California's Official Medical Fee Schedule comprises multiple fee schedules governing reimbursement for different categories of workers' comp medical care. Below, we break down how reimbursement rates under the Physician Fee Schedule (the schedule governing reimbursement for physician and non-physician services) have compared to Medicare rates for the same services over time.

The data tell a story in three parts:

• First, California has steadily increased its Physician Fee Schedule Conversion Factor relative to Medicare, pushing reimbursement rates to 154.51% of Medicare rates as of March 2026.
• Second, even at 155% of Medicare, California's fee schedule is among the lowest workers' comp physician fee schedules in the nation.
• Third (and most damning), providers don't receive fee schedule amounts because of Preferred Provider Organizations (PPOs). Once payers apply PPO discounts, real-world reimbursement drops to roughly 128% of Medicare.

With PPOs undermining every California fee schedule increase, physicians are opting out of the workers' comp system entirely, imperiling access to care. Instead of paying to keep workforces healthy, employers' premium dollars are flowing to PPOs and their private equity backers.

Part 1: Historical Data: Steadily Rising Fee Schedule Rates

The California Division of Workers' Compensation (CA DWC) establishes Physician Fee Schedule rates based on Medicare's Relative Value Unit (RVU) system, but mandates higher reimbursement rates than Medicare to reflect the time and resources required to treat injured workers and navigate the complex, burdensome billing process.

Periodically, the CA DWC increases the Conversion Factor (CF) used to calculate workers' comp physician reimbursement rates. The table below tracks the divergence between the California Physician Fee Schedule Conversion Factor and the Medicare Conversion Factor since 2014.

The most telling column is ‘CA Fee Schedule Rates as % of Medicare,’ which has climbed steadily from 107.07% in 2014 to 154.51% in 2026. This widening gap does not reflect California paying providers more; rather, it reflects Medicare paying dramatically less in real terms.

The Medicare Conversion Factor has declined both nominally and, relative to cumulative inflation, catastrophically. California's Physician Fee Schedule has at least roughly tracked inflation over the same period.

Part 2: CA Physician Fee Schedule: Among the Lowest in the Nation

A fee schedule at 155% of Medicare sounds substantial. But in the context of workers' comp nationally, it is not.

A 2025 report from the Workers' Compensation Research Institute (WCRI) found that California's overall fee schedule reimbursement sits well below the median state. Sixteen states have fee schedules at least double Medicare rates.

After accounting for California's unusually high provider practice expenses, the WCRI concluded that California's aggregate fee schedule rate is 17% below the median state. In other words, California providers bear some of the highest costs in the nation to deliver care, while receiving some of the lowest reimbursements for treating injured workers.

Part 3: PPOs Drop Effective Reimbursement to 128% of Medicare

There’s a significant gap between California Physician Fee Schedule rates and what California providers are actually paid to treat injured workers. That difference is the essential lens through which stakeholders must view the real-world reimbursement picture.

According to daisyBill's reimbursement data, drawn from more than 9 million procedure codes with dates of service on or after January 1, 2022, California workers' comp providers receive, on average, only 83% of the Physician Fee Schedule amount. Against over $1.1 billion in fees due, payers remitted $922 million, leaving $187.6 million in unpaid balances.

Applying that 17% structural discount to the current Conversion Factor reveals what providers actually receive:

The published fee schedule appears to pay 155% of the Medicare rate. What providers actually receive represents roughly 128% of Medicare, a margin so thin it fails to offset the administrative burden of workers' comp billing, let alone justify the cost of treating a patient population that requires extensive documentation, authorization fights, and billing disputes.

This discount is structural, driven by PPO network contract leasing. Providers sign PPO discount contracts, often under threat of exclusion from Medical Provider Networks (MPNs). Refuse to sign, and the provider risks losing eligibility to treat injured workers restricted to that MPN.

Once signed, PPOs typically sell or lease contractual discount rates to other PPOs and bill review vendors, which then apply them across bills from payers with no direct contractual relationship with the provider.

The mechanics are straightforward and the consequences are severe: employers pay premiums to fund medical care for their injured employees. PPOs, many owned or backed by private equity, position themselves between those funds and the physicians who earned them, extracting profit through contracted discounts.

The physician provides the care, the employer pays for it, and PPOs collect a share of every dollar…without treating a single patient.

Some of the resulting reimbursement rates are staggering. Examples include:

• City of Long Beach - 22% of fee schedule via Coventry/MultiPlan
• Ralph's - 22% via Coventry/MultiPlan
• Disney - 44% via MultiPlan
• Next Level Administrators - 21% via Coventry/MultiPlan
• Berkshire Hathaway - 43% via Coventry/MultiPlan
• State Compensation Insurance Fund - 42% via Anthem
• Liberty Mutual - 46% via Anthem
• ESIS - 42% via Anthem
• City of Riverside - 22% via Careworks/Coventry/MultiPlan

This is the environment in which California physicians are deciding whether to treat injured workers.

The state increases the fee schedule; PPOs negate the increase. Employers pay higher premiums; providers receive lower reimbursement. The gap between what employers pay for and what physicians receive is not going toward care. It’s going to private equity profits.

California has not established a mechanism to dispute improper PPO reductions, leaving providers with no real recourse when PPOs apply unspecified, illegally shared, or non-existent discounts to reduce payments. Until that changes, the fee schedule will continue to be a mirage, injured workers will continue to lose access to care, and employers will continue to get a deeply questionable return on investment for their rising premiums.

daisyBill makes billing for workers’ comp patients easier, faster, and more accurate. Click below to learn more:

BILL BETTER: DAISYBILL