Allowed Amount in Medical Billing
The allowed amount is the maximum amount an insurance company agrees to pay for a specific service under the terms of a patient’s plan.
Allowed Amount in Medical Billing Explained
The allowed amount is determined by the insurance company based on negotiated rates with providers or standardized fee schedules. If a provider bills more than the allowed amount, the excess is typically written off, and the patient may only be responsible for their co-pay or coinsurance based on the allowed amount.
For example, if a provider charges $500 for a procedure, but the insurance company’s allowed amount is $400, the patient is only responsible for their co-pay on the $400.
Explore acronyms and abbreviations in Medical billing glossary.
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