Question

Kim lives in an urban area with a high cost of living. Grace lives in a rural area with a lower cost of living. They have identical medical expense plans from the same insurer which pays claims on a usual, customary, and reasonable (UCR) basis. Why will the insurer pay each a different benefit for the same medical treatment?

A. Costs for medical treatment in large urban areas are typically lower than costs for the same treatment in rural areas.
B. They bought their policies at different times.
C. Costs for medical treatment in large urban areas are typically higher than costs for the same treatment in rural areas.
D. Patients have different symptoms.

Answer 1

The insurer will pay each person a different benefit for the same medical treatment due to the difference in cost of living between urban and rural areas.

Step-by-step explanation:

The insurer will pay each person a different benefit for the same medical treatment due to the difference in cost of living between urban and rural areas. The cost for medical treatment in large urban areas is typically higher than in rural areas. Since Kim lives in an urban area with a high cost of living and Grace lives in a rural area with a lower cost of living, the insurer will pay Kim a higher benefit compared to Grace for the same medical treatment.