Certified Application Counselor Practice Test

Which term refers to the maximum amount paid for a healthcare service?

1. Balance billing

2. Allowed amount

3. Coinsurance

4. Claim

The correct answer is: Allowed amount

The term that refers to the maximum amount paid for a healthcare service is the allowed amount. This concept is pivotal in the healthcare payment system, particularly in managed care and insurance settings. The allowed amount is determined by the insurance plan and represents the maximum fee that the plan will cover for a specific healthcare service. When a provider agrees to accept the allowed amount as full payment for the service, this amount signifies the limit of what will be reimbursed by the insurance company. If the provider charges more than the allowed amount, they cannot bill the patient for the difference when they are in-network, which is why understanding the allowed amount is crucial for both patients and healthcare providers. This ensures clarity in billing and patient's financial responsibility regarding their out-of-pocket costs. In contrast, balance billing refers to the practice of billing the patient for the difference between the provider's charge and the allowed amount, which usually happens with out-of-network providers. Coinsurance is the percentage of the total cost that a patient is responsible for after the deductible is met, and a claim is merely a request for payment submitted to an insurer for services rendered. Each of these terms plays a different role in the healthcare payment system, but the allowed amount specifically defines the maximum that the insurer agrees