By Dan Eisner, Employee Benefits Advisor

As most employee benefits plan sponsors are aware, the adjudication of employee claims is subject to a provision referred to as “Reasonable and Customary” (“R&C”) limits. These are most often seen impacting paramedical claims but also exist in many other areas of Extended Health and Dental plans. Unfortunately, the impact of R&C limits is almost always seen as a negative by employees since the reimbursement of their claims is limited.

Conceptually R&C limits have been put in place to mitigate potential abuses in employee benefits plans and to help ensure the financial sustainability of these programs. However, historically there has been a lot of secrecy around how these limits are developed and managed by the insurers. Based on a recent informal survey of 10 participating Canadian insurers we can share some high-level findings with respect to R&C limits for paramedical practitioners:

• The vast majority of insurers review R&C limits annually and a couple review them at least every two years, or on an ad hoc basis if required.
• In general, all insurers were somewhat vague in describing their underlying methodologies when reviewing R&C limits and one carrier declined to respond to this question as they consider this information proprietary. Where information was provided, most carriers referenced internal data, current R&C limits, and external sources including provincial fee guides.
• One insurer indicated they consult experts as needed and two insurers indicated they review competitor data where available. As well, three insurers advised that they have targets as to what percentage of claims will be paid under their R&C limits.
• Only three insurers publish their R&C limits for plan members to use. Of those insurers that do not publish, one insurer indicated they are moving towards publishing, one insurer indicated that plan members can contact the insurer to obtain this information, and one insurer indicated that this information is available on their App.
• Only two insurers provide this information to advisors and one insurer indicated that this information can be provided upon request by an advisor.

We agree that R&C limits are necessary to help ensure the financial sustainability of the benefits plans that employees rely upon. We also agree that the intent of these limits is most often to mitigate abuses by the providing practitioners versus abuses by employees. However, we struggle to understand why there is so much secrecy around the methodology for developing R&C limits and why these limits are not proactively published so that they are available to employees, benefits plan sponsors and advisors.

We believe that if R&C limits and the underlying methodologies were proactively published, many benefits would result. Employees would have easier access to information to help them become better consumers when dealing with paramedical practitioners. Plan sponsors would be better prepared to respond to employee concerns and complaints when their paramedical claims are not fully reimbursed. Benefits advisors would be able to better assist their clients when issues arise around R&C limits and would be able to proactively work with insurers to refine those methodologies to ensure competitive and equitable practices across the industry. Ultimately we could all work together to help ensure the sustainability of our employee benefits programs.

We would be pleased to discuss your specific situation with you to identify the best strategy with respect to your employee benefits and retirement programs. Should you have any questions on the above, please don’t hesitate to contact me or a member of our team.

ZLC Financial is one of the fastest growing advisors for employee benefits programs in Vancouver and we are fortunate to have the best people, resources and clients. We provide value to you by leveraging one of the most skilled benefits teams – almost 350 years of experience within our team of 18 employee benefits specialists. We have been working with businesses ranging from 3 to over 70,000 plan members for the past 35 years.

This information is designed to educate and inform you of strategies and products currently available. As each individual’s circumstances differ, it is important to review the suitability of these concepts for your particular needs with a qualified advisor.