“Allowed” amount or rate is defined as the maximum amount insurance will pay for a covered service code.  Based on the patient’s insurance policy, it will determine who pays the provider for the services; the patient or insurance. 

What is the difference between the provider’s “bill” rate and the “allowed” rate?

The “bill” rate is the normal rate that a provider charges for each service code or CPT.  This is what many providers use as their “normal” rate for each service code.  

Example, the provider may have a “bill” rate of $170.00 for 90834

Insurance will have a “allowed” rate of $100.00 for 90834

The insurance company has determined that this is the Usual and Customary rate for providers in that geographical area.  

If you are credentialed with the insurance company, this the rate you agree to charge patient for the service code billed to insurance

• You agree to charge the patient no MORE than $100

• You agree to charge the patient no LESS than $100

In this example, the collection can differ based on the patient’s insurance policy.  Whether they have a co-payment or deductible at the time of service.

 

Payments for the provider for reimbursement

In the example, the patient has a co-payment of $25

• The patient will pay out-of-pocket $25 for co-payment
• Insurance will pay $75
• The provider will receive the total reimbursement of $100.00

In the example, the patient has a deductible

• When a patient has a deductible, the patient is to pay out-of-pocket directly to the provider
• When the patient has not reached their deductible, the only payment will come directly from the patient, as insurance will NOT be paying.
• When the patient has a deductible, in this example the patient will pay $100 out-of-pocket directly to you the provider

In the example, the patient has reached their deductible and co-insurance applies

Example: Patient has a 20% co-insurance

• 20% of the “allowed” amount, means the patient will be paying $20.00 out-of-pocket.
• Insurance will be paying $80.00
• The provider will receive the total reimbursement of $100.00

In the example, the patient has Out-of-Pocket Maximum (OOP)

• Insurance will 100% for all qualified services
• Patient will pay $0.00 out-of-pocket
• It’s important to verify the benefits that when a patient has reached the status of reaching their Out-of-Pocket Maximum (OOP)
• This ends at the end of the policy year.  Many policies end on December 31st of the year.  The deductible will reset back to 0.00 at the beginning of the new policy year, meaning the patient will need to pay out-of-pocket for services.

Does the  “Allowed” rate apply if the provider is credentialed with insurance

Yes, when a provider completes all the paperwork to be credentialed or panelled with an insurance company, they agree to charge the insurance company members the agreed upon rate for their geographical area.

Does the  “Allowed” rate apply if the provider is non-credentialed with insurance

Yes, as a non-credentialed provider insurance they will apply a maximum that will allow for each service code submitted to insurance.  If the provider does not submit the claims to insurance, the “allowed” amount is not applicable.  The patient will be subject to the provider’s bill rate at the time of service.

Patient responsibility for out-of-pocket

• Co-payment 
  • See YouTube video in Spanish  “Copago”
• Deductible 
  • See YouTube video in Spanish – Cuando su paciente tiene un “Deducible”
• Co-insurance 
  • See YouTube video in Spanish  – Cuando su paciente tiene un “Co-seguro”
• Coordination of Benefits 
  • See YouTube video in Spanish “Coordinación de Beneficios”
• Out-of-pocket maximum 

Provider Reimbursement

• Verifying the patient’s insurance benefits 
• Credentialed or paneled with insurance
• Non-Credentialed or non-paneled with insurance
• “Allowed” amount or “Allowed” rate with insurance
  • See YouTube video in Spanish “Tarifa Permitida”
• When my patient has a deductible, what do I collect from the patient?