Employee benefit plans are all designed with internal limitations and maximums which are intended to maintain affordability and to prevent abuse. Most of these limitations and maximums are up front and stated in the employee booklet, as well as the contracts. What aren’t always so clear and up front are the maximum amounts insurers will pay for individual products or services on a per claim basis. These maximums are known as Usual & Customary (U&Cs) or Reasonable & Customary (R&Cs).
What the insurer is willing to pay
Often, we hear concerns from employees who receive claim reimbursements that are less than the amount they paid for a service such as a massage or a purchase of medication and they do not understand why. “I paid $200 for my massage I should get $200 back since my plan allows $500 per year” or “My pharmacist charged $75 but my plan only paid $65”. The reason is the U&Cs. Every insurance company maintains a schedule of the maximum amount they will pay, at any given time, for individual services such as chiropractor or massage therapy, as well as maximum mark-up amounts on medications. In this way, they can help keep costs down while maintaining good value for employers and employees.
Usual & customary schedules
U&C schedules are based on the constant monitoring carriers do to keep up with the health care market. They strive to ensure that most claims are paid in accordance with the plan but not outside the normal costs for services. As a rule, most carriers won’t pay more than 10% above the wholesale cost or ingredient cost of medications, whether the medication is a generic or a brand name drug. Just like the maximum that will be paid for a dispensing fee, charges beyond carrier maximums will be charged to the claimant.
The confusion is that the U&C schedules are only updated periodically and, generally, are not released for public consumption. This results in differences between carriers. Where something might have been covered in full by one insurer, another might cover a few dollars less. Schedules aren’t standardized from one carrier to another. A carrier may allow more than others for massage but less for physiotherapy. It all depends on the results of research and timing, on their part.
Geography impacts the schedule
U&Cs may differ geographically, as well. Competition for services in downtown Toronto keeps chiropractic per visit charges lower than in a smaller centre like Tweed or Parry Sound. Higher per visit maximums can, therefore, have an impact of the premiums a carrier will require to maintain the plan.
Claimants will be less likely to reach the overall maximum if the per visit maximum is followed, if necessary medications will cost the plan less when the allowable mark-up is respected and reasonable prices will be paid for medical equipment where caps are imposed. Benefit plans shouldn’t pay whatever an individual service or product supplier thinks they can get. The plans should pay no more than market value. In this way, plans will remain viable and of good value to employers and employees alike.
Please contact ASSOCIUM Benefits for more details on the Usual and Customary amounts pertaining to your plan.
ASSOCIUM Benefits is a very unique employee group benefits provider, focused on supporting benefits advisors and their employer clients. We provide Brokers and Plan Sponsors with a range of solutions from traditional group benefits to more customized, cost and tax effective employee compensation. Let’s connect to find out how we can help.