UK Private Health Insurance: 'Reasonable & Customary' Explained

Demystifying 'Reasonable and Customary': What You Need to Know for Your UK Private Health Insurance Claims

Demystifying "Reasonable and Customary": What This Crucial Clause Means for Your UK Private Health Insurance Claims

Navigating the world of private medical insurance (PMI) in the UK can feel like deciphering a complex code. You've diligently chosen a policy, committed to premiums, and have the peace of mind that comes with knowing you're covered for unexpected health challenges. But then, a moment arrives when you need to make a claim, and you encounter a term that often causes confusion, frustration, and sometimes, unexpected bills: "Reasonable and Customary" (R&C).

This seemingly innocuous clause is one of the most vital, yet frequently misunderstood, components of your health insurance policy. It's the mechanism through which your insurer determines how much they will pay for a specific medical service. Ignore it, and you could find yourself facing significant shortfalls – the difference between what your medical provider charges and what your insurer deems "reasonable" to pay.

This comprehensive guide is designed to peel back the layers of mystery surrounding "Reasonable and Customary." We'll explore what it means, why it exists, how it's applied, and most importantly, how you can proactively protect yourself from unexpected costs. Our aim is to empower you with the knowledge needed to confidently manage your private healthcare journey, ensuring your policy delivers the protection you expect.

What Exactly is "Reasonable and Customary" (R&C)?

At its heart, "Reasonable and Customary" refers to the maximum amount your health insurance company will pay for a particular medical service or treatment. It's an internal benchmark that insurers use to assess the fairness and typicality of charges submitted by medical professionals and facilities.

Think of it this way: your insurer isn't just signing a blank cheque for any medical bill you incur. They operate on the principle that there's a prevailing, fair price for specific medical procedures, consultations, or diagnostic tests within a given geographical area. The R&C clause ensures that the charges you're billed for are in line with what other similar providers in your region would typically charge for the same service.

It's crucial to understand that R&C is not about whether a treatment is medically necessary or appropriate for your condition. That's a separate assessment made by your medical team and, following pre-authorisation, agreed upon by your insurer. Instead, R&C focuses purely on the cost of that necessary treatment.

The clause applies to a vast array of services, including:

• Consultation fees for specialists (e.g., orthopaedic surgeons, cardiologists).
• Fees for diagnostic tests (e.g., MRI scans, X-rays, blood tests).
• Charges for surgical procedures, including the surgeon's fee, anaesthetist's fee, and theatre costs.
• Hospital accommodation charges (e.g., per night for a private room).
• Charges for medical supplies and devices used during treatment.

The goal of R&C is multifaceted: to prevent healthcare providers from overcharging, to ensure a degree of fairness across the private healthcare landscape, and ultimately, to protect the financial sustainability of the insurance pool, benefiting all policyholders.

The Core Components of R&C: What Factors Do Insurers Consider?

Defining what's "reasonable and customary" isn't an arbitrary decision. Insurers employ sophisticated data analysis and benchmarks to establish these limits. While the exact methodology can vary between insurers, several key factors are consistently taken into account:

1. Geographic Location

Healthcare costs vary significantly across the UK. A consultation with a specialist in Central London, for example, will almost certainly be more expensive than the same consultation in a regional city or a less affluent area. Insurers maintain different R&C schedules based on postcodes or broad geographic zones to reflect these regional cost differences. This means the R&C limit for a particular procedure in Manchester will likely be different from that in Edinburgh or Brighton.

2. Specialist's Fees and Expertise

The individual medical professional's experience, reputation, sub-specialty, and even their specific practice overheads can influence their fees. While R&C aims to standardise, it does account for general variations. A highly sought-after surgeon with decades of experience and a unique specialisation might, within limits, charge slightly more than a newly qualified consultant, but there's a ceiling. Insurers gather data on what similar specialists in similar fields charge.

3. Nature and Complexity of the Treatment/Procedure

A straightforward GP consultation will have a very different R&C limit compared to a complex neurosurgical procedure. The complexity, time required, specialised equipment needed, and the number of medical personnel involved all feed into the R&C calculation. Procedures are often coded, and each code has an associated R&C value.

4. Hospital Charges

Hospitals have their own fee structures for things like bed nights, theatre time, nursing care, and use of facilities. Dedicated private hospitals may have higher overheads and therefore higher charges than a private wing within an NHS hospital. Insurers will have R&C limits for these hospital-specific charges, again based on location and the type of facility.

5. Typical Market Rates and Peer Group Data

This is perhaps the most critical factor. Insurers accumulate vast amounts of data on what thousands of healthcare providers charge for a multitude of services across the country. They analyse this data to determine the "median" or "average" charge for a given service in a specific area. If 80% of knee surgeons in Birmingham charge between £200-£250 for an initial consultation, the R&C limit for that service in Birmingham will likely fall within that range. Charges significantly above this average might be deemed "unreasonable."

6. Industry Benchmarks

Beyond their own internal data, insurers also refer to industry-wide benchmarks and, in some cases, data from independent bodies that monitor private healthcare costs. This ensures their R&C rates remain competitive and fair within the broader market.

By combining these factors, insurers develop complex algorithms and databases that allow them to assess each claim against their predetermined R&C limits.

Why Do Insurers Use R&C Clauses?

While the R&C clause can sometimes feel like a hurdle for policyholders, it serves several fundamental purposes from an insurer's perspective, ultimately aiming to benefit the entire policy pool:

1. Cost Control and Affordability

Without R&C clauses, healthcare providers could theoretically charge any amount they wished, knowing an insurance company would pick up the tab. This would lead to uncontrolled cost escalation, driving up premiums for everyone and making private health insurance unaffordable for many. R&C acts as a vital brake on healthcare inflation.

2. Fairness and Preventing Overcharging

The clause protects policyholders from being overcharged by unscrupulous providers. It ensures that you're paying a fair market rate for services, rather than an inflated price simply because you have insurance. It creates a level playing field where providers must align their fees with common market practices.

3. Sustainability of the Insurance Scheme

Insurance works on the principle of collective risk. Premiums paid by many cover the claims of a few. If claims costs spiral out of control due to excessive charges, the entire system becomes unsustainable. R&C helps maintain the long-term viability and financial health of the insurance scheme, ensuring it can continue to pay out legitimate claims.

4. Standardisation and Consistency

R&C provides a consistent framework for assessing claims. It introduces a degree of standardisation, meaning that similar claims for similar services are evaluated against the same criteria, irrespective of who the policyholder is or where exactly the treatment took place (within the same geographic R&C zone).

5. Promoting Efficient Healthcare Delivery

By setting R&C limits, insurers indirectly encourage healthcare providers to operate more efficiently and competitively. Providers who consistently charge significantly above R&C limits may find themselves less frequently recommended by insurers or preferred by policyholders who want to avoid shortfalls.

In essence, while it adds a layer of complexity, the R&C clause is a necessary mechanism to maintain a balanced, affordable, and sustainable private healthcare system in the UK.

The Potential Pitfalls: When R&C Can Lead to Shortfalls

Understanding what R&C is, and why it exists, is only half the battle. The real challenge for policyholders often arises when the R&C limits are exceeded. This is when you can encounter a "shortfall" or "deficit," meaning you are personally liable for the difference between the provider's charge and what your insurer pays.

Here are the common scenarios where R&C can lead to unexpected out-of-pocket expenses:

1. Surprise Bills from Consultants

This is perhaps the most frequent and frustrating pitfall. You consult a specialist, undergo a procedure, and expect your insurer to cover the full cost. However, the consultant's fee (or the anaesthetist's fee) might be higher than your insurer's R&C limit for that specific service in your area. You then receive a bill for the difference. This can happen for:

• Initial consultations
• Follow-up consultations
• Surgical fees
• Anaesthetist fees (often charged separately)
• Assistant surgeon fees

2. Exceeding Hospital Facility Charges

While less common than consultant shortfalls, hospitals also have their own fee schedules for things like bed nights, operating theatre time, and nursing care. If you choose a particularly high-end private hospital, or if their charges for certain facilities exceed your insurer's R&C for that type of facility in your region, you could face a shortfall.

3. Diagnostic Test Charges

You might be referred for an MRI, CT scan, or extensive blood tests. The clinic or laboratory performing these tests charges a fee. If their charge for a specific scan or test is above the R&C limit, you'll be responsible for the difference. This is especially prevalent with highly specialised or newer diagnostic techniques.

4. High-Cost Geographical Areas

As mentioned, London is notorious for higher healthcare costs. While insurers adjust their R&C limits for different regions, the sheer variance in fees in London can sometimes make it harder to find providers who consistently charge within R&C, leading to more frequent shortfalls for policyholders in the capital.

5. Lack of Pre-Authorisation or Understanding

The biggest reason for shortfalls is often a lack of clear understanding or communication before treatment. If you don't get pre-authorisation for every stage of your treatment, or if you don't specifically ask your insurer about the R&C limits for the proposed fees, you're flying blind.

It's vital to remember that these shortfalls are your responsibility. Your contract is with your insurer, and your contract is also with your medical provider. If the insurer only pays part of the bill, you're legally obligated to pay the rest to the provider.

Real-Life Scenarios: How R&C Plays Out in Practice

Let's illustrate how the R&C clause can impact policyholders with a few common scenarios:

Scenario 1: The Routine Follow-Up Consultation

• The Situation: Ms. Davies has private health insurance and needs a follow-up consultation with an orthopaedic specialist after a minor ankle injury.
• The Action: Ms. Davies' GP refers her to a local private orthopaedic consultant. She calls her insurer for pre-authorisation for the consultation.
• The R&C Impact (illustrative): The insurer confirms the consultation is covered and informs her of their R&C limit for an orthopaedic follow-up in her postcode: £180. The consultant's fee is £200.
• The Outcome (illustrative): The insurer pays £180. Ms. Davies receives a bill for the £20 difference from the consultant, which she pays out of pocket. While annoying, the shortfall is manageable.

Scenario 2: The Planned Elective Surgery

• The Situation: Mr. Khan requires elective knee surgery. He has identified a highly recommended surgeon through his network.
• The Action: Mr. Khan gets a referral and then contacts his insurer for pre-authorisation for the surgery. He also requests a detailed fee schedule from the surgeon, anaesthetist, and the private hospital.
• The R&C Impact: The insurer confirms cover for the surgery. They inform Mr. Khan of their R&C limits:
  • Illustrative estimate: Surgeon's fee: £2,500
  • Illustrative estimate: Anaesthetist's fee: £700
  • Illustrative estimate: Hospital bed night: £800
  • Theatre costs: £1,200
  • His chosen surgeon charges £3,500. His anaesthetist charges £900. The hospital charges are within the R&C limits.
• The Outcome: The insurer pays £2,500 for the surgeon and £700 for the anaesthetist. Mr. Khan faces a shortfall of £1,000 for the surgeon's fee and £200 for the anaesthetist's fee, totalling £1,200. He now has to decide whether to proceed and pay the shortfall or find an alternative surgeon who charges within the R&C limits.

Scenario 3: The Unforeseen Diagnostic Test

• The Situation: Mrs. Green has persistent headaches, and her GP refers her to a private neurologist. After an initial consultation (which was within R&C limits), the neurologist recommends an urgent MRI scan of her brain.
• The Action: Mrs. Green gets pre-authorisation for the MRI from her insurer. The neurologist's practice arranges the scan at a nearby private imaging centre.
• The R&C Impact (illustrative): The insurer's R&C limit for a brain MRI in that area is £450. The imaging centre charges £550 for the scan.
• The Outcome (illustrative): The insurer pays £450. Mrs. Green receives a bill for £100 from the imaging centre. She was unaware that diagnostic centres also have varying fee structures and that R&C applies to these as well.

These examples highlight that R&C is not just about major surgery; it can impact almost any aspect of your private healthcare journey. The key takeaway is that proactive communication with your insurer and providers is paramount.

Navigating the R&C Minefield: Proactive Steps to Protect Yourself

The good news is that with the right knowledge and a proactive approach, you can significantly reduce the likelihood of facing unexpected R&C shortfalls. It requires a bit of effort on your part, but it's an investment that pays dividends in peace of mind and financial security.

1. Understand Your Policy Wording THOROUGHLY

Before you even think about making a claim, take the time to read your policy documents. Pay particular attention to the sections on "Benefit Limits," "How We Pay Claims," "Reasonable and Customary Charges," and "Shortfalls." Some policies might even state if they have a "full medical underwriting" option which can sometimes allow for slightly broader cover, though R&C still applies. Being aware of the general terms is your first line of defence.

2. Pre-Authorisation is Paramount for Every Step

This cannot be stressed enough. Always, always, always get pre-authorisation from your insurer before any consultation, diagnostic test, or treatment. Do not assume. Your GP or consultant might recommend a course of action, but your insurer needs to approve it for cover.

When seeking pre-authorisation:

• Provide full details of the proposed treatment, including the medical codes if known.
• Specify the consultant's name and GMC number.
• State the hospital or clinic where the treatment will take place.
• Get a reference number for your pre-authorisation.

3. Ask for Fee Schedules Upfront (From ALL Providers)

This is a game-changer. Once you have your pre-authorisation, contact every medical professional and facility involved in your treatment and request a detailed breakdown of their fees:

• Consultant: Ask for their fee for the initial consultation, follow-ups, and any proposed surgical procedures.
• Anaesthetist: Request their fee schedule, as they often bill separately.
• Hospital: Get a full quote for the proposed stay, theatre time, drugs, and any other associated charges.
• Diagnostic Imaging Centre/Laboratory: If referred for tests, ask for the cost of each specific scan or test.

Don't be shy about asking. It's your right to know the full financial picture.

4. Compare Quoted Fees with Your Insurer's R&C Limits

Once you have the fee schedules from the providers, contact your insurer again. armed with this specific information. Ask them:

• "My consultant, Dr. [Name], charges £[Amount] for [Procedure/Consultation Code]. Is this within your 'Reasonable and Customary' limits for my policy and location?"
• "The anaesthetist charges £[Amount]. Is this covered in full?"
• "The MRI scan at [Clinic Name] costs £[Amount]. Will this be fully covered?"

Your insurer should be able to tell you exactly what they will cover based on their R&C schedule. If there's a shortfall, they should inform you of the exact amount you'll be liable for. This conversation is critical before you commit to treatment.

5. Utilise Your Insurer's "Preferred Provider" Network

Many UK health insurers have established "preferred provider" or "network" schemes. These are lists of consultants and hospitals who have agreed to charge fees that are within the insurer's R&C limits.

• Why use them? By choosing a provider from your insurer's network, you significantly reduce the risk of R&C shortfalls. The insurer has pre-negotiated or pre-agreed on fees with these providers, offering you greater certainty of full cover.
• How to find them? Ask your insurer for a list of network consultants or hospitals for your specific condition and location. Many also have online portals or apps where you can search.

While you always have the right to choose your own consultant, opting for an in-network provider is often the safest financial option.

6. Don't Be Afraid to Negotiate (or Choose Alternatives)

If you find a consultant you particularly want to see, but their fees are slightly above the R&C limit, you can try to:

• Negotiate: Politely explain that your insurer has a specific R&C limit and ask if they would consider reducing their fee to meet it. Some consultants may be willing to do so, especially for less complex procedures or if they value the referral.
• Choose an Alternative: If negotiation isn't successful or the shortfall is too large, you might need to find an alternative consultant or hospital who charges within your insurer's R&C limits. Your insurer can often provide you with a list of options.

7. Leverage the Expertise of a Specialist Health Insurance Broker Like WeCovr

This is where a good health insurance broker proves invaluable. Navigating the nuances of R&C, comparing policies, and understanding the fine print can be overwhelming.

WeCovr is a modern, independent UK health insurance broker that specialises in helping individuals, families, and businesses find the best private medical insurance solutions. Here's how they can help you understand and mitigate R&C issues:

• Policy Comparison: WeCovr works with all major UK health insurance providers. They can help you compare policies side-by-side, explaining how different insurers handle R&C, whether they have extensive preferred networks, or if certain plans offer higher R&C limits for specific benefits.
• Expert Guidance: Their team understands the intricate details of each insurer's policy wording, including the specific implications of their R&C clauses. They can advise you on which policies might be a better fit for your needs and risk tolerance regarding potential shortfalls.
• Pre-Claim Advice: While WeCovr isn't involved in claims processing, they can guide you on the best practices for getting pre-authorisation and understanding fees, putting you in a stronger position before you interact with your insurer or medical provider.
• Ongoing Support: WeCovr offers ongoing support and advice, ensuring you're making informed decisions about your policy. Crucially, their services are entirely free of charge to you, as they are compensated by the insurers.

Using a broker like WeCovr adds a layer of professional advocacy and expertise, ensuring you're well-equipped to manage your health insurance effectively and avoid costly surprises.

When Things Go Wrong: Dealing with a Shortfall

Despite your best efforts, sometimes a shortfall might still occur. Perhaps there was a miscommunication, or an emergency situation left no time for meticulous checks. If you receive a bill with a shortfall:

1. Don't Panic, But Act Promptly

Review the bill carefully. Compare it with the Explanatory of Benefits (EOB) or payment statement from your insurer. Understand exactly what the shortfall is for and why the insurer didn't pay the full amount.

2. Contact Your Insurer for Clarification

Call your insurer immediately. Ask them to clearly explain why the full amount wasn't covered. They should be able to refer to their R&C schedules and explain the specific limits that were applied. This conversation might reveal an administrative error or simply confirm the R&C application.

3. Contact the Provider

Once you understand the insurer's position, contact the medical provider (consultant, hospital, lab). Explain the situation. Sometimes, especially if the shortfall is small, they might be willing to reduce their fee slightly, or offer a payment plan. It's worth a polite enquiry.

4. Appeal (If Grounds Exist)

If you believe there has been a genuine error in the R&C assessment, or if you can demonstrate exceptional circumstances (e.g., this was the only specialist available with the unique expertise you needed), you can formally appeal your insurer's decision. This usually requires providing further documentation and a written explanation. Be prepared that such appeals are often challenging.

5. Understand Your Financial Liability

Ultimately, if the R&C shortfall is deemed valid, you are legally responsible for paying the difference to the medical provider. Failing to do so could result in debt collection actions against you.

6. Learn for Next Time

Use the experience as a learning opportunity. What could you have done differently? Did you check fees early enough? Did you use a preferred provider network? This self-reflection will help you navigate future claims more smoothly.

The Future of R&C: Industry Trends and Policyholder Empowerment

The private healthcare landscape is constantly evolving, and with it, the way R&C clauses are applied and understood.

1. Increased Transparency from Insurers

There is growing pressure on insurers to be more transparent about their R&C limits. While they may not publish their full, detailed schedules publicly (due to commercial sensitivity), many are making it easier for policyholders to check specific fees for specific procedures from specific providers before treatment. Digital tools and online portals are helping facilitate this.

2. Digital Tools and "Find a Consultant" Services

Many insurers now offer online "Find a Consultant" tools or apps. These often allow you to search for specialists by condition or location and will indicate if their fees are typically within the insurer's R&C limits. Some even provide specific fee ranges. This empowers policyholders to make informed choices.

3. Focus on Value-Based Care

The industry is slowly shifting towards a model of "value-based care," where the focus is not just on the cost of individual services but on the overall outcome and quality of care. While still nascent, this could influence how R&C is applied, potentially incorporating quality metrics alongside pure cost data.

4. The Enduring Role of Independent Brokers

As policies become more nuanced and the private healthcare market more complex, the role of expert health insurance brokers like WeCovr will become even more critical. They act as trusted advisors, helping policyholders understand the intricacies of different plans, including the subtle differences in how R&C is applied across insurers. Their independent advice, offered at no cost to the client, will remain invaluable in ensuring consumers get the right cover and understand how to use it effectively.

Important Considerations: What R&C Does NOT Cover

It's absolutely essential to distinguish between the application of "Reasonable and Customary" and the fundamental exclusions of private health insurance. R&C comes into play only after a medical condition has been deemed eligible for cover under your policy.

R&C does NOT apply to or override:

1. Pre-existing Conditions

A fundamental principle of UK private health insurance is the exclusion of pre-existing conditions (medical conditions you had symptoms of, or received treatment for, before taking out the policy). If your condition is deemed pre-existing and therefore excluded from your policy, your insurer will not cover any of the associated costs, regardless of whether they fall within R&C limits. R&C is irrelevant in such cases.

2. Chronic Conditions

Private health insurance policies are designed to cover acute medical conditions – those that respond quickly to treatment and are likely to improve. They generally do not cover chronic conditions (long-term, ongoing conditions that require continuous management, such as diabetes, asthma, or multiple sclerosis). If your condition is chronic, your insurer will not cover its ongoing treatment, and therefore R&C limits will not be applied.

3. Experimental or Unproven Treatments

If a treatment is deemed experimental, unproven, or not widely accepted within mainstream medical practice, it will typically be excluded from cover. In such cases, R&C limits are irrelevant because the treatment itself is not an eligible benefit.

4. Cosmetic Procedures

Unless a cosmetic procedure is medically necessary (e.g., reconstructive surgery after an accident or cancer), it will not be covered by your health insurance. R&C would not apply.

5. Non-Eligible Claims or Exclusions

Every policy has a list of general exclusions (e.g., typically fertility treatment, normal pregnancy and childbirth, some forms of mental health treatment, self-inflicted injuries, addiction treatment, etc.). If a claim falls under one of these exclusions, R&C is not a factor because no cover is provided in the first place.

It's vital to remember that "Reasonable and Customary" is a cost-control mechanism for eligible claims, not a loophole for getting non-covered conditions or treatments paid for.

Conclusion

The "Reasonable and Customary" clause is an undeniable, and often challenging, aspect of UK private health insurance. It serves as a necessary mechanism for insurers to manage costs, prevent overcharging, and ensure the long-term sustainability of the private healthcare system. However, for policyholders, it can be a source of confusion and, if misunderstood, lead to unexpected financial burdens.

By now, you should have a much clearer understanding of what R&C means, why it's used, and how it impacts your claims. The key takeaway is empowerment through knowledge and proactive action. Always get pre-authorisation, always ask for detailed fee schedules from all providers, and always compare those fees with your insurer's R&C limits before committing to treatment. Utilising your insurer's preferred provider network is often the safest route to full cover.

Remember, you don't have to navigate this complex landscape alone. Expert independent health insurance brokers like WeCovr are specifically designed to help you understand these intricacies. They can compare policies from all major insurers, explain how R&C clauses differ across providers, and help you find a policy that best aligns with your needs and risk tolerance – all at no direct cost to you.

Understanding "Reasonable and Customary" isn't just about avoiding a surprise bill; it's about taking control of your private healthcare journey and ensuring your policy truly delivers the peace of mind and financial security you invested in. Armed with this knowledge, you are far better equipped to make informed decisions and get the most from your private health insurance.

Sources

• Department for Transport (DfT): Road safety and transport statistics.
• DVLA / DVSA: UK vehicle and driving regulatory guidance.
• Association of British Insurers (ABI): Motor insurance market and claims publications.
• Financial Conduct Authority (FCA): Insurance conduct and consumer information guidance.