Are Reasonable and Customary Charges Really Reasonable?

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“Reasonable and Customary” charges in a benefits plan refer to limits put on a medical or dental treatment, supply or service, by a health insurance provider.  These limits reflect differences in the cost of health and dental treatment, service and supplies in different regions across Canada and are applied according to where the service or supply was received.

The purpose of Reasonable and Customary charges is to prevent overbilling by a supplier or practitioner because the patient is covered by supplementary insurance.  The Reasonable and Customary charge limits are one of numerous controls an insurance provider employs to ensure that while medically necessary coverage is being provided to plan members, long term costs remain sustainable.  If these controls were not in place, insurers would have no immediate recourse to prevent reimbursement of excessive fees which would be detrimental to the long term viability of a plan.

When submitting claims to Insurance providers for health or dental treatment or supplies we expect that we will be reimbursed the amount we paid according to our benefit plan’s reimbursement schedule.   This may not always be the case.  Insurance companies state that they will pay the Reasonable and Customary fees for treatment, supplies or service.   At one time, Insurance companies published these fees.   Unfortunately, this led to some practitioners charging the maximum amount an insurance company would reimburse.  Removing this published fee guide has also given more flexibility to the insurance companies to adjust these fees throughout the year as provincial or territorial professional associations that govern medical and dental practitioners change their fees.  If fee information is not readily available, an insurance company will survey different practitioners or suppliers within specific provinces, to determine average costs for specific items or services.

If you have questions or concerns about how much out of pocket expense you might incur for a given treatment or item, we recommend that you talk to your practitioner or supplier to verify the total cost or ask them to submit a predetermination to your insurer on your behalf.  Your insurer or plan member advocate can provide you with details about your coverage and eligible expenses under your plan.

Smart shopping for health and dental products and services can help plan members reduce their out of pocket expenses, while helping employers keep the benefit plan costs in check.

Written by: Cathy Walker