Insurance Allowed Amount and Why It Matters to Your Practice

Understanding insurance allowed amount and how it impacts your practice

Article by SlicedHealth partner, Azalea Health

A tricky part of medical billing is the insurance allowed amount, because each payer and even payer plans have different allowed amounts. And those amounts rarely match your actual billed amount. Billers can end up tracking allowed amounts for 10 to 20 different reimbursement schedules against billed charges and the resulting actual collection rates and/or underpayments.

The risk of not tracking allowed amounts is not seeing underpayments and missing out on collecting critical revenue.

This article covers health insurance allowed amounts, what they are, how to track them, and why they matter to your practice.Key Takeaways on the Insurance Allowed Amount

• An insurance allowed amount is the maximum an insurance plan pays for a specific CPT code under an in-network contract.
• Payer contracts, portals and the Medicare Physician Fee Schedule are good sources for finding allowed amounts.
• A baseline of allowed amounts helps practices improve revenue predictability, identify underpayments, and measure actual collection rates.
• Detailed data isn’t needed or reasonable. Practices just need enough data to gain visibility and find trends that impact the bottom line.