Reasonable and Customary Fees

Health care plans cover eligible expenses on a reasonable and customary basis.  The definition of reasonable and customary is commonly based on a range of charges based on geographic location given the service, treatment or procedure performed by an eligible health care professional (can vary slightly from carrier to carrier).

A reasonable and customary charge includes the following characteristics

  • A price that is common within a specific geographic area where the treatment/service is provided
  • A price published in a fee guide from a professional association (such the dental fee guide)
  • The maximum price established by law (such as for certain prescription drugs)

Insurance carriers will pay for eligible expenses up to the maximum charged for a specific treatment by a specified majority of providers in the local area.  Insurance carriers mostly use percentiles to determine the maximum reasonable and customary charge and make adjustments across their blocks of business periodically.

 

Category: FAQ's