Health insurers cut claims using ‘reasonable and customary’ charges

Health insurance claim settlement letters often contain deductions that can leave policyholders confused. Livemint reports that understanding terms like 'reasonable and customary' (R&C) charges, MoU discounts, and 'no active line of treatment' can help consumers challenge unfair cuts.

In one case cited by Livemint, Chennai resident Vijaya Kawar had a Rs 2.11 crore hospital bill but her insurer approved only Rs 85 lakh. The Rs 1.26 crore in deductions included Rs 28.39 lakh under R&C charges and Rs 87.50 lakh on the grounds there was no active line of treatment. Kawar could not approach the Insurance Ombudsman because the disputed amount exceeded the Rs 50 lakh limit.

R&C charges mean the insurer pays only what it considers standard for a treatment in a given area. MoU discounts are contractual reductions between hospital and insurer. Deductions for 'no active line of treatment' occur when an insurer believes hospitalisation was not medically necessary. Policyholders should obtain itemised bills and ask insurers to explain the data behind deductions. Livemint notes these disputes may end up in consumer court.