Billed amount:
It is the Amount charged for each service performed by the provider. In other words it is the total charge value of the claim. The billed amount for a specific procedure code is based on the provider. It may vary from place to place. It is not common across all the states.
After reviewing the definitions in rules or provided by the health insurers, OFM found that:
** Billed amount is not defined in rule by any of the states with an APCD.
** Billed amount can be either the total amount billed (Premera, Group Health) or the dollar amount charged on the service line for a service (Regence).
** The Medicaid definition is not definite on whether the billed charge is the total dollar amount or a line item charge.
** Billed amount is generated by the provider billing the health plan for services.
** Billed/submitted amount can also be generated by Group Health members when submitting charges for reimbursement.
• Allowed amount:
The maximum reimbursement the member’s health policy allows for a specific service. It is the maximum dollar amount assigned for a procedure based on various pricing mechanisms. Allowed amounts are generally based on the rate specified by the insurance. This amount may be:
-a fee negotiated with participating providers.
-an allowance established by law.
-an amount set on a Fee Schedule of Allowance.
Allowable Charges
Blue Cross reimburses participating providers based on allowable charges. The allowable charge is the lesser of the submitted charge or the amount established by Blue Cross as the maximum amount allowed for provider services covered under the terms of the Member Contract/Certificate. You should always bill your usual charge to Blue Cross regardless of the allowable charge. Allowable charges are available to participating providers to help avoid refund situations. They are for informational purposes and not intended for providers to establish allowable charges.
Blue Cross regularly audits our allowable charge schedule to ensure that the allowable charge amounts are accurate. From time to time we must adjust an allowable charge because it may have been incorrectly loaded into our system or the CPT code description has changed. Allowable charges are added periodically due to new CPT codes or updates in code descriptions.
For Example:-
If the billed amount is $100.00 and the insurance allows $80.00 then the allowed amount is $80.00 and the balance $20.00 is the write-off amount.
Formula: – Allowed amount = Amount paid + co-pay / co-insurance + Deductible
• Paid amount:
It is the amount which the insurance originally pays to the claim. It is the balance of allowed amount – Co-pay / Co-insurance – deductible. The paid amount may be either full or partial. i.e. Full allowed amount being paid or a certain percentage of the allowed amount being paid.
For Example:-
If the billed amount is $100.00 and the insurance allows $80.00 but the payment amount is $60.00. Here $60.00 is the actual amount paid for the claim.
Formula: –
Paid amount = Allowed amount – (Co-pay / Co-insurance + Deductible)
• Co-pay:
The fixed dollar amount that patient requires to pay as patient’s share each time out of his pocket when a service is rendered. This is paid during the time of the visit. Co-pay ranges from $5.00 to $25.00. Co-pay’s are usually associated with the HMO plan. The Co-pay amount is usually specified in the insurance card copy.
• Co-insurance:
Co-insurance is the portion or percentage of the cost of covered services to be paid either by insurance or patient. After the primary insurance making payment the balance of the cost covered (Co-insurance) will be sent to secondary insurance if the patient has one or to the patient.
For Example:-
If the billed amount is $100.00 and the insurance allows @80%. The payment amount is $60.00 then the remaining $20.00 is the co-insurance amount.
Formula: –
Co-insurance = Allowed amount – Paid amount – Write-off amount.
• Deductible:
Deductible is the amount the patient has to pay for his health care services, whereas only after the patient meets the deductible the health insurance plan starts its coverage. The patient has to meet the Deductibles every year. It is mostly patient responsibility and very rarely another payor pays this amount.
Deductible means the dollar amount of Eligible Expenses that must be incurred by the Employee, if ”Employee only” coverage is elected, before benefits under the Plan will be available. If ”Family” coverage is elected, Deductible means the dollar amount of Eligible Expenses that must be incurred by the family before benefits under the Plan will be available.
MAXIMUM ALLOWABLE PAYMENT SYSTEM
B. The physician agrees to fully and promptly inform BCBSKS of the existence of agreements under which such physician agrees to accept an amount for any and or all services as payment in full which is less than the amount such physician accepts from BCBSKS as payment in full for such services. BCBSKS staff is authorized to adjust MAP for the physician in light of such agreements, under the following terms:
1. The BCBSKS staff may adjust the MAP only in circumstances in which the staff becomes aware through independent investigation or as a result of information provided by a contracting provider, that a contracting provider has a payment agreement with another payor or offers a discount or other financial arrangement, the effect of which is that such contracting provider accepts from another payor as payment in full an amount less than such contracting provider would accept from this corporation as payment in full;
2. Such adjustment shall be approved in writing by the executive vice president or by the president of this corporation.
3. Such adjustment shall be communicated in writing to the contracting provider. Such communication shall be considered a change in policy adopted by the board of directors, and the contracting provider shall have such advance notice of the change and such rights to cancel the Contracting Provider Agreement rather than abide by the change as are afforded for other amendments to policies and procedures under Section III.A.2. of this agreement.
4. The board of directors or executive committee of BCBSKS shall be informed by the staff of any such adjustments to MAPs so made, at the next meeting of the board of directors or executive committee immediately following such adjustment.
5. The board of directors or executive committee of this corporation shall have the ability to make subsequent changes in adjustments to MAPs so made, which changes shall be prospective only and shall be effective as any other amendment to policies and procedures after communication. If a change in such adjustments would have the effect of inducing a party which terminated its Contracting Provider Agreement as a result of the staff adjustment to MAPs to wish to contract anew with BCBSKS, a contract shall be tendered to such party and shall become effective on the date of execution by such party.
Maximum allowable amount and non contracting allowed amount
Allowable Amount means the maximum amount determined by BCBSTX to be eligible for consideration of payment for a particular service, supply, or procedure.
• For Hospitals and Facility Other Providers, Physicians, and Professional Other Providers contracting with BCBSTX in Texas or any other Blue Cross and Blue Shield Plan – The Allowable Amount is based on the terms of the Provider contract and the payment methodology in effect on the date of service. The payment methodology used may include diagnosis-related groups (DRG), fee schedule, package pricing, global pricing, per diems, case-rates, discounts, or other payment methodologies.
• For Hospitals and Facility Other Providers, Physicians, and Professional Other Providers not contracting with BCBSTX in Texas or any other Blue Cross and Blue Shield Plan outside of Texas (non-contracting Allowable Amount) – The Allowable Amount will be the lesser of: (i) the Provider’s billed charges, or; (ii) the BCBSTX non-contracting Allowable Amount. Except as otherwise provided in this section, the non-contracting Allowable Amount is developed from base Medicare Participating reimbursements adjusted by a predetermined factor established by BCBSTX. Such factor shall be not less than 75% and will exclude any Medicare adjustment(s) which is/are based on information on the claim.
Notwithstanding the preceding sentence, the non-contracting Allowable Amount for Home Health Care is developed from base Medicare national per visit amounts for low utilization payment adjustment, or LUPA, episodes by Home Health discipline type adjusted for duration and adjusted by a predetermined factor established by BCBSTX. Such factor shall be not less than 75% and shall be updated on a periodic basis.
When a Medicare reimbursement rate is not available or is unable to be determined based on the information submitted on the claim, the Allowable Amount for non-contracting Providers will represent an average contract rate in aggregate for Network Providers adjusted by a predetermined factor established by BCBSTX. Such factor shall be not less than 75% and shall be updated not less than every two years.
BCBSTX will utilize the same claim processing rules and/or edits that it utilizes in processing Participating Provider claims for processing claims submitted by non-contracted Providers which may also alter the Allowable Amount for a particular service. In the event BCBSTX does not have any claim edits or rules, BCBSTX may utilize the Medicare claim rules or edits that are used by Medicare in processing the claims. The Allowable Amount will not include any additional payments that may be permitted under the Medicare laws or regulations which are not directly attributable to a specific claim, including, but not limited to, disproportionate share and graduate medical education payments.
Any change to the Medicare reimbursement amount will be implemented by BCBSTX within ninety (90) days after the effective date that such change is implemented by the Centers for Medicaid and Medicare Services, or its successor.
The non-contracting Allowable Amount does not equate to the Provider’s billed charges and Participants receiving services from a non-contracted Provider will be responsible for the difference between the non-contracting Allowable Amount and the non-contracted Provider’s billed charge, and this difference may be considerable. To find out the BCBSTX non-contracting Allowable Amount for a particular service, Participants may call customer service at the number on the back of your BCBSTX Identification Card.
• For multiple surgeries – The Allowable Amount for all surgical procedures performed on the same patient on the same day will be the amount for the single procedure with the highest Allowable Amount plus a determined percentage of the Allowable Amount for each of the other covered procedures performed.
• For procedures, services, or supplies provided to Medicare recipients – The Allowable Amount will not exceed Medicare’s limiting charge.
• For Covered Drugs as applied to Participating and non-Participating Pharmacies – The Allowable Amount for Participating Pharmacies will be based on the provisions of the contract between BCBSTX and the Participating Pharmacy in effect on the date of service. The Allowable Amount for non-Participating Pharmacies will be based on the Participating Pharmacy contract rate.
