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What's Reasonable & Customary Mean?
Dec 12th, 2015
Most if not all group insurance plans contain some mention of reasonable and customary. This is an approach by providers to limit allowable costs for some services within a plan without providing a fixed hard cap. Reasonable and customary refers to the maximum allowable amount that a provider will reimburse on a particular service or item.
Few insurers post their reasonable and customary charges because they can differ by region and year submitted. This means that reasonable and customary reflects the typical fees and or costs associated with a particular service or product, in a specific geographical region.
While most providers charge less that the reasonable and customary limits imposed by the group insurers, having the limits “off-the-record” does help keep providers competitive on fees/charges. Publishing the limits would likely result in providers increasing fees to maximize the plan which would in turn drive up premium rates.
Plan members should obtain estimates on services to ensure they understand what the group insurer will reimburse before they are out-of-pocket on large expenditures. Most group insurers have a swift review system to return a confirmation of eligible expense.