Here are some common health care terms, and what they mean: Allowed Amount – This is the maximum payment the plan will pay for a covered health care service. May also be called “eligible expense,” “payment allowance,” or “negotiated rate.”
Final answer: A contract allowable is the maximum amount an insurance company will pay a provider for a specific service, predefined in their contract. This impacts the provider's reimbursement, as any charges above this amount may either be billed to the patient or written off.
Contractual Allowance: The difference between what an insurance company approves according to their contract and what the healthcare provider charges for the procedure. If the provider is under contract to accept the patient's insurance plan, the patient is generally not responsible for this difference.
Impact on Reimbursement to the Provider
Determines Reimbursement: The provider is reimbursed based on the contract allowable amount, not the amount they initially charge for the service or procedure. If the provider's charge is higher than the allowable amount, they cannot bill the patient for the difference.
An allowable cost is one that is permitted under the terms and conditions of the sponsored agreement. Examples of terms and conditions include costs must be incurred within the project effective dates and must be in accordance with the approved project budget.
Usually, an in-network provider will bill more than the allowed amount, but they will only get paid the allowed amount. You don't have to make up the difference between the allowed amount and the actual amount billed when you use an in-network provider.
Contractual Amount means the amount to be paid to the SUPPLIER in accordance with the CONTRACT for total compliance with its contractual obligations.
Maximum contract allowance, also known as maximum plan allowance is the amount that is reimbursed for each dental service by the dental insurance companies. These amounts are pre-decided by the payers, for each dental service, and are dependent upon the enrollee's dental insurance plan.
In the world of construction contracting, the term “allowance” is frequently used, but what does it really mean? A construction allowance is an estimated amount of money allocated for a specific item or scope of work that cannot be fully determined when a bid or proposal is submitted.
Example: Diagnostic facility charges $150 for a test. Your insurance thinks that particular test should only cost $100, which is their "allowable" amount. So they'll pay you 30% of $100, or $30. So you're out $120.
What Medicaid Covers. Once an individual is deemed eligible for Medicaid coverage, generally there are no, or only very small, monthly payments, co-pays or deductibles. The program pays almost the full amount for health and long-term care, provided the medical service supplier is Medicaid-certified.
Allowed Amount = Total charges less Contractual Adjustments If no contractual adjustment is posted then total charges equals the allowed amount. Denial adjustments are excluded from the calculation as denials do not impact allowed amount.
Maximum Allowable Fee means the maximum dollar amount that the agency will pay a provider for specific services, supplies and equipment.
How to calculate Contractual Adjustment Rate. The total contractual adjustments refer to the difference between the amount charged by the healthcare provider and the amount paid by the insurance company or other third-party payers.
The allowable charge, as mentioned earlier, is the maximum amount that a payer is willing to reimburse for a specific service. It is predetermined and agreed upon between the payer and the provider, usually through contractual agreements or fee schedules.
Often, the choices are not known at the time a job is bid, so the contractor puts in an estimate of the cost, called an “allowance.” For example, the fixed-price bid might include material allowances of $6,000 for kitchen cabinets and countertops, $15 per sq. yd., for carpeting, and $5 per sq. ft. for ceramic tile.
Accepted Contract Amount means the total amount (excluding tax and escalation) agreed after concluding contract negotiations and shall supersede the Tender Amount upon signing of contract. The Accepted Contract Amount is typically just the price offered by the contractor in its bid in the procurement proceeding.
The Contract Amount represents the financial compensation that the contractor will receive from the project owner for completing the specified work according to the project plans, specifications, and conditions stipulated in the contract.
A contractual allowance is the amount of discount from standard charges that is allowed by a particular payer for that service. For example, a hospital may charge $5,000 for an appendectomy, but based on terms of its negotiated United managed care contract, the amount United will pay is $3,000.
The Contract Amount means the total amount for which the Contractor has tendered to execute the contract work. Sample 1. The Contract Amount means the amount of money to be charged in respect of the individual contract for time and materials only and is specified in the Client Agreement.
Contractual limitations on damages are agreements whereby the parties limit or exclude the availability of damages that would otherwise be available under statutory law.
For example, if the provider's charge is $100 and the allowed amount is $70, the provider may bill you for the remaining $30. A preferred provider may not balance bill you for covered services. Refer to glossary for more details.
In simpler terms, contractual allowance is the amount that a healthcare provider writes off as a result of negotiated agreements with insurance companies or government payers. It is the difference between the provider's standard charge for a service and the lower amount that the payer has agreed to reimburse.
Your health insurer will review your complaint and should tell the provider to stop billing you. If you do not agree with your health insurer's response or would like help from the California Department of Insurance to fix the problem, you can file a complaint with us online or by calling 1-800-927-4357.