Usual and Customary (U&C) Charge
A Usual and Customary charge, or Reasonable and Customary fee, is what the health insurance determines is the proper payment range for a service or medical procedure. Estimates are specific to geographical areas. In other words, the customary charge in New York City may be different from what a doctor would charge in Lincoln, Nebraska.
Health insurance is a regulated industry, however, when it comes to Usual and Customary charges, there are few rules. Companies determine the proper range based on statistics gathered by a third-party or employees of the insurance organization. Once numbers are compiled, they look for trends. If most New York doctors charge between 75 and 100 dollars for a wellness check up, the assumption is this would be a reasonable fee range for wellness checks in the area. In Nebraska, the same visit might only cost on average between 30 and 50 dollars. For this state, the Reasonable and Customary fee drops down to fit that range.
Usual and Customary charges are common in dental and major medical programs or with indemnity healthcare coverage. Individuals insured in a managed care plan are not subject to the Reasonable and Customary fee stipulation unless they go out of the network. With HMO or PPO healthcare plans, doctors who sign up for the network have a set amount they can charge for services. This is a reversed version of the same system, but one that offers protection to the insured.
The draw back of Usual and Customary charge systems comes when billing does not fall into the range. For instances, a doctor who bills 100 dollars for an office visit might only get a payment from the insurance company of 75 dollars. The patient may then be responsible for the difference of 25 dollars.
For the insured that goes out of the network, the same risk exists. If you have a minor surgical procedure performed out of network, the insurance company will pay the agreed upon percentage on the Usual and Customary charge amount. If the surgeon bills 1,500 dollars for the service, and the fee states the reasonable payment is 1,000, the company only issues a payment for 800 dollars. This leaves the patient responsible for the co-payment percentage plus the difference between the billed amount and payment.
Each state regulates insurance differently. Refer to your policy to see if Usual and Customary charges apply to you.