Usual, Customary, and Reasonable Fees
What Is UCR?
UCR stands for Usual, Customary, and Reasonable and is a way of reimbursing claims based on the actual costs of procedures in a geographic area. When used for pet insurance, it is similar to the way UCR is used for dental insurance.
Actual costs tend to recognize not only the relative veterinary costs where you live (for example, veterinary care in New York City is more expensive than in Des Moines) but also higher costs for emergency care (emergency facilities are usually more costly than your family vet clinic because they are open 24/7) and veterinary inflation over time.
ASPCA Pet Health Insurance is an example of one company that uses UCR to reimburse claims.
Embrace Does Not Use UCR
At Embrace, we reimburse based on the vet bill you paid – no Benefit Schedules, no Usual, Customary, and Reasonable Charges.
However, there is still the possibility of extreme cases where Embrace would investigate claims. For example, we had a case where a pet parent was charged $465 for a course of antibiotics. The amount seemed excessive and when we called around to clinics in the area, prices for the same type and amount of antibiotics ranged from $55 to $85. In this case, we capped the charged amount at $100 and calculated the claim reimbursed on the lower amount.
Pros and Cons of UCR
For the general case of UCR in pet insurance, here are some pros and cons to the approach.
Pro #1: Claim Payouts Vary By Location
Compared to a benefit schedule that generally does not vary by location, UCR is more sensitive to the regional variation in veterinary charges. The UCR method generally pays more in more expensive locations, such as large metropolitan areas, than less expensive locations.
This means you should get more back for a claim in Los Angeles than you would in a more remote part of California, such as Bakersfield, for the same procedure – because a vet in Bakersfield would likely charge you less than one in LA.
Pro #2: Premiums May Be Lower
While some of the limitations of UCR reduce the claim payout (see cons below), lower reimbursements are generally reflected in lower pet insurance premiums. If you understand and accept the impact of the specific benefit schedule on your future claims payouts, lower premiums can certainly be appealing.
Con #1: Hard to Disclose
Because UCR charges vary by location and possibly over time, it is not easy to disclose the UCR details to policyholders, which can create uncertainty about how much will be paid out on a claim.
Con #2: Claim Reimbursement May Be Lower
While the UCR charges do vary by location, you may find that your veterinary bills are sometimes higher than the UCR table values - something you may only find out after you have paid your vet bill and received your claim decision.
So, do the pros outweigh the cons? Depending on where you live and what kind of medical care you expect to give your pet should a future health concern happen, UCR might work for you; however, you need to fully understand the limitations when it comes to claim reimbursement to avoid disappointment.
Other types of insurance, in particular dental insurance, use UCR charges to manage their claims, but only a few pet insurance companies actively use this method.