If a physician accepts the allowed amount and the insurer allows 80 of 120, with $50 of deductible not yet met, how much should be written off?

If a physician accepts the allowed amount and the insurer allows 80 of 120, with $50 of deductible not yet met, how much should be written off?

• A. $40
• B. $20
• C. $50
• D. $60

Answer: (A)

The main idea is contractual adjustment: when a provider agrees to accept the insurer’s allowed amount, the difference between what’s billed and what the insurer allows is written off as a reduction in the provider’s charge. Here, the charge is 120 but the insurer allows only 80. The amount the provider will not bill the patient or insurer for is 40, so that is the write-off. The deductible status affects what the patient still owes on top of that, but it doesn’t change the write-off itself. With a 50 deductible not yet met, after applying the deductible the remaining allowed amount is 30. The insurer would cover 80% of that remaining amount (24), and the patient would owe the remaining coinsurance (6). So total collection would be 120 when including the write-off, but the amount written off is 40.

The main idea is contractual adjustment: when a provider agrees to accept the insurer’s allowed amount, the difference between what’s billed and what the insurer allows is written off as a reduction in the provider’s charge.

Here, the charge is 120 but the insurer allows only 80. The amount the provider will not bill the patient or insurer for is 40, so that is the write-off.

The deductible status affects what the patient still owes on top of that, but it doesn’t change the write-off itself. With a 50 deductible not yet met, after applying the deductible the remaining allowed amount is 30. The insurer would cover 80% of that remaining amount (24), and the patient would owe the remaining coinsurance (6). So total collection would be 120 when including the write-off, but the amount written off is 40.