Allowed Amount (Health Care) Law and Legal Definition

An allowed amount 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. Sometimes the nonparticipating providers and facilities do not accept allowed amount as payment in full for covered services. The allowed amount 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.