Reasonable and Customary to Your Health Insurance

The Normal Range of Payment for a Specific Health-Related Service

Charges on a medical bill.
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When dealing with health insurance, one term that you may come across is a reasonable and customary fee. It is important to understand just what a reasonable and customary fee is.


A reasonable and customary fee is the amount of money that a particular health care provider determines is the normal or acceptable range of payment for a specific health-related service or medical procedure. Reasonable and customary fees operate within given geographic areas, and the exact numbers of such fees depend on the location of service.

If the charges for a health-related procedure or service that you (or your doctor) submit to your healthcare provider are higher than what the health plan typically considers normal or acceptable for the covered service, then your health plan may not allow or cover the full amount charged to you. Thus, you may end up having to pay the difference out of pocket.

Individuals who have health insurance are enrolled in a managed care plan (such as a PPO or HMO) do not have to worry about reasonable and customary fees, as they are not subject to them.

Dental Procedures

Reasonable and customary fees are often used for dental procedures. They were especially common when most people had major medical, or indemnity, health insurance. Now, however, many if not most Americans who have health insurance are enrolled in some type of managed care plan (such as a PPO or HMO) and are not subject to reasonable and customary fees.

If you are in a PPO and decide to go out of network for care, you may have to pay coinsurance, which usually is about 20%. Sometimes you also may have to pay an additional amount based on the reasonable and customary fee.


Below is an example of a reasonable and customary fee:

Let's say that you have gone out-of-network for a minor surgical procedure. The doctor charges $1500 for the procedure, but the health plan has determined that the reasonable and customary fee for the particular procedure is $1000. Your health plan will then pay the doctor $800 and you will have to pay $200 coinsurance. The doctor may also send you a bill for the remaining $500.

Location comes into play, however. Depending on where you live and where a procedure is performed, your state insurance laws, and contractual arrangements between providers and health plans may work to determine just how much exactly you will have to pay.

Also Known As: A reasonable and customary fee is also commonly referred to as a Usual fee, a Reasonable fee, and a Customary fee.