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What is Reasonable & Customary?
One of the most controversial topics in the area of hospital
and medical reimbursement is the dispute over what constitutes
the reasonable and customary rate of reimbursement payable
by non-contracted healthcare carriers, health insurers and
health maintenance organizations (HMO’) and Preferred
Provider Organizations (PPO’s).
With ever growing frequency, healthcare carriers are ignoring
the provider’s actual billed charges and instead reimbursing
non-participating providers pursuant to what the carrier considers
the “reasonable and customary” charge for the particular
procedure or service furnished by the non-contracted facility.
A precise and universally accepted formula for determining
the UCR for any given procedure or admission remains elusive
and subject to wide variation depending on the type of service
rendered or the location of the providing facility.
However, readily available objective data such as the average
charge for the specific procedure or admission in the provider’s
geographic area and similar factors offer the non-contracted
carrier ample information to calculate payment close to an
acceptable reasonable and customary rate of reimbursement.
Unfortunately, our experience with this problematic issue
indicates that an alarming number of healthcare carriers are
grossly underpaying claims to non-participating providers by
and through the use of UCR calculations that have little or
no bearing to objective standards or any connection with the
just and correct determination of what constitutes the valid “reasonable
and customary” reimbursement rate.
Our recommendation to our acute care and ancillary provider
clients is for the facility or practitioner to conduct an inquiry
into what factors comprise its actual billed charges (i.e.
cost-to-charge ratio) and how the charges compare with the
fees billed by other facilities and providers in the same geographic
area for the same or similar procedures or admissions.
By compiling an objective and independently verifiable basis
for its actual billed charges, any provider faced with an underpayment
issued by a non-contracted healthcare carrier and premised
upon that carrier’s version of reasonable and customary
will have the essential billing data necessary to successfully
challenge any non-participating carrier’s underpayment
and obtain full and fair UCR reimbursement.dependently verifiable
basis for its actual billed charges, any provider faced with
an underpayment issued by a non-contracted healthcare carrier
and premised upon that carrier’s version of reasonable
and customary will have the essential billing data necessary
to successfully challenge any non-participating carrier’s
underpayment and obtain full and fair UCR reimbursement.
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