In 2019, Neelam Vohra filed a claim with National Insurance Company for ₹5.4 Lakh to cover a knee replacement surgery at a network hospital. Shockingly, the insurer approved only ₹2.2 Lakh, citing R&C charges as the reason for deducting the remaining ₹3.19 Lakh.
In February 2023, Mayur Parmar underwent cataract surgery in Vadodara and submitted a claim of ₹1.69 Lakh. His insurer approved just ₹49,000, denying the remaining amount under the R&C charges.
In a similar instance of amount being denied under R&C clause, Mahesh Parikh was denied an amount of ₹18,441 from the cataract procedure that costed him ₹42,441.
What’s on this page?
What do these cases have in common?
The dangerous and ever increasing menace of Reasonable & Customary charges. Time and again, the judiciary has had to come to the rescue of the hapless consumer. In this piece, let us try and understand what these charges are and how can you protect yourself against these deductions.
What are Reasonable and Customary charges?
The term Reasonable and Customary charges refers to the insurer-determined “standard” cost for a specific service or procedure within a geographical area. In essence, insurers look at what they deem “reasonable” for the type of service, the location, and the illness. These charges should ideally reflect the average or typical costs for similar treatments within the same city or area.
However, the ambiguity of Reasonable and Customary charges leads to inconsistencies. The Reasonable and Customary charges for a single room differs vastly from that of a twin-sharing room for the same treatment. Since hospitals charge varied rates based on factors like room type and hospital reputation, insurers tend to cap the claim amount in ways that may not always seem “reasonable” to policyholders.
Lets understand with an example
If one of your parent needs to be operated for a Coronary Artery Bypass Grafting CABG – heart surgery, the treatment could range from anywhere between ₹ 2-4 Lakh. Now depending on the city you are in, the hospital & the room you choose, your expense might turn out to be very different from what the Insurer deems “reasonable”. And that precisely is the reason why so many Customers have to take the legal resource when it comes to rejections under this head.
Why do Insurers impose Reasonable and Customary charges?
R&C charges are, in theory, a safeguard for insurers against overcharging by hospitals. With rising instances of hospitals billing inflated amounts, insurers introduced Reasonable and Customary charges to ensure claims remain within reasonable cost brackets. By doing so, they aim to mitigate excessive charges and maintain sustainable premium levels for policyholders.
However, due to the subjective nature of what is “reasonable,” many claims get reduced. Consequently, policyholders feel the burden, and Reasonable and Customary charges have become a frequent grievance.
How can customers avoid reasonable and customary charges while claiming health insurance?
- Opt for Cashless Treatments: Whenever possible, choose cashless treatments at network hospitals. These facilities tend to align more closely with insurer guidelines on charges, reducing the risk of hefty out-of-pocket expenses.
- Review Hospital Charges: Whether in-network or not, carefully check all hospital charges. Some charges may not align with insurer expectations for R&C, especially for add-on services or luxury room options.
- Consider an Reasonable and Customary Waiver: Some insurers offer policies or add-ons that waive R&C restrictions, though at a higher premium. If your budget allows, this can help avoid disputes over R&C charges during claim settlement.
How to find reasonable and customary charges
The best way to find reasonable and customary charges is to check with your insurer. The problem however is that Insurers might not want to readily share these with you.
The next best alternative is to consult your Broker. Your Insurance Broker is an industry insider who has all of this data and knows these rates to the T.
Conclusion
By understanding the nuances of Reasonable and Customary charges and making informed choices, customers can better navigate the complexities of health insurance claims, reducing the risk of unpleasant surprises in times of medical need.
