So what’s the real usual, customary and reasonable price of care?

So what’s the real usual, customary and reasonable price of care?


The Ingenix mess apparently won’t go away. Sen. Jay Rockefeller is now going after the health plans for using Ingenix’ database. Ingenix and some of its customer health plans have already settled with several states, but apparently it’s not enough. Now Rockefeller is after them. And the words are tough. “Fraud”, for one.

Now, health plans don’t exactly have much credibility. And when the politicos find out that Ingenix a) sells tools to help health plans cram down the amount they pay providers, b) sells tools to providers to extract more money from health plans, and c) is owned by the biggest (and not too long ago) baddest insurer on the block, this may get a little more interesting. After all, it’s kind of an arms dealer arming both sides.

But there is one thing that troubles me. I’m quite prepared to believe that Ingenix’s view about what was UCR was different from the local medical society’s view of what was UCR, and therefore that the plans were “under-paying” the consumers and the doctors who serve them.

But let’s remember what Usual, customary and reasonable fees are.

They’re what providers have made up over the years. It’s not as if there’s a market price for provider fees. Everyone, from my buds at Cato to the single payer crowd agree that there’s no real market for health care. After all we know that there’s huge differences in prices charged to those who are in a PPO versus the uninsured by the same providers. And price discrimination is a symptom of a failed market. And even when they’re based off Medicare’s RBRVS pricing, we know that those fees are not based in reality, but rather in politics.

So the UCR prices, which Ingenix was or wasn’t paying correctly, are just made up. So tell me why Ingenix’s made up prices were different from the made-up prices of the providers?

And for that matter why aren’t we going after doctors and hospitals that used Ingenix products to increase the amount they got paid. Weren’t they committing “fraud” against health plans and cosumers too?

And then tell me why we use this nutty system of paying doctors anyway. Oh, I remember now…

Coda: While I don’t say very much very nice about health plans, I am very impressed with Kaiser Permanente’s new campaign on disparities in health care based on race. Uninsurance in particular is very different among different races, and it’s great that KP is putting a face on it.

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43 Comments on "So what’s the real usual, customary and reasonable price of care?"

Thomas Cloud
Nov 28, 2014

This is a capitalistic society and everyone is entailed to charge what ever one including non contracted health care providers to charge whatever ts desired for the good and services that are provided, However Health care is necessary to protect the well being of society and should be provided by all civilized countries.

The best plan would to create two entities a private access and governmental universal access paid for from a tax funded as has always been in place under either Medicare, Nidicaid, Medical, and recently affordable health care

The usual and customary plans would be solely for the private sector and opened to employers and insurers who would offer a PPO plan based on a Usual Customary and Reasonable rate.The so called Reasonable rate to be fair would need to be provided by AMA or Specialty groups, who have by a majority vote to agree for the rate determined to be reasonable for every CPT Code in the AMA registry,
To date all rates Published by the AMA are based solely in accordance to CMS or medicare rates and not any reasonable rates established by the providers or their professional organizations
Therefore, I am informed and believe that until THE PRIVATE create through its professional organizations or the AMA a separate Reasonable rate schedule for all reimbursable (Medically necessary), CPT codes
There will continue to be abuse by both the insurance companies and the providers.

I would like to start a campaign to among the private sector of Health care providers to implement a program funded by all the AMA and or all professional health care organizations to create a reasonable rate schedule for all the reimbursable ( Medically necessity), CPT code.
This project I believe if implemented would modernize our present system and control health cost for all Americans

All interested parties can email me at TCCLOUDIII@YAHOO>COM

Jun 30, 2014

That’s what irritates me the most. You could get radically different prices on medical procedures from city to city and state to site. The Healthcarebluebook helps give you the median price on a particular procedure and tells you where you can find the type of service for the cheapest. Insurance companies and hospital corporations set their own prices so its’ up to the individual to do their research.

Sep 22, 2010


Dan Smith
Oct 14, 2009

Full-blown competition in the healthcare field will only occur if service provider contracts between the doctors/hospitals and insurance companies are eliminated. These contracts limit access, quality, competition and raise prices. Also these contracts make it harder for new insurance providers to enter a state since these contracts are used to build the insurance companies’ service provider network. A new insurance company would lack the network and find it difficult to recruit local providers who are already fully booked by established insurance carriers. The key is to eliminate the service provider contracts and require the doctors and hospitals to accept patients with any valid state licensed insurance until their full patient load is reached.
It is only possible to eliminate service contracts in a Medical PSC environment since there has to be some mechanism for negotiating prices. The Medical PSC would set fair pricing based on actual costs plus a reasonable mark-up which all state insurance carriers would pay for the exact same medical provider services. Since all insurance carriers would pay the same, the Medical PSC would require that all doctors/hospitals accept all valid state licensed health insurance without prejudice. Anyone could walk into any doctor’s office or public hospital accepting patients in the state and receive medical attention and pay a fair price for service. (The insurer may still require an authorization to see a specialist, but the choice of specialist would not be limited.) This would equally apply to any newly created non-profit co-op plan so that it would not be cost effective for this plan to invest in its own medical facilities.
In the Medical PSC environment the insurance carriers are all the same except for the uniqueness of the policies they sell. The carriers only collect premiums and pay-out claims according to the terms of the individual policies. Their former network is no longer a selling point. Their patients no longer get preferential treatment if the carrier paid the highest. The common denominator becomes competition over which carrier can sell the best coverage at the cheapest price to out sell the others. Then the more carriers selling insurance in the state, the more competition you have. The level of healthcare access and quality available to the customers of these insurance carriers would be equal. Then everyone in the state could purchase the best healthcare they choose to afford. This is the basic healthcare operating environment which should be operational in each state now. A few cents can be added to the state tax tables to cover the cost of the Medical PSC. Spread over the millions of state tax returns makes the cost practically negligible. (Other states without a state income tax will have to decide how to cover these costs, but the best way is via the state income tax since all payers should have insurance and share these costs.)
Common sense, which seems to be lacking in Washington, should tell you that the Medical PSC solution would increase access, quality, competition and policy coverage while lowering patient costs. These benefits are independent of any law changes in Washington. This idea should be echoed across the nation. Any “appropriate” law changes in Washington to glean money to subsidize the disadvantaged is an aside to creating the Medical PSC environment. If we had created the Medical PSC environment earlier, we probably would not have the healthcare crisis we have now. Like I said, if you do not eliminate the service contracts between the doctors/hospitals and the insurance carriers, you are subsidizing the problem by feeding it more money to absorb. A real solution requires fundamental change in the mechanics of the system. The Medical PSC is the missing piece of the healthcare puzzle.

Dan Smith
Oct 14, 2009

Its time to dust off an old tried and true solution to solve a problem like healthcare that the free market cannot solve. In the past when competition was not sufficient to control prices on big ticket items like the price of electricity, price of land-line phone service, and the price of natural gas service, our state governments instituted public service commissions (PSCs) to arbitrate fair pricing. We need a PSC for healthcare to set medical charge code prices billed to insurance.

Apr 9, 2009

If data is power—and make no mistake, data IS power– then these data warehouses, like Ingenix, are very powerful. Although problematic, I completely understand UHC’s interest in purchasing Ingenix. In fact, they are not the only data warehouse owned by a health plan.
The attraction is understandable. Traditionally, health plans have succeeded based on the efficiency of the claims processing and strengths of their provider contracts. Using data to drive business decisions and demonstrate value, particularly of care management programs, is a relatively new competency. Health plans with their finger on the pulse of the industry have needed to build out their data analytic capabilities quickly. Buying companies with proven data competencies makes sense.
The problem starts when these data warehouses start to resell their data. It is hard to build firewalls tall enough and strong enough to avoid what happened with Ingenix. The value of the data in the marketplace is compromised when the ultimate owner has conflicting interests. Pushing these reimbursement (rate-setting) databases out to independent, academic organizations may avoid the conflict of interest issue, but, as Matthew suggests, it may do little to improve the accuracy of the underlying flawed data.

Apr 5, 2009

I can only guess that most of the commentators are not practicing physicians. Practically speaking, UCR price is a non-issue. As a primary pare physician (with an MBA) in a two doctor practice I can tell you that “charges” in no way reflect “payment”. In the contracts with payers, the actual reimbursement is generally a percentage of Medicare. Commercial insurers usually, but not always, pay a small amount more—let’s say 110% of Medicare rates. This rate is “take it or leave it”. I can assure you the extra $5 I receive for an average office visit does not offset the hassles of dealing with commercial insurers. My staff and I waste an enormous waste of my time on things like prior authorizations— decided by a clerk using proprietary, often nonsensical algorithms—for referrals, imaging and medication.
UCR charges are determined by payers—period. There are virtually no market forces in this case. Federal antitrust law and legislative complicity (see: has permitted Big Insurance to become an unrestrained business, and we physicians have become a commodity that no longer has control of our destiny or our patient’s health.

Tom Leith
Apr 3, 2009

> Thanks for the Starr book referral.
It is a great book — a little dry, Starr’s an academic.
> btw, that “noble reasons” bit was not me.
Oh, sorry.

Apr 3, 2009

Tom Leith,
Thanks for the Starr book referral. A quick blog search returns a bunch of hits. When I saw Maggie Mahar’s mention of the book there was no need to look further. I will be ordering it.
Thanks, too, for your time and patience.
(btw, that “noble reasons” bit was not me.)

Tom Leith
Apr 3, 2009

John Ballard writes:
> they don’t give it away for noble reasons
You’re changing the subject.
To even begin to discuss all this would be far too much for me to write here. I suggest Paul Starr’s book “The Social Transformation of American Medicine”. You can get it for less than $10 including shipping through
> The system in place IS. NOT. WORKING.
No it isn’t, not anymore. The old social bargain is collapsing and we’re in the throes of working out a new one. It is not easy:
“There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new.” — Niccolo Machiavelli, The Prince, 1513
> Sorry to have taken your valuable time.
You haven’t taken it, I have given it.

Apr 3, 2009

Clearly, spending too many years in a plain old business has left me with an understanding of accounting way too primitive for this forum.
Physicians and hospitals are rational monopolists with charity in their hearts. Something wrong with that image.
One of my neighbors with no insurance tell me that the few times he has sought medical attention he negotiated a favorable price up front by paying cash, thus avoiding the “usual and customary charges” and the price of insurance at the same.
Four men I know are eligible for VA benefits and are very satisfied with their “government insurance.” And the price? Don’t get me started. I’m a veteran, too, but can’t pass the means test. I’d like to know how many eligible veterans choose Medicare instead when they become eligible.
The system in place IS. NOT. WORKING. And the costs are rising so much and so fast that my children will not be able to bear them.
I’m not here with any agenda. I’m just a concerned old guy blogging. And what I’m encountering is agenda-driven interests approaching the reform of health care with barbs and armor, defending the status quo.
Sorry to have taken your valuable time.

Apr 3, 2009

“Then the dirty dogs turn `round and give away free care just like what you paid good money for.”
Tom, they don’t give it away for noble reasons, or willingly because of charitable inclinations – they do it by force of law and then use the courts/collection agencies to collect it. The minimum (charitable) consideration for someone uninsured would be to at least charge them what the hospital has already determined to be “usual, customary and reasonable” – but no, these “dirty dogs” up charge the most vulnerable 3-4 times above standard charges. Sounds more like the attitude of a loan shark. Paying the freight is getting harder and harder, pray that some fix is done before we all need healthcare.

Tom Leith
Apr 2, 2009

John Ballard writes:
> I’m sure glad the billing didn’t have to be padded.
Let’s see…
Didn’t you tell us all the other day
> As for profits, I’m all in favor of profits.
> Whatever the market will bear, I say. I want
> surgeons to have vacation homes and yard men.
> I want RN’s to take their spouses out to eat at
> expensive restaurants at least once a week. I
> want housekeepers to have well-funded benefits
> including PTO and generous matching of retirement
> plans. Hell, I want so much profit to flow to
> health care professionals they can’t figure out
> how to spend it all.
Unless, I suppose, they want to spend it on someone who can’t afford to pay what their efforts are worth.
Your bill isn’t “padded”. Docs and hospitals are getting what the market will bear by practicing price discrimination like any rational monopolist. Then the dirty dogs turn `round and give away free care just like what you paid good money for. The injustice of it all!
This precisely was the social bargain with respect to medical licensure: docs get monopoly pricing power, but they have to take all-comers, which had been “usual and customary” stretching back into classical antiquity and that old pagan Hipocrates. The bargain has broken down lately due primarily to your particular attitude taken on the part of people with the ability to do something about it. There may be a new social bargain coming where docs don’t get monopoly pricing power anymore, but then they don’t have to take all comers either. The notion of what is “usual and customary” will have changed, not necessarily for the better. Pray that when the time comes, you’ll be able to pay the freight yourself or that a generous soul will provide you the opportunity to be healed in body and grateful in spirit.

Apr 2, 2009

Thanks for that summary. I see now how it works.
Some kinda way it just gets cleared up.
I’m sure glad the billing didn’t have to be padded.

Tom Leith
Apr 2, 2009

John Ballard writes:
> No one has explained to me where the money
> comes from to pay the actual expenses of the
> thousands of uninsured patients who get treated
> and walk away, or who are insured but have claims
> denied, or declare personal bankruptcy because of
> horrendous medical bills.
Oh, come on!
It comes from those who did pay their bills (or a portion of them), from gifts to the hospital (usually a hospital), from the self-sacrifice of doctors, nurses, and staff (including administrators), and from tax-free status (most of the time). This is not a mystery.