Why is the allowed amount higher than the billed amount?
Asked by: Eliza Pouros | Last update: October 3, 2025Score: 4.8/5 (33 votes)
Why are the charge and allowable charge different amounts?
The charge: It is the total amount a healthcare provider bills for a medical service or procedure. The allowable charge: It is the maximum amount an insurance company will cover for a specific service or procedure. Usually, insurance companies negotiate discounted rates with healthcare providers.
Can a provider charge more than the allowed amount?
For example, if the provider's charge is $200 and the allowed amount is $110, the provider may bill you for the remaining $90. This happens most often when you see an out-of-network provider (non-preferred provider). A network provider (preferred provider) may not balance bill you for covered services.
What is the term for the difference between the billed amount and the allowed amount?
When a provider bills you for the difference between the provider's charge and the allowed amount. For example, if the provider's charge is $100 and the allowed amount is $70, the provider may bill you for the remaining $30.
How is the allowable amount determined?
For out-of-network providers, the allowed amount is what the insurance company has decided is the usual, customary, and reasonable fee for that service. However, not all insurance plans, like most HMO and EPO plans, cover out-of-network providers.
What is the Allowed Amount? | Healthcare Medical Billing
What is the difference between amount allowed and billed amount?
Billed amount: what the provider billed. Allowed amount: what the insurer allows for the service (sometimes shown as an "insurer discount" - i.e., if the billed charge is $50 higher than the insurer's allowed amount, the insurer discount would be $50), Paid amount: what the insurer paid the provider.
What is the extra allowable amount?
The "extra allowable amount" is the difference between the property owner assets value limit and the non property owner assets value limit which applies to the person.
Why do doctors charge more than insurance will pay?
It is entirely due to the rates negotiated and contracted by your specific insurance company. The provider MUST bill for the highest contracted dollar ($) amount to receive full reimbursement.
What is the formula for the allowed amount?
Allowed Amount = Total charges less Contractual Adjustments If no contractual adjustment is posted then total charges equals the allowed amount. Denial adjustments are excluded from the calculation as denials do not impact allowed amount.
What if I need surgery but can't afford my deductible?
In cases like this, we recommend contacting your insurance, surgeon, or hospital and asking if they can help you with a payment plan. Remember that your surgery provider wants to get paid so they may be very willing to work with you on a payment plan.
What can happen if you charge more than your allowed limit?
Should you go over your credit limit? Even if your card issuer allows it, you should avoid going over your credit limit. Maxing out your credit card could hurt your credit score, leave you with over-the-limit fees, and even put your credit card account at risk.
What is the maximum allowable charge?
Maximum Allowable Charge (MAC) — caps payment for services provided by an out-of-network dentist at a scheduled amount, the Maximum Allowable Charge.
Why does my explanation of benefits not match my health insurance bill?
If you have a doctor's bill that cannot match one or more EOBs, it is likely that your insurance has not been applied to that bill. This can happen for a number of reasons. A common issue is that the doctor filed the claim to an outdated insurance policy or the name or birthdate did not match our records.
What is the difference between the charge amount and the allowable charge amount?
Difference Between Allowable Charge and Actual Charge
It is predetermined and agreed upon between the payer and the provider, usually through contractual agreements or fee schedules. On the other hand, the actual charge refers to the amount that the healthcare provider bills for a particular service.
Why am I being charged more than my copay?
Non-Covered Services: Some medical services or prescription medications may not be covered by your insurance plan. If this is the case, you will be responsible for the full cost of the service or medication, which may exceed your copayment.
Why are there two types of charges?
The overall charge of an object is usually due to changes in the number of electrons. To make an object: Positively charged: electrons are removed making the object electron deficient. Negatively charged: electrons are added giving the object an excess of electrons.
What is the maximum allowed amount?
The maximum amount a plan will pay for a covered health care service. May also be called “eligible expense,” “payment allowance,” or “negotiated rate.” When a provider bills you for the difference between the provider's charge and the allowed amount.
What is the formula for the maximum allowable offer?
The exact formula to calculate MAO may vary based on the property in question and your own situation, but it's generally calculated by multiplying the after-repair costs by 0.7, and then subtracting fixed and repair costs.
Can providers charge more than EOB?
If your provider is charging you more than your EOB shows, we encourage you to talk to your provider directly and ask that your bill be adjusted. If you've already paid more than your EOB says that you owe, you will need to request a refund from your provider or facility directly.
Why are insurance companies allowed to charge so much?
New laws and regulations may impose additional requirements on insurers, such as higher capital reserves or more comprehensive coverage mandates. Incorporating and implementing these changes often results in increased operational costs for insurers, which are again passed on to consumers in the form of higher premiums.
Can you negotiate prices with doctors?
If you have a planned procedure or scheduled medical services, you can negotiate your bill before receiving treatment. You can reach out to your medical provider for the estimated cost of your treatment.
Why is my hospital bill so high after insurance?
People who are uninsured are more likely to incur medical debt, but insured patients still receive unexpected medical bills that are too high, due to deductibles, copays, coinsurance, and surprise billing or balance bills.
What is the maximum allowable benefit?
The maximum benefit limits are the highest amount an individual is paid by a health insurance plan for health services over a specific period. The limits are expressed as a fixed dollar amount, a percentage of the expense covered, or combined total benefits for all covered services.
What is the allowable deduction?
Allowable deductions include mortgage interest payments, repairs to the property, insurance, letting agency fees and 10 per cent of your total rental income to cover depreciation.
What is the maximum exclusion allowance?
The first limit, under Section 403(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code"), is commonly referred to as the "maximum exclusion allowance" or "MEA." Basically, the limit is 20% of includible compensation times years of service minus untaxed amounts contributed or deferred in prior years to ...