Florida 2-20 General Lines Agent (Property, Casualty, Commercial Lines and Florida Law)Health InsuranceHard
A Florida family is comparing different health insurance plans. One plan describes its benefits as covering 'reasonable and customary' charges. What does 'reasonable and customary' typically refer to in health insurance?
- AThe average charge for a medical service by providers in a specific geographic area.
- BAny charge that a medical provider bills for their services.
- CThe lowest possible charge for a medical service in a given geographic area.
- DA fixed price set by the insurance company for all medical services nationwide.
Show answer & explanationAnswer & explanation
Correct answer: A. The average charge for a medical service by providers in a specific geographic area.
'Reasonable and customary' refers to the average fee charged by providers for a specific medical procedure or service within a particular geographic area. Insurers will only pay up to this amount, even if the billed charge is higher.
Why the other options are wrong
- B. Incorrect. Insurers do not pay 'any' billed charge; they limit payments to reasonable and customary amounts.
- C. Incorrect. It's usually an average, not the absolute lowest.
- D. Incorrect. Charges vary by region and provider, so a nationwide fixed price is not practical or common.
Reasonable and Customary Charge
The maximum amount an insurance company will pay for a specific medical service, based on the average fee charged by providers for the same service in the same geographic area.
- Based on typical charges in a local area.
- Determined by the insurer's data.
- If a provider charges more, the insured may pay the difference.
- Helps control healthcare costs.
Memory trick: Reasonable: what's typical around here, not just what's billed, my dear.