American Academy of Professional Coders (AAPC) Practice Exam

What happens to the difference between the physician's fee and the insurance carrier's allowed amount?

1. It is billed to the patient directly

2. It is adjusted by the participating provider

3. It is ignored by the provider

4. It is written off by the insurance carrier

The correct answer is: It is adjusted by the participating provider

The most accurate response to the question about what happens to the difference between the physician's fee and the insurance carrier's allowed amount is that it is adjusted by the participating provider. This reflects the agreement an in-network provider has with the insurance carrier, indicating that they accept the insurer’s allowed amount as full payment for the services rendered. When a provider participates in a network, they agree to specific payment terms with the insurance company. As a result, if the physician's charge exceeds what the insurance company allows, the participating provider cannot bill the patient for the difference. Instead, they must adjust their fee so that the patient is not responsible for that additional amount. Therefore, the adjustment effectively allows the provider to comply with their contractual obligations while also ensuring that patients are not burdened with unexpected costs. This interaction is a fundamental aspect of how insurance negotiations work, highlighting the importance of understanding provider agreements and fee schedules.