What is Allowed Amount

What is fee amount and allowed amount 

A fee is the price a healthcare provider charges for a product or service. This is similar to each product like electronic item comes with price. Each practice calculates the fee based on the Medicare allowed amount for that year and that area.


The "allowed amount" is one medical insurer pays which is not necessarily to the exact fee practice set the fee. This is like what medical insurers typically pay the allowed charge or the usual, customary, and reasonable fee for a product or service within the specific section of the country.

As Example practice set $100 for Fever consultation which is the Fee amount but insurance pays only $80 which is allowed amount in this case.

The difference between fee and allowed amount usually refers as Write off 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.

Allowable Amount

The Allowable Amount is the maximum amount of benefits BCBSTX will pay for Eligible Expenses you incur under the Plan. BCBSTX has established an Allowable Amount for Medically Necessary services, supplies, and procedures provided by Providers that have contracted with BCBSTX or any other Blue Cross and/or Blue Shield Plan, and Providers that have not contracted with BCBSTX or any other Blue Cross and/or Blue Shield Plan. When you choose to receive services, supplies, or care from a Provider that does not contract with BCBSTX, you will be responsible for any difference between the BCBSTX Allowable Amount and the amount charged by the non-contracting Provider. You will also be responsible for charges for services, supplies, and procedures limited or not covered under the Plan, Deductibles and any applicable Out-of-Pocket Maximum amounts.


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