The allowed amount is the predetermined price that the health insurance company will pay for specific procedures performed by in-network providers. Think of it as wholesale versus retail prices. In-network providers charge the insurance company the allowed (wholesale) amount. In exchange, the providers get a flow of business from plan participants.
Out-of-network providers did not agree to the wholesale prices, and do not benefit from the flow of patients participating in a particular plan. They often charge a retail rate when treating out-of-network patients. The patient often owes the difference between the allowed amount, and what the provider charges.
Agent Owner, Gilmore Insurance Services, Marysville, Washington State
What is allowed amount in health insurance? Well, more than likely it means the maximum an insurance carrier will pay for a service provided. You might hear it also as usual and customary as a similar term. Basically when you read that on a plan summary or explanation of benefits it represents the maximum the plan will pay.
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Out-of-network providers did not agree to the wholesale prices, and do not benefit from the flow of patients participating in a particular plan. They often charge a retail rate when treating out-of-network patients. The patient often owes the difference between the allowed amount, and what the provider charges.