Workers Comp Medical Leakage Shows Up Late in Your EMR
CWCI found unlisted professional-code payments grew to 14.4% of professional service payments. That leakage can sit inside reserves until it reaches your EMR.
Workers comp medical leakage is medical cost growth that does not look like a new claim count problem. CWCI found unlisted professional-code payments rose from 5.6% to 14.4% of professional service payments from 2017 to 2024 (CWCI, June 16, 2026). If those payments stay in incurred losses, they can flow into the experience modification rate.
Workers comp medical leakage is easy to miss because it does not arrive as a dramatic new injury. It arrives as a bill code, a reserve change, and then a number on your experience modification rate (EMR, also called the mod) worksheet.
CWCI's June 16 release put a name to the problem. The California Workers' Compensation Institute (CWCI) called unlisted-code growth "a new and increasingly important source of medical cost growth" (CWCI, June 16, 2026). That is a California finding. It is also a warning for Southeast construction contractors running loss-sensitive, deductible, or high-claim-frequency programs.
Why workers comp medical leakage reaches the mod late
The leak is not the code by itself. The leak is what happens when a payment escapes the normal price guardrails, lands in the claim value, and stays there long enough to be reported.
CWCI studied medical payments from 2017 through 2024 using its Industry Research Information System database (CWCI, June 16, 2026). Professional services and facility fees made up about 70% of California workers' comp medical spending, but the strongest pressure came from professional services outside the Official Medical Fee Schedule (OMFS), where prices grew faster than fee schedule benchmarks (CWCI, June 16, 2026).
The mod does not care whether the higher incurred value came from the injury itself or from a billing path that priced outside the schedule. It sees the incurred number.
The unlisted-code numbers are not small
CWCI found the average payment per professional service transaction increased 33.2% from 2017 to 2024, above the 25.9% increase in the Medicare Economic Index (CWCI, June 16, 2026). Unlisted professional service reimbursements more than doubled over the same eight-year period, with average payments up 106.7% (CWCI, June 16, 2026).
The share shift is the cleaner signal. Unlisted professional codes grew from 5.6% of professional service payments in 2017 to 14.4% in 2024 (CWCI, June 16, 2026). On $100,000 of professional medical payments, that is the difference between $5,600 and $14,400 flowing through unlisted codes. The spread is $8,800 before the mod formula ever sees it.
Code 97799, unlisted physical medicine and rehabilitation, accounted for nearly half of all unlisted professional service payments in 2024, with an average payment of $1,663 per transaction (CWCI, June 16, 2026). Two such transactions put $3,326 into the medical side of a claim.
The national severity signal is already flashing
The CWCI data came from California. The national severity data points the same direction.
The National Council on Compensation Insurance (NCCI) reported that construction had the highest lost-time medical claim severity across industries, and construction medical severity increased 13% between accident years 2023 and 2024 (NCCI State of the Line Guide, 2026). NCCI also estimated average medical lost-time claim severity for accident year 2025 at about 4% above accident year 2024 (NCCI State of the Line Guide, 2026).
Those numbers matter because experience rating usually compares the latest available three years of an employer's payroll and losses to similar employers (NCCI ABCs of Experience Rating, 2025). Incurred medical cost does not need to be spectacular to matter.
NCCI unit reporting is the hinge. First reports are valued 18 months after the policy effective date and due two months later; subsequent reports are valued every 12 months after the prior valuation (NCCI Unit Reporting, 2026). NCCI defines incurred amount as paid amount plus reserved amount (NCCI Unit Reporting, 2026). It defines gross incurred loss as paid and outstanding indemnity and medical amounts as of the valuation date (NCCI Complex Claims Reporting, 2026).
Once the inflated value is reported, the worksheet treats it as experience, not a billing argument.
What bill review can miss before reporting
Bill review is supposed to catch pricing outside the rules. But the CWCI data shows why fee schedules alone are not enough. Unlisted durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) grew from 41.9% of DMEPOS payments in 2017 to 50.1% in 2024, passing scheduled DMEPOS codes for the first time (CWCI, June 16, 2026). Medical-legal average payments were 35.1% above 2017 levels by the first full year after the 2021 fee schedule revision (CWCI, June 16, 2026).
In our reviews of Southeast contractor worksheets, medical leakage usually shows itself as a reserve that feels too round, too stale, or too comfortable with old assumptions. The bill may have been reviewed. The reserve may not have been forced to admit what the reviewed bill actually means.
A run of moderate medical files can build a debit mod one quiet valuation at a time.
What an audit would check
An audit checks whether medical incurred values on the worksheet still match the claim reality before unit statistical values harden into the mod. It reviews whether reserves on open medical files reflect current treatment, reviewed bills, and claim posture rather than broad medical inflation assumptions. It also checks whether medical-only claims and deductible-program loss values are being reported in the right shape for experience rating.
If your claim count is stable but your medical incurred values keep climbing, send us your NCCI worksheet and we'll review where the leakage is entering the mod.