'Reasonable and customary charges' deduction — what it means and how to question it

A "reasonable and customary" deduction means the insurer has paid a charge only up to what it treats as the usual rate for that service in your area, instead of what your hospital billed. Policies define the term — one wording describes it as the provider's standard charges, consistent with prevailing charges in the area for similar services, taking the illness into account. Ask the insurer in writing which benchmark it used, for which line, and how the nature of your illness was considered.

Start with your policy's definition. New India's Mediclaim wording defines reasonable and customary charges as those "which are the standard charges for the specific provider and consistent with the prevailing charges in the geographical area for identical or similar services, taking into account the nature of the Illness / Injury involved".^[1]

The same wording promises to reimburse hospitalisation expenses that are "Reasonable and Customary, and Medically Necessary". Its Arogya Sanjeevani wording does something similar through its definition of medical expenses: no more than "other hospitals or doctors in the same locality would have charged for the same medical treatment".^{[1, 2]}

What the definition actually tests

• The provider's own standard charges: Compare what you were billed with the hospital's published tariff. A charge in line with its own tariff meets the first part.
• Prevailing charges in the area: Ask which hospitals or which data the insurer compared with, and for which area.
• Identical or similar services: The comparison should be like for like: the same procedure, a similar room category and a similar level of hospital.
• The nature of the illness or injury: Complications, emergencies and longer stays cost more. A treating doctor's note can explain why. See a letter from your doctor.

How to question it

1. 1

   Find the line

   Identify each line cut on this ground in the deduction sheet. See reading the settlement sheet.

2. 2

   Ask for the basis in writing

   Which comparison was used, for which area, and which clause. A partial disallowance must come with details that refer to the specific policy terms.^[3]

3. 3

   Get the hospital's tariff

   Ask the hospital's billing or insurance desk for its schedule of charges for that service.

4. 4

   Complain if the answer does not explain it

   An insurer should resolve a complaint within 14 days, with reasons that refer to the policy terms if it does not accept it.^[4]

ClaimAssure is an independent private platform. It is not an insurer, IRDAI, Bima Bharosa or the Insurance Ombudsman, it never files anything on your behalf, and it cannot promise any outcome. What it does is read your documents and show you what they say.

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