The California Workers’ Compensation Research Institute (CWCI) published a new report on Medical Inflation and Cost Drivers in California Workers’ Compensation, which used data from CWCI’s Industry Research Information Database to review medical payments from 2017-2024.

The study found that an increased use of unlisted billing codes outside of the Official Medical Fee Schedule is a growing driver of medical cost inflation. Unlisted professional service payments more than doubled from 2017–2024, with average payments increasing 106.7% and their share of payments rising from 5.6% to 14.4% One single code (97799 – physical medicine/rehab) accounted for nearly half of all unlisted professional payments.

In contrast, scheduled services generally tracked expected inflation benchmarks, indicating OMFS controls remain effective where applied. Meanwhile, DMEPOS unlisted codes exceeded scheduled codes for the first time, representing 50.1% of payments in 2024. Pharmacy was the only category with sustained cost declines, driven by reduced utilization following formulary adoption.

This trend increases cost exposure by shifting spend outside fee schedule protections, particularly in professional services and DME. It reinforces the need for strong bill review, coding oversight, and reimbursement management, as traditional fee schedule controls alone may not fully contain medical costs