Allowed amount

The allowed amount is the maximum a specific insurance plan will pay for a given procedure code, as set by that plan's fee schedule. For an in-network dentist, the allowed amount is not optional: the contract requires writing off the difference between the practice's full fee and the allowed amount, and billing the patient for that difference is a contract violation in most cases, which is exactly what the write-off line on an explanation of benefits represents.

The allowed amount is also where underpayment most often hides. Because it is set by the plan and not independently verified by the practice, an insurer can quietly apply the wrong fee schedule, downcode a procedure to a lower-paying code, or apply an alternate benefit provision, and unless someone is actually checking the allowed amount against the contracted fee schedule for that plan, the error goes uncaught and unappealed.

Keep a current copy of the fee schedule for every plan the practice participates in, and spot-check allowed amounts against it periodically rather than assuming every payment that comes through is correct simply because it arrived.