Let’s say you buy a travel policy for a month-long stay in Miami, Florida. You don’t plan on getting sick or needing health services but catch a cold that leads you to seeing a doctor. Your insurance company says they will reimburse you for the doctor visit based on what is Usual, Customary, and Reasonable. But that’s not very specific for you as a consumer. How do you know what you will be reimbursed? Will insurance pay for the whole visit, or just a fraction? Let’s break things down to see where the money really goes.

What Is a Usual, Customary, and Reasonable Charge?

A usual, customary, and reasonable charge, often referred to as UCR, is the typical amount a medical provider will bill for a certain service within a geographical region. UCR is calculated by third-party data analysts who look at the different providers in a region and see what is charged for a specific service. It is determined by pinpointing the amount that is charged by the most providers in that area. UCR will vary from region to region, and even between insurance companies, depending upon the analysts each company uses. That’s why it’s important for consumers to do their research before buying a policy. Look at the policy you are thinking of buying, but also do research on the providers you may need to see while you are on your trip.

How Does this Affect Insurance Claims?

Based on the data that the third-party data analyst receives, an insurance company will determine a maximum amount that they will reimburse for a specific medical service in a specific region. This will help them process claims, determine the amount that they will reimburse for claims on specific services and even allow them to deny reimbursement for any amount over what is determined by the UCR rate. Insurance companies will be able to tell you what the UCR rate is for a specific region, but only the doctor you see can tell you what they charge at their office.

How Do UCR Charges Affect the Insured?

Just because an insurance company sets a base UCR rate for a region, doesn’t meant that the provider you see for your cold will charge that amount. The actual bill by your provider could be higher or lower than the UCR rate, depending on the provider and what they typically charge. Since there are no set rates for services across the board, UCR rates will be determined by a majority finding, but it doesn’t take into account any outliers. If you are charged under the UCR rate, your insurance company will reimburse you the amount charged. But if the provider charges above the UCR rate, you will be on the hook to pay for any mount over what the UCR rate is. For example, a doctor’s visit for a cold in Miami, Florida is typically $375 according to what is usual, customary, and reasonable. However, if the doctor you go to charges $500 for that visit, your insurance provider will reimburse you $375, but you will still owe $125 to your doctor.

Education is key for patients and providers alike. Insurance companies set the rules for what they will pay or reimburse, so it is up to the patients to figure out how much they will actually have to pay once insurance has kicked in. It can feel confusing and probably intimidating at first, but there are people who can help. Contact the insurance company issuing the policy you are considering purchasing, for more information.