A provider charged $500 to a claim with an allowable amount of $400. In which column should the non-allowed charge be posted?

A provider charged $500 to a claim with an allowable amount of $400. In which column should the non-allowed charge be posted?

• A. Adjustment column of the credits
• B. Revenue column
• C. Payment column
• D. Balance column

Answer: (A)

When a charge is more than what the payer allows, the difference is an adjustment for contractual allowances, not additional income. This non-allowed amount reduces the amount that can be collected and lowers revenue accordingly. Therefore the proper place to record it is in the adjustments shown on the credits side, because credits in that area are used to reflect reductions to what was originally billed, not actual payments or earned revenue. In this scenario, the service generated revenue on the full 500, but the payer’s allowed amount is 400, so the 100 difference is treated as an adjustment (contractual allowance). Recording it in the adjustment column communicates that this portion is not revenue and helps keep the accounts receivable and income accurate. The other columns serve different purposes: revenue tracks earned income, the payment column records funds received, and the balance column shows outstanding amounts.

When a charge is more than what the payer allows, the difference is an adjustment for contractual allowances, not additional income. This non-allowed amount reduces the amount that can be collected and lowers revenue accordingly. Therefore the proper place to record it is in the adjustments shown on the credits side, because credits in that area are used to reflect reductions to what was originally billed, not actual payments or earned revenue.

In this scenario, the service generated revenue on the full 500, but the payer’s allowed amount is 400, so the 100 difference is treated as an adjustment (contractual allowance). Recording it in the adjustment column communicates that this portion is not revenue and helps keep the accounts receivable and income accurate. The other columns serve different purposes: revenue tracks earned income, the payment column records funds received, and the balance column shows outstanding amounts.