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What Does "Reasonable and Customary" Actually Mean?
Here's an example: You end up in the hospital and the hospital bill amounts to ₹2,00,000. But your insurance company only covers ₹1,50,000. Why? That's where the "Reasonable and Customary" (R&C) clause kicks in.
Simply put: R&C charges are the usual fees that doctors, hospitals, and medical professionals charge for certain services in your location.
Breaking Down R&C with a Real Indian Example
Assuming you require a knee replacement surgery in Delhi:
Your Hospital Bill: ₹4,50,000
Insurance Company's R&C for knee replacement in Delhi: ₹3,80,000
Result: You may be required to pay ₹70,000 from your pocket
(Visual: A hospital bill with amounts marked showing the difference)
How Do Insurance Companies Decide R&C Charges?
These rates are decided by insurance companies based on:
📍 Your City/Town
Metro cities (Delhi, Mumbai) have greater R&C than small towns
🏥 Hospital Category
Corporate 5-star hospitals versus neighbourhood nursing homes
📊 Medical Procedure Complexity
Routine procedures versus specialized care
📈 Current Market Rates
The price which most of the hospitals in that region are charging for the same procedure
The R&C Clause: Your Shield or Your Burden?
The GOOD
Holds back the hospitals from overcharging you
Makes insurance premiums low for all
Equalizes medical expenses across locations
The CHALLENGE
You may be surprised with some out-of-pocket expenses
Restricted choice if you desire premium hospital room
May prove confusing at claim settlement
5 Smart Ways to Avoid R&C Surprises
What Does "Reasonable and Customary" Actually Mean?1. Choose Network Hospitals
Always prefer cashless treatment at your insurer's network hospitals where rates are pre-negotiated.
2. Pre-Authorization is Key
For planned procedures, get pre-authorization where the insurer confirms the covered amount in advance.
3. Understand Room Rent Caps
Many policies link R&C to room category. A premium room might mean higher co-pays.
4. Compare Before Committing
Verify usual costs for your treatment in your locality prior to hospitalization.
5. Speak with Your TPA/Insurer
Always ask for approximate costs from your Third-Party Administrator or insurer representative.
Real-Life R&C Situations in India
Scenario 1: The Premium Room Conundrum
Policy Room Rent Ceiling: ₹5,000 per day
Actual Room Selected: ₹7,500 per day (Deluxe)
Outcome: All other fees (doctor charges, medicines) could be cut proportionally
Scenario 2: Metro City vs. Tier-2 City
Angioplasty in Mumbai: R&C could be ₹3,00,000
Same process in Indore: R&C could be ₹2,00,000
Result: Treatment choice location affects coverage
Your Action Plan: Don't Get Caught Off Guard
Before Purchasing a Policy:
✅ Inquire about R&C calculation process
✅ Find out if they have an explicit R&C chart
✅ Know how they cover super-specialty treatments
At Hospitalization:
✅ Verify if the hospital is in network
✅What is "Reasonable and Customary" in Indian Health Insurance?
Here's an example: You end up in the hospital and the hospital bill amounts to ₹2,00,000. But your insurance company only covers ₹1,50,000. Why? That's where the "Reasonable and Customary" (R&C) clause kicks in.
Simply put: R&C charges are the usual fees that doctors, hospitals, and medical professionals charge for certain services in your location.
Breaking Down R&C with a Real Indian Example
Assuming you require a knee replacement surgery in Delhi:
Insurance Company's R&C for knee replacement in Delhi: ₹3,80,000
Result: You may be required to pay ₹70,000 from your pocket
(Visual: A hospital bill with amounts marked showing the difference)
How Do Insurance Companies Decide R&C Charges?
These rates are decided by insurance companies based on:
Your City/Town
Metro cities (Delhi, Mumbai) have greater R&C than small towns
Hospital Category
Corporate 5-star hospitals versus neighbourhood nursing homes
Medical Procedure Complexity
Routine procedures versus specialized care
Current Market Rates
The price which most of the hospitals in that region are charging for the same procedure
The R&C Clause: Your Shield or Your Burden?
The GOOD
Holds back the hospitals from overcharging you
Makes insurance premiums low for all
Equalizes medical expenses across locations
The CHALLENGE
You may be surprised with some out-of-pocket expenses
Restricted choice if you desire premium hospital room
May prove confusing at claim settlement
5 Smart Ways to Avoid R&C Surprises
1.Choose Network Hospitals
Always prefer cashless treatment at your insurer's network hospitals where rates are pre-negotiated.
2.Pre-Authorization is Key
For planned procedures, get pre-authorization where the insurer confirms the covered amount in advance.
3.Understand Room Rent Caps
Many policies link R&C to room category. A premium room might mean higher co-pays.
4.Compare Before Committing
Verify usual costs for your treatment in your locality prior to hospitalization.
5.Speak with Your TPA/Insurer
Always ask for approximate costs from your Third-Party Administrator or insurer representative.
Real-Life R&C Situations in India
Scenario 1: The Premium Room Conundrum
Policy Room Rent Ceiling: ₹5,000 per day
Actual Room Selected: ₹7,500 per day (Deluxe)
Outcome: All other fees (doctor charges, medicines) could be cut proportionally
Scenario 2: Metro City vs. Tier-2 City
Angioplasty in Mumbai: R&C could be ₹3,00,000
Same process in Indore: R&C could be ₹2,00,000
Result: Treatment choice location affects coverage
Your Action Plan: Don't Get Caught Off Guard
Before Purchasing a Policy:
✅ Inquire about R&C calculation process
✅ Find out if they have an explicit R&C chart
✅ Know how they cover super-specialty treatments
At Hospitalization:
✅ Verify if the hospital is in network
✅ Ask hospital administration about cost estimates
✅ Report to your insurer about planned procedures
At Claim:
✅ Keep all bills and documents in order
✅ Review the deduction breakdown
✅ Request clarification for any R&C reductions
The Bottom Line
The "Reasonable and Customary" clause is not designed to dupe you—it's a tool for curbing healthcare expenses and stopping overcharging. But not knowing it may result in some nasty financial surprises.
Your mantra needs to be: "Know your policy's R&C norms before you need to use them."Ask hospital administration about cost estimates
✅ Report to your insurer about planned procedures
At Claim:
✅ Keep all bills and documents in order
✅ Review the deduction breakdown
✅ Request clarification for any R&C reductions
The Bottom Line
The "Reasonable and Customary" clause is not designed to dupe you—it's a tool for curbing healthcare expenses and stopping overcharging. But not knowing it may result in some nasty financial surprises.
Your mantra needs to be: "Know your policy's R&C norms before you need to use them."
