Definitions
Health Insurance Terms
Usual, Customary & Reasonable

Usual, Customary & Reasonable

Definition:

A reduction in the payment of benefits on a claim that is justified by the insurance company as "the going rate" to be paid in that geographical area.

Application:

When a physician "contracts" with a health plan, both parties have agreed upon a rate on which the medical procedure will be paid. However, when there is no contract, the health plan must determine if the amount billed by the physician is in excess of what the plan would normally pay for that procedure. They use statistics of what is billed by physicians in that geographical area and try to come up with an amount that is acceptable to reimburse.

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