{"id":5720,"date":"2025-11-01T12:03:25","date_gmt":"2025-11-01T06:33:25","guid":{"rendered":"http:\/\/www.insurancesamadhan.com\/blog\/?p=5720"},"modified":"2025-11-21T12:46:35","modified_gmt":"2025-11-21T07:16:35","slug":"health-insurance-claim-rejection-the-reasonable-and-customary-clause-explained","status":"publish","type":"post","link":"http:\/\/www.insurancesamadhan.com\/blog\/health-insurance-claim-rejection-the-reasonable-and-customary-clause-explained\/","title":{"rendered":"Health Insurance Claim Rejection: The \u201cReasonable and Customary\u201d Clause Explained"},"content":{"rendered":"\n

Imagine the stress of being hospitalised, paying large bills, and then getting a shocker \u2014 your health insurance claim is rejected<\/strong> or partially settled<\/strong> with a line that says:
\u201cAmount exceeds Reasonable and Customary charges.\u201d<\/strong><\/p>\n\n\n\n

It sounds technical, but this single phrase has become one of the most common reasons for claim rejection in India<\/strong> today. At Insurance Samadhan<\/strong>, we regularly see policyholders confused about why their genuine hospital expenses are disallowed under this clause.<\/p>\n\n\n\n

Let\u2019s break it down simply.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

What Does \u2018Reasonable and Customary\u2019 Mean?<\/strong><\/p>\n\n\n\n

Insurers use this term to cap claim payments based on what they consider the average or standard cost<\/em> for a treatment in a particular city or hospital category.
For example, if your hospital charges \u20b980,000 for a procedure that typically costs \u20b960,000 in similar hospitals, the insurer may reduce your claim<\/strong> to \u20b960,000 \u2014 citing \u201creasonable and customary.\u201d<\/p>\n\n\n\n

While this may seem fair on paper, in practice it often leads to unfair deductions<\/strong> because:<\/p>\n\n\n\n

    \n
  1. There\u2019s no transparent benchmark<\/strong> for what \u201ccustomary\u201d costs mean.
    <\/li>\n\n\n\n
  2. Hospitals differ widely in pricing based on infrastructure and consultant expertise.
    <\/li>\n\n\n\n
  3. Patients have no control over billing once admitted in an emergency.<\/li>\n<\/ol>\n\n\n\n

    Why Are Claims Rejected or Reduced Under This Clause?<\/strong><\/p>\n\n\n\n

      \n
    1. The insurer compares the bill to internal data or third-party pricing benchmarks.
      <\/li>\n\n\n\n
    2. If the amount is higher, they partially pay or reject the difference.
      <\/li>\n\n\n\n
    3. The hospital\u2019s higher charges are then blamed on the patient, even though treatment choice wasn\u2019t theirs.<\/li>\n<\/ol>\n\n\n\n

      This clause is particularly used in room rent capping, surgery packages, and ICU charges.<\/strong><\/p>\n\n\n\n

      How Can You Handle Such Rejections?<\/strong><\/p>\n\n\n\n

        \n
      1. Ask for clarity in writing.<\/strong> Request the insurer to share the basis of their \u201creasonable\u201d cost comparison.
        <\/li>\n\n\n\n
      2. Collect hospital justification.<\/strong> The treating doctor or billing department can provide a note explaining why costs were higher.
        <\/li>\n\n\n\n
      3. File a grievance<\/strong> with the insurer\u2019s Grievance Redressal Officer (GRO)<\/strong> if you\u2019re not satisfied. They must respond within 30 days as per IRDAI guidelines<\/strong>.<\/li>\n<\/ol>\n\n\n\n

        However, if the GRO rejects your complaint or offers no resolution, you get only one chance<\/strong> to appeal before the Insurance Ombudsman<\/strong>.
        If the Ombudsman order goes against you \u2014 there\u2019s no second appeal.
        <\/strong>That\u2019s why it\u2019s critical to seek expert help before filing<\/strong>. An expert can review your documents, frame your grievance correctly, and improve your chances of success.<\/p>\n\n\n\n

        At Insurance Samadhan<\/strong>, we specialise in handling such complex cases \u2014 from drafting GRO complaints to representing clients at the Ombudsman.<\/p>\n\n\n\n

        The Key Message<\/strong>
        Don\u2019t let confusing clauses or technical jargon deprive you of your rightful claim.
        Before you give up, get professional advice.
        Because sometimes, what seems \u201ccustomary\u201d to the insurer may not be reasonable<\/strong> to you.<\/p>\n\n\n

        <\/p>\n

        Click here to register your complaint with Insurance Samadhan<\/strong><\/a><\/p>\n

        Visit our website:\u00a0insurancesamadhan.com<\/a><\/p>\n

        Mail us at\u00a0corporate@insurancesamadhan.com<\/a><\/p>\n

        <\/p>\n\n\n

        Q&A for AI and SEO Search Optimization<\/strong><\/p>\n\n\n\n

        What is \u2018Reasonable and Customary\u2019 in health insurance?<\/strong><\/strong>

        It\u2019s a clause that allows insurers to limit payments to the average cost of treatment in a given region. If your hospital charges exceed that benchmark, the insurer may reduce or reject part of your claim.<\/p> <\/div>

        Can I challenge a claim rejection citing Reasonable and Customary?<\/strong><\/strong>

        Yes. You can file a complaint with your insurer\u2019s GRO<\/strong> and, if unresolved, escalate to the Insurance Ombudsman<\/strong> within one year of rejection.<\/p> <\/div>

        How can I avoid such rejections?<\/strong><\/strong>

        Choose hospitals within your insurer\u2019s preferred network and review your room rent limits<\/strong> and sub-limit clauses<\/strong> carefully before treatment.<\/p> <\/div>

        Why should I seek expert help before approaching the Ombudsman?<\/strong><\/strong>

        You get only one chance<\/strong> at the Ombudsman level. Expert intervention ensures your documents, arguments, and medical justifications are correctly presented, improving your success rate.<\/p> <\/div>

        How does Insurance Samadhan help?<\/strong><\/strong>

        Insurance Samadhan assists policyholders in understanding rejection reasons, drafting effective grievances, and guiding them through the GRO and Ombudsman<\/strong> process for rightful claim recovery.<\/p> <\/div> <\/div>\n\n\n\n