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 it is used in 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 allows for higher costs for emergency care (emergency facilities are usually more costly than your family vet clinic because they are 24/7 and 365 days a year) 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 pay based on the vet bill you paid – no Benefit Schedules, no Usual, Customary, and Reasonable Charges.
However, there's 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 to us 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 usually more sensitive to the regional variation 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 CA, for the same procedure – of course, your vet would likely charge you less in Bakersfield than LA as well.
Pro #2: Premiums May Be Lower
While some of the limitations of UCR reduce the claim payout (see the cons below), lower reimbursements are generally reflected in lower pet insurance premiums than other policies that do not use UCR. 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 and can become a bit of a black box, creating 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 higher 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 time to avoid disappointment at a time when you are financially out of pocket.
Other types of insurance, in particular dental insurance, uses UCR charges to manage their claims but only a few pet insurance companies actively use this method.