Contractual Adjustment in Medical Billing
A contractual adjustment is the difference between the amount a healthcare provider bills for services and the amount the insurance company agrees to pay, based on their contract.
Contractual Adjustment in Medical Billing Explained
In medical billing, providers often have agreements with insurance companies to accept a reduced rate for services. The contractual adjustment is the portion of the bill that is written off by the provider because they cannot bill the patient for this amount.
For example, if a provider bills $1,000 but the insurance company’s allowed amount is $800, the $200 difference is the contractual adjustment.
See common acronyms and abbreviations in Medical billing glossary.
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