Listen up! A podcast version of this article is now available over at The Comp Pod with Andy & Ivy. Visit our YouTube channel https://www.youtube.com/@TheCompPod
Medical equipment represents a growing portion of workers’ compensation medical costs. According to industry data, the average cost of medical equipment increased by a whopping 87% from Service Year (SY) 2012 to 2024. This jump is primarily driven by an increase in the average cost of Durable Medical Equipment (DME), a subset of medical equipment which now comprises 28% of total medical equipment costs in workers’ comp.1
This increase in costs can be explained by new DME products hitting the market as well as high demand. According to one source, that demand could stem from several factors: the increasing penetration of home healthcare services, high occurrence of chronic conditions, and rising elderly population.2
For the workers’ compensation industry, the growing cost of DME is especially concerning because the costs are not always transparent. Many DME products are classified as “miscellaneous,” meaning payers don’t typically know which type of DME product they’re being asked to cover – and E1399 (DME Miscellaneous) is now the top DME code driving up cost share.3
Let’s take a deeper look at the current state of DME as well as strategies for increasing transparency and ultimately keeping costs down.
Durable (can withstand repeated use)
Used for a medical reason
Typically only useful to someone who is sick or injured
Used in your home
Expected to last at least three years4
According to Healthesystems data, more than half of DME spend every year is classified under a miscellaneous code. And of all miscellaneous codes – more than 50 – code E1399 is by far the most used, making up 25% of DME spend in 2025. This is a catch-all code for items that don’t have specific Healthcare Common Procedure Coding System (HCPCS) designations. HCPCS is used to classify medical supplies for billing and reimbursement purposes.
E1399 is often used for new equipment – and there’s plenty of miscellaneous-coded DME products hitting the market. Healthesystems data shows the number of new E1399 products has grown by over a percent each year for the last three years. In 2025 alone, Healthesystems tracked over 600 new E1399 products – comprising 15% of DME spend.
And according to NCCI data, the cost share of E1399 among all medical equipment categories (DME; Prosthetics, Orthotics and Implants; and Supplies) almost doubled from 6% in SY 2012 to 11% in SY 2020. After that, it grew at an even faster rate to 16% in 2024 – while the cost share of other DME codes remained more or less stable.5
Why are miscellaneous codes notable? Because they can mask thousands of different products, obscuring billing and also making it impossible to apply criteria such as patient eligibility or appropriateness of the product. Cost containment is also a problem. Some of these miscellaneous products may not be high volume, but they are big-ticket items. And because DME billed under E1399 is typically not bound by fee schedule maximums, reimbursement amounts “vary widely depending on the payer and the documentation provided.”6
Increasing transparency into medical prices has long been a goal for workers’ comp stakeholders. In fact, both executive leaders and medical program managers cited increasing transparency/visibility into pharmacy program economics as their top pharmacy goal in this year’s Annual Industry Insights Survey.7 And the need for transparency extends to ancillary services, too.
As mentioned, many ancillary medical bills use ambiguous miscellaneous codes such as E1399 – which sidestep visibility at the product level. This inhibits payers’ ability to understand exactly what product or therapy they are being billed for. The result is that payers may be limited to blunt measures and edits to control overutilization, such as dollar thresholds, and are left unable to apply other criteria such as patient eligibility or appropriateness of the product or therapy.
The solution? Partners that are able to provide more specific, product-level data to identify the actual DME product being billed – so payers can see clearly what item was provided, how it’s being used, and whether it’s appropriate for the injured worker patient.
This product-level visibility allows payers to move beyond blunt cost controls, such as dollar thresholds, and instead apply more precise criteria – like whether the product is clinically appropriate, medically necessary, or aligned with evidence-based treatment guidelines.
Having a fuller picture of the products enables payers to employ cost containment strategies and ensure more transparent and consistent pricing.
These miscellaneous-coded DME devices began showing up in workers’ comp claims about three years ago. They apply red and near-infrared light to diseased or injured tissues and can be used to treat acute musculoskeletal injuries.8 They also have the potential for treating concussions and Traumatic Brain Injury.9 Healthesystems data shows 20 new products in this category hit the market in 2025 – with more likely to come.
However, there is insufficient clinical evidence to suggest that these devices are an effective modality for pain relief, swelling, inflammation, or wounds. A 2025 review of studies concluded that further high-quality trials and standardization of PBM protocols are warranted before widespread clinical adoption.10
Thermal compression is not a new therapy, but more than 50 new products still came to market last year, according to Healthesystems data. These portable units provide hot and cold therapy to treat pain, inflammation, and swelling following an injury or surgical procedure.
However, there is no significant clinical evidence showing that thermal compression therapy provides greater results than standard ice packs or reusable gel hot or cold packs11 – making thermal compression a costly alternative to these traditional treatments.
In early 2026, a federal grand jury in Rhode Island indicted the former Chief Executive Officer and Chief Operating Officer of Zynex, Inc., a medical device company, with conspiracy to commit healthcare fraud, securities fraud, and mail fraud. This is a prime example of how bad actors in the medical supply/DME space can defraud government and private healthcare payers and even patients.
Zynex submitted millions of dollars in fraudulent billings for medical devices and supplies that were not medically necessary, not covered by insurance, and not agreed to by the patients. They continued sending supplies even when patients told Zynex to stop sending them because they already had too many.12
This is another area where product‑level visibility – not pricing data alone – can make a meaningful difference. Fraudulent, wasteful, or abusive auto‑shipping of supplies is notoriously difficult to identify without detailed insight into what is actually being dispensed. In many cases, individual shipments (such as replacement pads for TENS units) are priced low enough to fall beneath traditional cost‑based thresholds, and fluctuating pricing further obscures recognizable patterns.
Access to product‑level transparency can reveal which supplies are being shipped, how often, and by whom. With that level of detail, potentially wasteful –or even fraudulent – auto‑shipping behaviors become visible and measurable, rather than hidden behind ambiguous or blended codes. This visibility enables payers and their partners to identify problematic vendors, take corrective action, and remove or block bad actors from ancillary supply networks – helping to mitigate ongoing fraud, waste, and abuse risk and prevent future leakage.
