Usual, customary and reasonable (UCR) was an American method of generating health care prices,[1] described as "more or less whatever doctors decided to charge."[2] According to Steven Schroeder, Wilbur Cohen inserted UCR into the Social Security Act of 1965 "in an unsuccessful attempt to placate the American Medical Association."[3]
Under this system, physician services were largely considered to be misvalued, with evaluation and management services being undervalued and procedures overvalued.[4] Third-party payers (public and private health insurance) advocated for an improved model instead of the UCR fees that led to "some egregious distortions".[2] In the mid 1980s, U.S. health care "payments for doing procedures had far outstripped payments for diagnosis".[2] For example, "doctors who spent an hour making a complex and lifesaving diagnosis were paid forty dollars; for spending a hour doing a colonoscopy and excising a polyp, they received more than six hundred dollars".[2] Costs for cataract surgery, which could be as high as $6,000 in 1985, "grew to consume 4% of Medicare's budget".[2] And despite technology that reduced the time required for the surgery by a factor of 4 to 6, costs did not decrease.[2]
The term is also used by lawyers for setting a reasonable retainer agreement.