The Allowed Amount is the maximum sum an insurance company agrees to pay for a specific medical service, procedure, or treatment. This amount is determined through negotiated rates between the insurer and in-network providers, ensuring that policyholders receive care at discounted rates. The Allowed Amount is sometimes referred to as the negotiated rate, eligible expense, or contracted rate.
If a patient visits an in-network provider, they are responsible only for their portion of the cost, which may include copayments, deductibles, or coinsurance, while the insurance covers the rest. However, if a patient sees an out-of-network provider, the insurer may pay only a portion of the allowed amount or deny coverage entirely. In such cases, the provider may bill the patient for the balance beyond the allowed amount, known as balance billing, unless protected by laws like the No Surprises Act.
Understanding the Allowed Amount helps patients manage healthcare costs, avoid unexpected bills, and make informed decisions about where to seek care. Reviewing medical bills and Explanation of Benefits (EOB) statements ensures charges align with the allowed amount and helps detect potential billing errors.
