The insurance process for Cross-coding and medical billing in dentistry is easy to understand if you break benefits down starting with allowed amounts. Understanding allowed amounts in cross-coding on the medical insurance explanation of benefits (EOB) is essential to success. A major insurer clarifies cost sharing as a simplified explanation of coverage:
“When you become a member of an insurance plan you agree to pay a share of the costs for the services covered by the plan. This is cost sharing. Your share of the cost can change over time as you use your insurance. When the amount of money you spend for covered services equals the deductible amount listed in your plan, you have “reached” or “met” your deductible. From that point on, you will pay less for covered services. If you reach the “out-of-pocket maximum,” your share of the cost for covered services reduces to zero”.
Copays, deductibles, and coinsurance are examples of “cost-sharing.”
Billed and Paid Amounts Explained
Amount Billed – The full amount billed by your provider to your health plan.
Amount Paid by Your Health Plan – The portion of the charges eligible for benefits minus your copay, deductible, coinsurance, network discount, and amount paid by another source up to the billed amount.
An allowed amount in cross-coding, in the context of health care, refers to the maximum amount of the billed charge an insurance company deems is payable by the plan for covered services or supply rendered by participating providers and facilities or by nonparticipating providers and facilities. The allowed amount is accepted as the full payment for covered services by the participating providers and facilities. Typically, nonparticipating providers and facilities do not accept allowed amount as payment in full for covered services. The allowed amount in cross-coding permitted by an insurance company can be determined by provider contracts. For example, an insurance company who contracts with a provider for a rate of 80% will allow bills for services only up to 80% and the difference between the allowed 80% amount and billed amount will not be covered by insurance company.
Amount Charged vs. Amount Allowed
An out-of-network healthcare provider can charge a patient their full amount for a product or service, but a health insurer will establish the maximum they will reimburse for a given covered product or service. The Amount Allowed is often less than the Amount Charged. The allowed amount is the maximum amount a plan will pay for a covered health care service. May also be called “eligible expense,” “payment allowance,” or “negotiated rate.”
If a provider charges more than the plan’s allowed amount, beneficiaries may have to pay the difference, (balance billing).
When a provider bills for the difference between the provider’s charge and the allowed amount. For example, if the provider’s charge is $1000 and the allowed amount is $700, the provider may bill for the remaining $300. A preferred provider typically may not balance bill you for covered services.
UCR (Usual, Customary, and Reasonable)
The amount paid for a medical service in a geographic area based on what providers in the area usually charge for the same or similar medical service. The UCR amount sometimes is used to determine the allowed amount.
Co-insurance is the beneficiaries share of the costs of a covered health care service, calculated as a percent (for example, 20%) of the allowed amount for the service. The insured pays co-insurance plus any deductibles they owe. For example, if the health insurance or plan’s allowed amount for an office visit is $100 and the insured met the deductible, a co-insurance payment of 20% would be $20. The health insurance or plan pays the rest of the allowed amount.
Co-payment A fixed amount (for example, $15) the insured pays for a covered health care service, usually when they receive the service. The amount can vary by the type of covered health care service.
Out-of-network Co-insurance The percent (for example, 40%) the insured pays of the allowed amount for covered health care services to providers who do not contract with your health insurance or plan. Out-of-network Co-payment A fixed amount (for example, $30) the insured pays for covered health care services from providers who do not contract with a health insurance or plan.
Even when insurers break down plan benefits in neat grids and summaries, patients need to know the difference between deductibles, premiums, out-of-pocket maximums, co-pays, and co-insurance to know the insured responsibility.
- Glossary of health insurance, healthcare.gov
- Important health insurance words described, AHEC Wes
Author: Rose Nierman, Nierman Practice Management
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Rose Nierman, is the Founder and CEO of Nierman Practice Management, and DentalWriter™ narrative report (for SOAP reports) and medical billing software. NPM also hosts CE courses on Medical Billing for Dentists and clinical treatment of TMJ disorders and Dental Sleep Medicine. They also offer a comprehensive, online cross-coding course series. For more information, contact Nierman Practice Management at 1-800-879-6468 or through niermanpm.com.