Usual, Customary And Reasonable
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Usual, customary, and reasonable (UCR) is an American method of generating
health care prices Health care prices in the United States, United States of America describes market and non-market factors that determine pricing, along with possible causes as to why prices are higher than other countries. Compared to other OECD countries, U.S. h ...
, described as "more or less whatever doctors decided to charge". According to Steven Schroeder,
Wilbur Cohen Wilbur Joseph Cohen (June 10, 1913 – May 17, 1987) was an American social scientist and civil servant. He was one of the key architects in the creation and expansion of the American welfare state and was involved in the creation of both the Ne ...
inserted UCR into the
Social Security Act of 1965 The Social Security Amendments of 1965, , was legislation in the United States whose most important provisions resulted in creation of two programs: Medicare and Medicaid. The legislation initially provided federal health insurance for the elde ...
"in an unsuccessful attempt to placate the
American Medical Association The American Medical Association (AMA) is a professional association and lobbying group of physicians and medical students. Founded in 1847, it is headquartered in Chicago, Illinois. Membership was approximately 240,000 in 2016. The AMA's state ...
". Health insurers determine what they deem to be "usual, customary and reasonable" and pay only a percentage of that. Under an early version of this system based on Resource-Based Relative Value Units, physician services were largely considered to be misvalued, with evaluation and management services being undervalued and procedures overvalued. Third-party payers (public and private health insurance) advocated for an improved model instead of the UCR fees that led to "some egregious distortions". In the mid-1980s, U.S. health care "payments for doing procedures had far outstripped payments for diagnosis". For example, "doctors who spent an hour making a complex and lifesaving diagnosis were paid forty dollars; for spending an hour doing a colonoscopy and excising a polyp, they received more than six hundred dollars". Costs for cataract surgery, which could be as high as $6,000 in 1985, "grew to consume 4% of Medicare's budget". And despite technology that reduced the time required for the surgery by a factor of 4 to 6, costs did not decrease. The US government healthcare website defines usual, customary and reasonable as being "The amount paid for a medical service in a geographic area based on what providers in the area usually charge for the same or similar medical service. The UCR amount sometimes is used to determine the allowed amount." Often it is used by insurance companies and plan administrators when participants go out of network for services where typically the maximum the plan will pay for a claim is based on the prevailing rates in the area or UCR. These statistics are available from private and commercial sources. In the context of
prescription costs Medication costs, also known as drug costs are a common health care cost for many people and health care systems. Prescription costs are the costs to the end consumer. Medication costs are influenced by multiple factors such as patents, stakeholde ...
, the
Government Accountability Office The U.S. Government Accountability Office (GAO) is a legislative branch government agency that provides auditing, evaluative, and investigative services for the United States Congress. It is the supreme audit institution of the federal govern ...
has stated that "The U&C price is the price an individual without prescription drug coverage would pay at a retail pharmacy." For dentists, the
American Dental Association The American Dental Association (ADA) is an American professional association established in 1859 which has more than 161,000 members. Based in the American Dental Association Building in the Near North Side of Chicago, the ADA is the world's ...
defines a usual and customary fee as "the fee an individual dentist most frequently charges for a specific dental procedure independent of any contractual agreement. It is always appropriate to modify the fee based on the nature and severity of the condition being treated and by any medical or dental complications or unusual circumstances."ADA News, January 17, 2011.


See also

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Resource-based relative value scale Resource-based relative value scale (RBRVS) is a schema used to determine how much money medical providers should be paid. It is partially used by Medicare in the United States and by nearly all health maintenance organizations (HMOs). RBRVS assig ...


References

{{Reflist Health insurance in the United States