CPB Certified Professional Biller Certification Practice Exam

What is considered an allowed charge?

1. The minimum payment a provider receives

2. The maximum reimbursement amount from the payer for services rendered

3. The total cost billed to the patient

4. The fee after adjustments and discounts

The correct answer is: The maximum reimbursement amount from the payer for services rendered

An allowed charge refers to the maximum amount that a payer (such as an insurance company) agrees to pay for a specific service or procedure. This amount is determined based on various factors including the provider's contracted rates with the insurer, regional pricing trends, and any applicable fee schedules. When a provider submits a claim to a payer, the allowed charge represents the upper limit that the insurance plan will recognize for payment. If the provider's billed amount exceeds this allowed charge, the excess typically will not be reimbursed by the insurer, and the provider may need to adjust it accordingly. This makes it crucial for billing professionals to understand the significance of allowed charges in the reimbursement process. The other options, while they may relate to billing practices, do not correctly define an allowed charge. The minimum payment a provider receives does not address the contractual agreements with payers, and the total cost billed to the patient can vary greatly without being confined to what the payer allows. Lastly, the fee after adjustments and discounts does not specifically indicate the maximum reimbursement the payer has set for services provided.