I got an e-mail from someone looking into our insurance policies last week. It seems they are a little confused about the words "usual and customary" pertaining to veterinary fees. We use this language to describe our rationale for reimbursement on claims filed by policy holders. Once you have met your deductible and 20% co-pay, we reimburse 80% of the eligible fees that are "usual and customary."
When used in the Policy, "Usual and Customary" shall mean fees or costs that would be considered reasonable for like veterinarians to charge in the region for which the the services were performed as described in veterinary fee references or other similar publications.
That seems pretty self explanatory to me. In plain english, it means we reimburse the going rate in the area in which the services are performed. We don't put a dollar limit on reimbursements because we are sophisticated enough to realize that veterinary fees vary from region to region and even within a give area.
Now veterinarians don't get together and set fees for the city in which they practice. I'm pretty sure that would be illegal. A particular vet may decide that they want to charge lower fees than others. They may think that this will generate more client traffic. Another vet in the same area may feel that they provide such good service that they are proud to be the highest priced clinic in town. There can be considerable "reasonable" variation in the two fee schedules.
There is also considerable variation from one region to another. Vets in LA or Boston or New York City charge way more than in Albuquerque, for instance. The cost of living in a particular zip code plays into veterinary fees.
The key words in our definition above are "reasonable" and "veterinary fee references or other similar publications". We know fees vary in a given area and we consider that variation to be "reasonable."
To be fair, how else would you determine reimbursements? A one size fits all
benefit schedule that lists what you are willing to pay for a given procedure is one way to do it. That
does limit what would be paid out. We think that is unduly complicating and fails to recognize the inherent disparity in veterinary fees. It also fails to recognize the impact of inflation on veterinary fees.
One thing that I can say categorically is that "usual and customary" as we use it does not imply some vast insurance industry scam to limit pay out. It's simply the fairest way to do it.
Some people see a conspiracy behind every tree. For them no explanation is satisfactory. I think most sensible people understand what we mean by usual and customary.
Oh, and by the way, we have yet to deny any portion of any claim due to the "usual and customary" language in our policies since we sold the first one.