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Allowable charge

1. In the Medicare program, the fee schedule amount for a medical service that is published annually by the Centers for Medicare and Medicaid Services (CMS). This fee is based on relative value units (RVUs) taking into consideration the physician’s work RVU, the practice expense RVU, and the malpractice insurance RVU. To bring the fees in line for the region where the physician practices and to adjust for regional overhead and malpractice costs, each of the RVUs is adjusted for each Medicare local carrier by geographic practice cost indices (GPCIs), pronounced “gypsies.” Sometimes this is called the approved charge. 2. Amount on which TRICARE figures the patient’s cost-share for covered care. This is based on 75% to 80% of the allowable charge.

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The lesser of the actual charge, the customary charge and the prevailing charge.

 

Allowable expense

Insurance policy provision under coordination of benefits that defines any medically necessary, reasonable, or customary item of expense and is a benefit of one or more of the insurance plans under which an individual is insured.

Allowable maximum

See: Earnings Cap. Alternative accommodation clause (loss of rent). A clause in both household buildings and contents insurances to cover the insured if his home becomes uninhabitable due to insured damage. The buildings insurer will pay the reasonable cost of: any necessary alternative accommodation, loss of rent due to the insured and a maximum of two years ground rent for which the insured is liable, subject to a maximum of 10 per cent of the amount insured. The contents insurer covers the cost of alternative accommodation and rent payable by the insured up to 20 per cent of the sum insured.

Allowed amount

Maximum dollar value the insurance company assigns to each procedure or service on which payment is based. Typically, a percent (e.g., 80%) of the allowed amount is paid by the insurance carrier. Also called approved charge or approved amount. See also maximum allowable and maximum allowable charge (MAC).