Allowed or Allowable

This is an amount established by an insurance company that it will pay for a health benefit. This varies per insurance company and per patient benefit contract. Some insurance companies may allow 100% of the submitted charges as the allowable amount. Some may establish their own internal amount. Medicare and Medicaid have their own established allowed amounts. Medicare pays 80% of its allowed amount if the patient has met their annual deductible. The patient pays the other 20% of the allowable. With Medicaid, it pays 100% of its allowable if the service is covered. Doctors or providers, when enrolling with Medicare and Medicaid agree to accept the allowed amount as payment in full. This means the patient cannot be billed for the difference between the provider’s charges and the Medicare/Medicaid allowed amounts. For example, a doctor may charge $160 for an office visit. The patient may have Medicare. Medicare may allow $60 for the visit. If the patient met their annual deductible, Medicare pays the doctor 80% of the $60 or $48. The patient pays the $12 difference between the $60 allowed amount and the $48 payment. The doctor cannot charge the patient the difference between the $160 charge and the $60 allowed amount. The provider must perform an adjustment between the $160 charge and $60 allowed amount. The patient can only be billed for their 20% of the allowable and any amounts applied to their deductible. With commercial insurance, if the doctor is non-par or not contracted with the patient’s health insurance company, the doctor doesn’t have to accept the allowed amount or paid amount as payment in full. The provider can bill the patient the difference between the charges and payment. This may not be so with HMOs in a state with a no-balance billing HMO law.

Ancillary Services: 

Medical care, other than those provided by the physician or hospital, which are related to a patient’s care. Examples are laboratory work, x-rays, physical therapy, and anesthesia 

ATD (Applied to Deductible)

The portion of the claim that the patient is required to meet before the insurance company pays the claim. The claim may have been $100. The insurance company allows $100. The patient has a $100 deductible they haven’t met. The EOB is received without payment with the $100 ATD (Applied to the deductible). You would change the account responsibility to self Pay and bill the patient the $100 that is owed.

AWP: (Any Willing Provider) Laws:

 State Laws that require health insurance companies to accept into their PPO and HMO networks any provider willing to agree to the insurance companies terms and conditions. Also known as Freedom of Choice Laws. Insurance Companies have gone to court to protect their choice not to contract with providers, however, the U.S. Supreme Court has found in favor of the State AWP Laws.  

AOB: Assignment of Benefit 

Assignment of Benefit. This is a simple term that can have very drastic consequences. Assignment means to take something and give it to someone else. Example. I assign my parking spot to Jim. I give my parking spot to Jim. Benefit is a healthcare service provided under a contract between a health insurance company and an employer or patient. SO, an assignment of benefit simply means the patient is asking permission to take the payment of their health benefit and give it to the doctor so that the doctor can apply the benefit payment to the medical debt owed by the patient. Not every patient has the contracted right to assign their benefit payment. Even if you have the patient sign an AOB form, the insurance company doesn’t have to honor it if the patient cannot contractually assign their benefit payment to anyone. The only exception is if there is a State Law mandating it. Florida is a State that mandates an insurance company honor an AOB but for emergency care only.

Assignment:

This is a process where an insurance company pays the patient’s health benefit directly to the person designated by the patient to receive the payment of the health benefit. The provider has checked “Yes” for “Assignment” on the claim form. The provider has the option to do this on a claim by claim basis. If the provider does NOT accept assignment, the payment of the health benefit is sent to the patient or member. Some insurance companies such as Medicare, Railroad Medicare, and Tricare allow you to bill the patient for 115% of the allowable. For example, if the allowable is $100, you can bill the patient for $115.00. Assignment only works if the patient’s contract allows the assignment of the benefit payment or State Law mandates acceptance of Assignment.