Contractual variance is caused by which difference?

• A. Between Service Date and Posting Date.
• B. Between Billed and Actual Payment.
• C. Between ALLOWED and EXPECTED amounts.
• D. Between Allowed and Billed Amount.

Answer: (C)

Contractual variance comes from the difference set by a payer contract between what the payer allows for a service and what the provider expects to be paid under that contract. The allowed amount is the reimbursement the payer will cap for the service, while the expected amount is what the provider anticipated receiving per the contract terms (the negotiated rate). When these two figures don’t align, the gap is the contractual variance and is typically recorded as a contractual adjustment or revenue variance. For example, if the contract expects 180 for a service but the payer only allows 160, the 20 difference is the contractual variance. The other options describe timing or other forms of difference not tied to the contractually defined expected versus allowed reimbursement.