What is Allowed Amount

Allowed Amount :

This is the amount allowed by the carrier. Not all carriers and in all circumstances allow the entire amount billed. Certain carriers have fee schedules based on which they make payments. These fee schedules determine the allowed amount. A Fee Schedule is a list of reimbursement amount for each procedure. These vary according to various localities. This allowed amount is the maximum that a carrier will pay for a particular procedure.

After reviewing the definitions in rules or provided by the health insurers, OFM found that:

* Allowed amount is the maximum amount that a payer will pay a provider for a service.

* Allowed amount applies to services that are included or allowed in the health care plan or the government program.

* Allowed amount applies to services provided by providers who are contracted with the health care plan (in-network).

* Allowed amount varies for providers who are not contracted with the subscriber’s health care plan (out-of-network).

* Allowed amount may not cover all the provider’s charges. In some cases, subscribers may have to pay the difference.

* Allowed amount may be determined by a fee schedule such as Medicare’s.

* Usual customary and reasonable (UCR) amount is sometimes used to determine the allowed amount.

* Oregon is the only state that defines allowed amount

Uniform Glossary

Allowed amount – Maximum amount on which payment is based for covered health care services. This may be called eligible expense, payment allowance or negotiated rate. If your provider charges more than the allowed amount, you may have to pay the difference.

UCR (usual, customary and reasonable) – The amount paid for a medical service in a geographic area based on what providers in the area usually charge for the same or similar medical service. The UCR amount sometimes is used to determine the allowed amount.

Medicare Glossary of Terms

Medicare approved amount – In Original Medicare, this is the amount a doctor or supplier who accepts assignment can be paid. It may be less than the actual amount a doctor or supplier charges. Medicare pays part of this amount and you’re responsible for the difference.

WAC 182-550-1050 Hospital services definitions

Allowed amount – The initial calculated amount for any procedure or service, after exclusion of any nonallowed service or charge, that the agency allows as the basis for payment computation before final adjustments, deductions and add-ons.

Premera Blue Cross

Allowable charge – This plan provides benefits based on the allowable charge for covered services. We reserve the right to determine the amount allowed for any given service or supply. The allowable charge is described below

No comments:

Top Medicare billing tips