How Does “Allowed Amount” Work in Healthcare?

The business of healthcare can be complicated. There are patients, medical practices, and insurance companies. This creates a triad of complexity. This is why a third party medical biller may be beneficial. Third party billers submit the prepared codes to the insurance company on behalf of the healthcare institution and patient.

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In this video, you will learn about the “allowed amount” in healthcare.

Jasmine from IPS learning provides us with an explanation of allowed amount. An allowed amount is the amount an insurance company will cover for a specific type of service. For example, an insurance provider may pay for 80% of your visit. Therefore, the allowed amount is however much that 80% costs. Another example is a patient that needs two services. One may be cover while the other is not. The covered service has an allowed amount while the service that is not covered is considered not allowed. Insurance companies often have lists of what they pay for various services. However, that service also has to be covered by the patients benefits for it to be allowed. In this way, a fee schedule slightly differs from an allowed amount.

“Allowed amount” is a common element in different kinds of healthcare alternatives, as well. Health Share Ministries, such as Jericho Share, allow for a certain number of medical services or visits every year, depending on the medical services needed. Each plan and provider is different.


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