Term for the amount allowed by the payer for a service?

• A. The Allowed Amount
• B. The Denied Amount
• C. The Write-off Amount
• D. The Billed Amount

Answer: (A)

The key idea here is the amount an insurer approves to pay for a service under the contract with the provider. This is the maximum dollar figure the payer considers eligible for reimbursement for that service, and it serves as the basis for determining what the patient owes after taking deductibles, copays, and coinsurance into account. It also helps determine how much the provider will actually receive after adjudication.

It isn’t the billed amount, which is what the provider initially charges; nor the denied amount, which is money the payer refuses to pay; nor the write-off amount, which is the provider’s adjustment down to the allowed amount. The allowed amount specifically refers to the payer-approved figure for reimbursement.