Introduction
Have you ever faced a situation where your health insurance claim was partially paid, leaving you confused and frustrated? If your insurer mentioned something called the “Reasonable and Customary Clause” as the reason for the short-settlement of the claim, you’re not alone. At Insurance Samadhan, we frequently assist policyholders who face this issue. Read on to learn what this clause means and what you can do if your claim has been reduced because of it.
Understanding the Reasonable and Customary Clause
The Reasonable and Customary (R&C) Clause is a provision in health insurance policies that allows insurers to limit the health insurance claim amount to what they feel are the “usual” charges for any particular treatments or procedures in a geographic area. Simply put, if the hospital charges more than what the insurance company believes is the standard rate for that treatment, they may only pay what they consider is the “reasonable” amount.
For example, if a hospital charges ₹50,000 for a procedure that typically costs ₹35,000 in your city according to your insurer’s data, the insurance company might only approve ₹35,000, leaving you to pay the difference of ₹15,000.
Why Insurers Apply This Clause
Insurance companies implement this clause to:
1. Control costs: By limiting reimbursements to standard rates, they prevent overcharging.
2. Standardise payments: It helps them maintain consistency in insurance claim settlements across various hospitals.
3. Prevent fraud: The clause discourages inflated billing practices.
While these reasons might seem reasonable from an insurer’s perspective, they can create significant financial strain for policyholders who weren’t aware of these limitations.
Signs Your Claim Was Reduced Due to R&C Clause
You might have encountered this clause in the claim settlement process in insurance if:
1. Your claim settlement letter mentions terms like “reasonable and customary charges,” “usual and customary,” or “UCR limits”
2. The insurer paid less than the actual hospital bill without clear explanation of other deductions
3. The deduction amount seems arbitrary and doesn’t align with specific policy exclusions
What Can You Do If Your Claim Is Affected?
At Insurance Samadhan, we recommend taking these steps if your claim has been short-settled due to the R&C clause:
1. Review Your Policy Document
Start by carefully reading your policy document to understand if and how the R&C clause is mentioned. Look for sections that discuss claim settlements, limitations, or exclusions. Understanding your policy terms is your first line of defense. You can also use the ‘Know Your Policy’ feature of the Polifyx app to understand your policy better.
2. Request Detailed Explanation
Contact your insurance company and request a written explanation of:
1. The specific R&C rates they applied to your insurance claim
2. How these rates were determined
3. The geographic area considered for establishing these rates
Insurers should be able to justify their decision with concrete data rather than vague explanations.
3. Gather Supporting Documentation
Collect evidence that supports the reasonableness of the charges:
1. Get a detailed breakup of the hospital bill
2. Request a letter from your doctor explaining why the procedure costs were justified
3. Obtain information about similar charges from other hospitals in your area
4. Ask for the hospital’s standard rate card for the procedure
4. File a Formal Appeal
Most insurance companies have a formal appeals process. Submit a written appeal that includes:
1. Your policy number and claim reference
2. A clear explanation of why you believe the full amount should be covered
3. Supporting documentation from your doctor and hospital
4. Reference to any policy language that supports your case
Be specific about which charges you’re contesting and why you believe they are reasonable.
5. Escalate to Higher Authorities
If your appeal is rejected, don’t give up. You can escalate the matter to:
1. The insurance company’s grievance cell
2. The insurance ombudsman in your region
3. The Insurance Regulatory and Development Authority of India (IRDAI)
How Insurance Samadhan Can Help You
Fighting short-settled health insurance claims can be time-consuming and complex. That’s where we come in. At Insurance Samadhan, we specialise in providing insurance claim assistance and can help you with:
1. Professional claim review: Our experts will analyse your policy document and claim papers to identify any discrepancies or unfair deductions.
2. Appeal preparation: We’ll help you draft a comprehensive appeal with the right arguments.
3. Regulatory assistance: If needed, we can guide you through the appeals process of approaching regulatory authorities.
Prevention Tips for Future Claims
To avoid R&C clause issues in the future during the claim settlement process in insurance:
1. Research hospital costs: Before planned procedures, inquire about costs at multiple hospitals.
2. Consult with your insurer: For planned hospitalisations, ask your insurance company about their R&C limits for your treatment.
3. Choose network hospitals: Prefer hospitals that have tie-ups with your insurer, as they generally have pre-agreed rates.
4. Review your policy: During renewal, consider policies with more transparent and generous R&C provisions.
Final Thoughts
The Reasonable and Customary Clause, while legitimate, should not become a tool for unfair health insurance claim reductions. Understanding your rights and taking appropriate action can significantly improve your chances of receiving fair compensation.
Remember, insurance is meant to provide financial security during medical emergencies. If you believe your claim has been unfairly short-settled due to the R&C clause, don’t hesitate to challenge it. At Insurance Samadhan, we’re committed to helping you navigate these complex situations and making sure you receive the coverage you’re entitled to under your policy.
Don’t let claim short-settlements add to your stress during already difficult times. Reach out to us, and let our expertise work for you in securing what’s rightfully yours.
Click here to register your complaint with Insurance Samadhan
Visit our website: insurancesamadhan.com
Mail us at corporate@insurancesamadhan.com
