Allowed amount too low

What it means

When you use a provider outside your plan’s network, the plan pays based on its “allowed amount,” not the provider’s bill. If the provider charges more, the difference may land on you. This is not always a denial. It is often the plan paying exactly what its rules say. But the rules can be wrong, misapplied, or overridden by federal protection.

FAIR Health, a nonprofit that keeps a large database of claims, describes two common methods. One is a usual, customary and reasonable charge, meaning a price drawn from data on what providers in your area charge. The other is a percentage of Medicare’s fee schedule. Your plan document says which one yours uses.

Who has to act first

You do. Read your explanation of benefits (EOB): billed amount, allowed amount, what the plan paid and what you owe. Then call the plan and ask how it set the allowed amount for this claim, what data or schedule it used, and where that appears in the plan document.

For a job-based plan or a non-grandfathered individual plan, you have at least 180 days after you receive the denial notice to file the first appeal; your plan may allow more. Medicare, Medicaid, TRICARE, Veterans Affairs and federal employee plans have different, often shorter, deadlines. Check the date on your notice, which controls.

Arguments that work

• Federal surprise-billing protections. For emergency services, for out-of-network clinicians at an in-network hospital or surgical center, and for air ambulance, you owe no more than in-network cost sharing. Ground ambulance is not covered by this law. For some scheduled services a valid written waiver can remove the protection, but never for emergency, anesthesia, pathology, radiology, laboratory and several other services. The dispute over payment is between the plan and the provider, not you.
• A wrong directory. If you relied on the plan’s directory listing a provider as in network and it was wrong, the plan may not charge more than in-network cost sharing.
• Apply the plan’s own method. Check the plan applied the method its document describes, to this service, in your area.
• Benchmark the price. The FAIR Health cost lookup shows typical prices for a procedure in your area. Its estimates default to the 80th percentile of charges and can be adjusted. Use it to show the allowed amount is far from the method the plan says it uses.
• A network gap. If the plan covers out-of-network care when the service cannot effectively be provided in network, show there was no in-network provider who could do it.

Evidence to gather

• The EOB and the bill (you).
• The plan’s out-of-network reimbursement wording (the plan document).
• A FAIR Health estimate for the procedure and area, saved with the date (you).
• A letter from the provider or your doctor on why this provider was needed (your doctor).
• Screenshots of the directory listing, if relevant (you).

What to send

Send a written appeal asking for reprocessing, using the out-of-network underpayment appeal letter. Ask the plan to state its method and data. If you believe the surprise-billing rules apply, also complain to the No Surprises Help Desk at 1-800-985-3059.

When this is not worth an appeal

If the plan paid exactly as its document describes, you chose an out-of-network provider, none of the protections apply and there was no network gap, an appeal has little to argue. Use the benchmark to negotiate with the provider, ask for a discount or payment plan, and check financial assistance.