Imagine facing a medical emergency, undergoing treatment, and then discovering your health insurance claim has been rejected due to a clause you never knew existed. This scenario is becoming increasingly common for Indian policyholders, all because of the often-overlooked "Reasonable and Customary" clause.
What Exactly is the 'Reasonable and Customary' Clause?
Hidden within the fine print of most health insurance policies, the Reasonable and Customary (R&C) clause acts as a cost ceiling. Insurance companies use it to determine what they consider a "reasonable" charge for medical procedures, hospital rooms, and treatments in your specific geographic area.
When your hospital bill exceeds what the insurer deems "customary," they can outright reject the excess amount or, in some cases, deny the entire claim. This leaves policyholders responsible for paying the difference out-of-pocket.
Why Are Insurers Increasingly Using This Clause?
Industry experts note a significant rise in R&C-related claim rejections. This trend correlates with escalating healthcare costs and the emergence of hospitals charging premium rates for standard procedures. Insurance companies argue this clause protects them from inflated medical bills and helps keep premiums affordable for all customers.
How Do Insurers Determine "Reasonable" Costs?
Insurance providers maintain extensive databases that track typical charges for medical procedures across different cities and hospital tiers. When processing claims, they compare your hospital bills against these benchmarks. If your costs significantly exceed the database average for similar treatments in your area, the R&C clause may be invoked.
Protect Yourself: 5 Essential Steps
1. Pre-Hospitalization Checks Are Crucial
Before planned hospitalization, contact your insurance provider to understand their approved cost range for your specific procedure. Many insurers offer pre-authorization that includes cost estimates.
2. Choose Network Hospitals Wisely
Always prefer cashless treatment at network hospitals. These facilities have pre-negotiated rates with insurers, significantly reducing R&C clause invocation risks.
3. Demand Detailed Cost Breakdowns
Request a comprehensive cost estimate from your hospital before admission. Scrutinize it for unnecessary procedures or premium-priced services that might trigger the clause.
4. Understand Your Policy Inside Out
Thoroughly review your policy document, specifically looking for the R&C clause section. Don't hesitate to ask your insurer for clarification about how they determine customary charges.
5. Negotiate With Your Hospital
Many hospitals are willing to negotiate package rates for planned procedures. Mentioning that you're using insurance might help secure rates aligned with insurer expectations.
What If Your Claim Gets Rejected?
If faced with an R&C-based rejection, you have recourse options. Start by formally disputing the decision with your insurance company, providing supporting documents from your hospital about treatment necessity and cost justification.
If the insurer remains uncooperative, escalate your case to the Insurance Regulatory and Development Authority of India (IRDAI) ombudsman. Many policyholders have successfully overturned unfair rejections through this channel.
Being an informed insurance consumer is your best defense against unexpected claim rejections. Understanding hidden clauses like R&C ensures you're truly protected when healthcare needs arise.
