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What are usual, customary and reasonable (UCR) charges?

Usual, customary and reasonable charges (UCR) is the amount paid for a medical service in a geographic area based on what providers in the area usually charge for the same or similar medical service. The UCR amount is used by certain health plans to determine the allowed amount of coverage (i.e., what an insurer will approve).

Under "indemnity" health insurance plans, as opposed to managed care plans, you select your own providers and the insurer pays a certain percentage of your medical costs (for example 80 percent, while you must pay 20 percent).

Insurers typically base the amount they will pay on the UCR. However, that could mean that you have to pay more (sometimes much more) than your regular percentage of the cost. For example, if your doctor charges $100 for a test or procedure, and that is the UCR amount your insurer uses, the insurer would pay $80 and you would pay $20, as expected. If if the doctor charges $140, the insurer will still pay only 80 percent of the $100 UCR ($80), leaving you to pay the remainder of $60, which is 43 percent of the total charge (20 percent of the UCR, plus the additional $40).  

Although policies regarding basing coverage on UCR charges typically are spelled out in the fine print of the insurance policy, many consumers are surprised by the added cost when they receive a bill. Before having a procedure, treatment, test, etc., find out if your coverage is based on UCR charges and compare what your provider will be billing you with what your insurer considers usual, customary and reasonable.

 

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