What is the 'allowed charge' in medical billing?

• A. The amount that is the most the payer will pay and provider for each procedure or service.
• B. The total amount billed by the patient.
• C. The deductible amount required before benefits begin.
• D. The charge for non-covered services.

Answer: (A)

In medical billing, the allowed charge is the maximum amount a health plan will reimburse for a service. This negotiated rate, often called the allowed amount, sets the limit the insurer will pay to the provider. It isn’t the full amount the provider charges, it isn’t the deductible you must pay before benefits begin, and it isn’t the charge for services the plan doesn’t cover. When a claim is processed, payments and what you owe are based on that allowed amount: the insurer pays up to the allowed amount, and you cover any remaining deductible or coinsurance within that limit. This concept explains why the allowed charge is the correct choice.