Medical service costs paid per workers’ compensation claim in California increased 5% in 2026 after rising 10% in 2024, according to the Workers’ Compensation Insurance Rating Bureau of California. Medical expenses represented 52% of total loss payments in the state’s workers’ compensation system during the year.
The 2025-2026 increase reflected a 4% rise in average prices paid per transaction and a 1% increase in utilization. Regional trends differed significantly, with Southern California recording an 8% increase in medical paid per claim while Northern California remained broadly stable.
Higher prices across service categories drove most of the increase in Southern California. In Northern California, lower average prices offset stronger utilization growth, leaving overall paid per claim little changed.
Medical-Legal services were among the fastest-growing cost categories. They accounted for 17% of total medical payments in 2026, while paid per claim increased 47% cumulatively between 2021 and 2025. The rise followed implementation of California’s revised Medical-Legal Fee Schedule in 2021. Earlier growth came largely from higher reimbursement levels, while more recent increases have been tied to greater utilization per claim.
Cumulative trauma claims contributed substantially to that trend. These claims have become more common and typically require more Medical-Legal services than other workers’ compensation claims.
Comprehensive evaluations represented 68% of Medical-Legal payments in 2025 despite accounting for only 45% of services. These evaluations are usually the first Medical-Legal assessment performed on a claim.
Medical Equipment and Other Services also recorded substantial growth. The category represented 13% of medical payments in 2025, while paid per claim rose 55% cumulatively from 2020 through 2025.
WCIRB attributed part of the increase to Medicare-related fee schedule updates for durable medical equipment. Higher utilization and costs for interpreter and home health services added further pressure.
Interpreter and home health services aren’t subject to a fee schedule. Together they accounted for more than 40% of Medical Equipment and Other Services payments during 2025.
Interpreter services recorded one of the largest increases in the report. Paid per claim rose 141% between 2020 and 2025, while transactions per claim increased 93%.
WCIRB linked much of that growth to cumulative trauma claims, which are more likely to involve interpreter services. Both higher prices and increased service use contributed to the overall increase.
Home health expenses have also climbed steadily since 2021. Workers aged over 60 accounted for 51% of home health payments in 2025, compared with 35% in 2015.
WCIRB cited an ageing workforce and a possible shortage of medical professionals as factors behind the increase. These trends have raised both the frequency and cost of home-based care.
Services outside California’s medical fee schedules are becoming a larger source of workers’ compensation costs. They represented 17% of total medical payments in 2025, up from 12% in 2021.
Utilization of non-fee-schedule services has increased steadily since 2022. These services accounted for nearly 30% of total medical utilization growth during 2024 and 2025, while utilization of services covered by fee schedules remained relatively flat.
Average payments per transaction are also considerably higher for services without fee schedule limits. That combination has increased their contribution to overall medical cost growth.
Physician Services remained the largest category, accounting for nearly half of medical payments in 2025. The portion of those payments outside fee schedule limits increased to 12.2% in 2024 before declining to 11.2% in 2025.
The temporary increase was driven largely by an unlisted Physical Medicine procedure. Use of that procedure fell in 2025, particularly in Northern California.
Evaluation and Management services and Physical Medicine together represented nearly 70% of Physician Services payments. Evaluation and Management paid per claim rose 6% in 2025, almost entirely because of higher prices.
WCIRB also recorded a shift toward more complex office visits. Physical Medicine costs per claim have increased in nearly every year since 2014, reaching 17% growth in 2024 before slowing in 2025.
Pharmaceutical spending continued moving in the opposite direction. Prescription drugs represented only 2% of total medical payments in 2025, down from 11% in 2015.
WCIRB attributed the long-term decline partly to reforms under Senate Bill No. 863 and lower opioid prescribing. Pharmaceutical costs therefore account for a much smaller share of California workers’ compensation medical spending than a decade ago.
