In Epic, which statement correctly describes a contractual variance?

• A. It is the difference between the expected reimbursement amount and the paid amount
• B. It is the difference between the expected reimbursement amount and the allowed amount
• C. It is the difference between the billed amount and the paid amount
• D. It is the difference between the allowed amount and the billed amount

Answer: (B)

In Epic, a contractual variance is the difference between the amount you expect to be reimbursed under the payer contract and the amount the payer allows. The expected reimbursement amount comes from applying the negotiated contract rate to the service, while the allowed amount is the payer-approved portion after contract terms and discounts. So, if you billed $1,000 but the contract and payer allow only $800, the contractual variance is $200. This helps identify revenue shortfalls tied to contract terms, rather than just total billed or paid amounts.