Which party bears responsibility for the difference between billed amount and allowed amount on remittance advice?

Which party bears responsibility for the difference between billed amount and allowed amount on remittance advice?

• A. Provider
• B. Payer
• C. Billing Specialist
• D. Patient

Answer: (A)

When a service is billed, the insurer assigns an allowed amount under the contract with the provider. The difference between the amount charged by the provider and this allowed amount is called the contractual adjustment. The provider agrees to accept the allowed amount as payment in full under the contract, so the responsibility for that difference falls on the provider, not the patient or the payer. The patient’s responsibility typically rests on the remaining amount calculated from the allowed charge (such as coinsurance or deductible), if any. For example, if something is billed at 150 and the insurer’s allowed amount is 100, the payer pays 100 and the provider writes off 50 as a contractual adjustment; the patient would owe only their portion of the 100 according to their plan.

When a service is billed, the insurer assigns an allowed amount under the contract with the provider. The difference between the amount charged by the provider and this allowed amount is called the contractual adjustment. The provider agrees to accept the allowed amount as payment in full under the contract, so the responsibility for that difference falls on the provider, not the patient or the payer. The patient’s responsibility typically rests on the remaining amount calculated from the allowed charge (such as coinsurance or deductible), if any. For example, if something is billed at 150 and the insurer’s allowed amount is 100, the payer pays 100 and the provider writes off 50 as a contractual adjustment; the patient would owe only their portion of the 100 according to their plan.