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Health care plans cover eligible expenses on a reasonable and customary basis.  The definition of reasonable and customary is commonly based on a range of charges based on geographic location given the service, treatment or procedure performed by an eligible health care professional (can vary slightly from carrier to carrier).

A reasonable and customary charge includes the following characteristics

  • A price that is common within a specific geographic area where the treatment/service is provided
  • A price published in a fee guide from a professional association (such the dental fee guide)
  • The maximum price established by law (such as for certain prescription drugs)

Insurance carriers will pay for eligible expenses up to the maximum charged for a specific treatment by a specified majority of providers in the local area.  Insurance carriers mostly use percentiles to determine the maximum reasonable and customary charge and make adjustments across their blocks of business periodically.