What Does R&C Mean in Insurance and Why It Matters

Policyholders frequently encounter “Reasonable and Customary” (R&C) in insurance, especially health insurance. This concept directly influences coverage for medical services. Understanding R&C and its function within your policy helps manage healthcare costs. This article explains R&C’s meaning and implications for policyholders.

Understanding Reasonable and Customary

“Reasonable and Customary” (R&C) refers to the maximum amount an insurance company will pay for a specific medical service or supply. This amount is determined by evaluating what healthcare providers in a particular geographic area charge for the same or similar services. R&C clauses prevent excessive charges and promote fairness in billing.

The term “usual” refers to the individual provider’s standard fee. “Customary” reflects the range of fees charged by similar providers in the same geographical region. “Reasonable” indicates that the fee is justified given the specific circumstances. The R&C amount is the insurer’s allowed payment, which may differ from the actual billed amount.

Determining Reasonable and Customary Charges

Insurance companies determine R&C amounts by analyzing extensive databases of claims data. They assess what providers in a specific area charge for various medical procedures and services. This data helps establish a prevailing rate for a service within a defined geographical region.

Factors influencing this include the specific type of service rendered, the provider’s specialty, and the average fees charged by other providers with comparable qualifications in that locale. Insurers use this information to set a benchmark, ensuring payments align with market rates and control overall healthcare costs.

How R&C Affects Your Insurance Coverage

The R&C determination directly impacts the amount your insurer will reimburse for a medical service. If a provider’s charge exceeds the R&C limit, your insurance plan will only pay a percentage of the R&C amount, not the full billed amount. This difference can increase your out-of-pocket expenses, as you become responsible for the portion exceeding the R&C limit, in addition to any deductibles or co-insurance.

For example, if a procedure costs $500, but the R&C amount is $350, and your plan pays 80% of the R&C, the insurer would pay $280. You would then be responsible for the remaining $220. This often leads to “balance billing,” where the out-of-network provider bills you for the difference between their charge and the amount the insurer paid. In-network providers cannot balance bill.

Navigating Disagreements Over R&C

If you believe an R&C determination is incorrect, you have the right to dispute it. First, gather all relevant documentation: your Explanation of Benefits (EOB), the provider’s detailed bill, medical records, and your policy’s R&C clauses and appeal procedures.

Next, contact your insurer’s customer service for a detailed explanation of the R&C calculation. If unsatisfactory, initiate an internal appeal within 180 days of receiving the denial. Provide a written appeal stating why the charges are reasonable, attaching all supporting documentation, including a letter from your medical provider.

If the internal appeal is unsuccessful, pursue an external review. An independent third party reviews your claim, and their decision is binding. Information on external review is provided in the denial letter or from your state’s insurance department. Maintain a detailed log of all communications.