Usual Customary and Reasonable Rates and Health Insurance

Buying insurance requires a certain amount of research before you even begin comparing insurance quotes and part of that research is learning the terminology associated with different types of insurance, including auto, home, life, health and renters. Usual, customary and reasonable rates make up a group of health insurance terms you might not completely understand. Usual, customary and reasonable rates is often shortened to UCR and is the basic amount your health insurance provider uses to determine how much it will pay for medical services covered by your policy.

Here’s an account of potential UCR issues taken from the opening remarks of the Market Regulation and Consumer Affairs Committee and the Health Insurance and Managed Care Committee of the National Association of Insurance Commissioners public hearing at the NAIC’s 2009 Fall National Meeting:

“The issue of what constitutes a “usual, customary, and reasonable” (UCR) payment arises when out-of-network providers seek reimbursement for covered services under a network based health insurance plan, a self-funded arrangement, or a public program. Out-of-network providers and facilities are free to charge whatever fee they choose and, without a contract or law that establishes the amount to be paid, an approach or system is needed to determine how out-of-network providers will be compensated for covered services. “

The most important effect UCR rates could have on you is if you receive medical services that exceed your health insurance provider’s UCR determination you are responsible for paying the difference. Many health service providers will work with you to reduce, or maybe even waive, the extra out-of-pocket expense you face. Your health insurance provider fulfills its contractual duty for your policy by paying its UCR rate and isn’t required to pay costs above that amount.

Did you know? The NAIC looked into UCR rates at the 2009 Fall National Meeting.

Takeaways:

1. Your insurance provider uses UCR to determine how much it will pay for medical services.
2. Out-of-network health care providers’ fees could differ from your health insurance provider’s UCR determination.
3. You must cover medical expenses above your heath insurance provider’s UCR rates out of your own pocket.

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