Contractual Obligation in Medical Billing
Contractual obligation refers to the healthcare provider’s obligation to accept a reduced payment from the insurance company as specified in their contract.
Contractual Obligation in Medical Billing Explained
In medical billing, a contractual obligation is the legally binding agreement between a provider and an insurance company. This means that the provider agrees to accept the insurance company’s payment rates and cannot charge the patient for the difference.
For example, if the allowed amount for a service is less than what was billed, the provider is contractually obligated to write off the difference and cannot bill the patient for it.
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