Usual, Customary and Reasonable
Many people are unaware of the term “Usual, Customary and Reasonable (UCR)” until they become a victim of it. UCR may seem like just another tactic used by the insurance company to get out of paying bills, but it’s not. UCR is used to benefit both you, and the insurance company.
An insurance company has no way to control the price the doctor’s charge for a procedure or service. Therefore, the insurance company doesn’t want to commit to paying any price the doctor decides to charge. If they were to pay without limitations, the providers would likely keep raising the price.
UCR is essentially an average price charged for a service by all providers in the area. The insurance company is willing to pay the average, but not willing to pay over average price. The insured then becomes responsible for the amount over UCR.
In most cases, if the insured has to pay more, they will attempt to bargain with the provider, asking that they lower the price. In some cases the provider will adjust the cost closer to that of UCR. This typically saves both you and the insurance company money.
Managed care plans, such as PPO (Preferred Provider Network) or HMO (Health Maintenance Organizations) also save you and the insurance company money. PPO and HMO plans are one way to nearly avoid receiving a bill over and above the UCR price. The doctor has likely agreed to provide a discount for services to members of the network. If the provider charges over the UCR price, the network administrator will likely contact the provider and attempt to bargain the price.
Indemnity health insurance plans are notorious for charges over UCR. The insurance company allows you to use any provider at any facility. However, the insurance company is not committing to paying any cost. They will still pay the UCR price for each service. You will be responsible for anything over and above UCR. Remember UCR is the average price in your area for a service/product, most people use a managed care program, thus receiving a discount, which is configured in the average. Therefore, when you use a provider without a network, you will not receive a discount and the amount charged is more likely to be over and above UCR price. Granted, you may enjoy the freedom of using any provider and/or facility, it may not be the most economical choice.
In any case, keep in mind; you have the right to bargain with any doctor and/or provider. It never hurts to ask if they can save you money. You may be surprised of the result.