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Linda Collins Blogger

Charge vs. Allowed vs. Reimbursed

Posted by Linda Collins | September 13, 2018

How do I know what dollar amount is being paid?

The explanation of benefits (EOB) which comes with payment from the insurance company can offer information about what is and is not paid. The terminology used can also be confusing.

Charge – this is the dollar amount put in box 24F on the HCFA claim form. This amount is your retail price.

Allowed – this is the dollar amount in the payer's fee schedule for this particular code. This is the dollar amount the payer will pay for this covered service.

Contractual Write-off – this is the difference between charges and allowed in the payers' fee schedule. You agree to accept the fee schedule allowed amount when you sign the contract with a payer. The difference between what you charge and allowed amount is a write-off. You are not able to bill the patient for the difference.

Patient Responsibility – the portion of the allowed amount the patient must pay. This may be coinsurance, copayment, or a deductible amount.

Here is an example of a payment to assist in understanding what payment is from the insurer and what payment is from the patient:

    Charge – $1200.00

    Allowed – $840.00

    Contractual Write-off – $360

    Patient Responsibility – $168.00

    Paid from the Insurance Company – $672

    You will receive $672 from the insurance company and collect $168 from the patient for a total allowed amount of $840.00

Each EOB is different and may use various terminology. Take the time to review your EOB and understand where your money is coming from.

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