Rev Up Your Revenue Cycle Skills 2025 – Master the RCM Practice Challenge!

The term that describes the maximum amount a payer will allow for each procedure or service based on the patient's policy is known as "Allowed Charges." This figure is essential in the revenue cycle management process because it dictates the reimbursement that a healthcare provider can expect to receive from an insurance company for a given service.

Allowed Charges are determined by the insurance policy and are influenced by factors such as the negotiated rates between the provider and the insurance company, the patient's specific plan details, and any contractual agreements in place. Understanding this concept is crucial for providers, as it directly impacts their revenue and the way they bill for services rendered.

In contrast, the other terms refer to different components of a patient's financial responsibility. A deductible is the amount a patient must pay out-of-pocket before their insurance covers any costs. Coinsurance is the percentage of costs that a patient must bear after the deductible has been met. A copayment is a fixed amount that a patient pays for a specific service at the time of the visit. Each of these terms plays a role in healthcare financing but does not represent the maximum allowable amount set by the payer, which is what "Allowed Charges" specifically addresses.