the state's loss-cost data. It moves yours.
In our reviews of Southeast contractor worksheets, the most common pattern is a reserve that was set high during active treatment and never adjusted after the claim resolved. The fee schedule capped the hospital and surgical components. The DME and professional service components closed lower than reserved. But the unit-stat date passed months before the claim settled, and the inflated value is what NCCI used.
What an audit would check
An audit checks whether the claim values on your NCCI worksheet match the carrier's current records, particularly on any lost-time claim involving durable medical equipment or extended professional services. It looks for reserves that were set during active treatment and never trued down after the fee schedule applied to the final reimbursement. It checks whether the unit-stat valuation captured an inflated number that the carrier has since corrected in its own system but never reported to NCCI. Most contractors with a DME-related lost-time claim in their experience period have at least one of these. Most don't know the reserve and the final cost are different numbers.
If your worksheet carries a reserve that doesn't match reality, send us your NCCI worksheet and we'll review it for free.