A 'reasonable and customary' (R&C) charge clause is used in some health-insurance policies to assess charges against the provider's standard charges and prevailing charges for identical or similar services in the relevant geographical area, taking the nature of the illness or injury into account. It is not a single government price list for every procedure, and whether an R&C adjustment is valid in your claim depends on the wording of your own policy and the insurer's stated basis for applying it.
What Are Reasonable and Customary Charges?
IRDAI-hosted health-policy wordings have long used a standard formulation: charges should be the provider's standard charges and consistent with prevailing charges in the geographical area for identical or similar services, taking into account the nature of the illness or injury. Your current policy wording is what governs your claim, so do not assume that every insurer or product uses the clause in exactly the same way.
Why Can an R&C Deduction Create a Dispute?
The difficult part is usually not the phrase itself but the evidence behind the insurer's benchmark. A hospital may charge more because of location, complexity, specialist expertise, implant choice, emergency circumstances or a longer stay. The insurer may still contend that a particular charge exceeds its allowable benchmark. A policyholder needs enough detail to test that conclusion.
| Question | Why it matters |
|---|---|
| Which policy clause authorises this deduction? | Confirms the contractual basis. |
| Which bill items were reduced? | Separates the disputed amount from other admissible deductions. |
| What benchmark or comparable data was used? | Helps test whether the insurer's conclusion is evidence-based. |
| Does the benchmark reflect the same city, treatment and clinical complexity? | A comparison may be weak if it is not genuinely comparable. |
| Was the deduction applied to a negotiated network-hospital bill? | If so, ask how the network arrangement and R&C adjustment interact. |
| Can the hospital justify the charge in writing? | A provider explanation can support reconsideration. |
How to Challenge an R&C Deduction
1. Get the complete settlement calculation
Ask for the claim settlement letter, deduction sheet and any explanation identifying the R&C amount. Reconcile the figures against the hospital's itemised bill.
2. Read the exact policy wording
Check the policy schedule, Customer Information Sheet and full wording. The presence, scope and effect of an R&C condition are policy-specific. Do not rely on a generic internet definition if your own contract uses different language.
3. Ask for the benchmark
Request the basis used to decide that a charge was above the reasonable level. You can ask whether the comparison considered the same geography, provider type, procedure, room category and clinical circumstances. The insurer may not provide a proprietary database in full, but you can still request a reasoned explanation for the deduction.
4. Get a hospital clarification
Ask the hospital to explain high-value disputed items, especially specialist fees, procedure charges, devices or unusual clinical requirements. If the hospital can show why the treatment was more complex than a routine comparison case, include that explanation in your grievance.
5. File a focused grievance
Challenge the specific deduction rather than asserting that every billed amount must be paid. State the amount in dispute, the clause, why the benchmark appears inappropriate, and the evidence you want the insurer to reconsider.
R&C Is Not the Same as a Sub-Limit
A sub-limit is a defined cap for a specified treatment, service or situation. An R&C clause instead addresses whether the charge itself is within the contractually recognised level. The two can sometimes affect the same claim, but they are different concepts and should be shown separately in the settlement calculation.
When to Escalate
If the insurer does not satisfactorily explain or reconsider the deduction, raise a formal grievance with its Grievance Redressal Officer. Bima Bharosa can be used to register and monitor the grievance. Depending on eligibility and the amount involved, a partial settlement dispute may also be taken to the Insurance Ombudsman after the required insurer-complaint step.
Frequently asked questions
Is there an IRDAI fixed price list for every hospital procedure?
No single nationwide regulatory price list determines every private health-insurance claim. The insurer's contractual R&C clause, if applicable, and the facts of the treatment must be examined.
Can an insurer apply R&C even if my bill is below the sum insured?
Potentially, if your policy contains an applicable R&C condition. The sum insured is a maximum cover limit, not a guarantee that every billed charge is admissible.
What evidence should I collect?
Keep the itemised bill, settlement sheet, policy wording, medical records, payment receipts, hospital explanation and the insurer's written basis for the deduction.
Can I complain to the Ombudsman about an R&C deduction?
A partial settlement can fall within the Ombudsman's complaint scope, subject to the current prerequisite, time-limit, forum and monetary-jurisdiction rules.
