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Are Your Doctor’s Charges “Reasonable and Customary”?

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If you are lucky enough to have health insurance, one of the keys to keeping a handle on your healthcare costs is understanding what are “reasonable and customary” charges under your health insurance policy. If you can understand your health insurance policy’s “reasonable and customary” charges, you will have taken the first step in finding your way through the maze of your health insurance company’s system of charges and reimbursements.

What are “reasonable and customary” charges?

“Reasonable and customary” charges are what a health insurance company believes are the reasonable and customary charges for specific medical treatment in a specific region of the country. Health insurance companies calculate what they believe are the prevailing costs of each medical treatment in a geographic area, and this determines the reasonable and customary charge.

Why Are Reasonable and Customary Charges Important?

In many health insurance policies, whatever a health insurance company determines are the “reasonable and customary” charges for a treatment become the benchmark for what they will pay out for a patient’s claim. If a doctor or hospital charges more than what a health insurance company considers the reasonable and customary charge, the health insurance company will still only reimburse the claim based on what they consider reasonable and customary and will leave the patient responsible to pay the rest.

So, for example, say you have health insurance which generally covers 80% of your medical expenses. When you undergo a treatment which costs $100 dollars, you may think that your health insurance will reimburse you 80% of those medical expenses. But actually, your health insurance will only cover 80% of what it considers the reasonable and customary charges for your treatment. If your health insurance company only considers $50 to be a reasonable and customary charge for the treatment you’ve received, you will only received 80% of $50 ($40). You will be responsible for covering the remaining $60 out of your own pocket. Ouch!

Is There Anything I Can Do About This?

Okay, so under this “reasonable and customary” system, it’s obviously very easy for patients to get hit by much more in medical expense charges than they ever expected, even if they are very familiar with their health insurance policies. Is there anything we can do to try to keep our medical care affordable, or at least under some kind of control?

Unfortunately, health insurance companies do hold most of the cards on this “reasonable and customary” rule, but there are some basic steps you can take to protect yourself from getting completely slammed under it.

Find Out What Your Health Insurance Company Considers Reasonable and Customary. Your doctor’s office should be able to provide you with the CPT (current procedural terminology) code for whatever treatment, test, etc. that you are going to receive. With that CPT code, your health insurance company should be able to give you the current reasonable and customary charges associated with it.

If Your Doctor Charges More than the Reasonable and Customary Charge, Negotiate. Ask if they will accept whatever your health insurance company is willing to pay as full and final payment for your treatment. Health insurance companies negotiate down doctors’ fees all the time, so don’t be embarrassed to do the same. Medical care is expensive, and many doctors will try to work with you on keeping your medical care affordable.

If Your Claim is Denied or Your Reimbursement is Low, FIGHT IT! Yes, you always have the right to appeal your health insurance company’s decision. Make sure you follow your health insurance policy’s appeals procedure. Enlist your doctor’s office and your HR benefits manager in helping your prepare your appeal. If necessary, your state attorney general’s office and state insurance commission may also be able to help. For more on fighting denials, visit MyHealthCafe.com at What to Do If Your Health Insurance Claim is Denied.

Have you ever had your health insurance claim denied? Tell us about it in our discussion forum!


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