Allowed amounts are determined by an insurance company. As all doctors determine their own fees, an insurance company takes the average of those fees in a geographic area by that type of provider (i.e. cardiologist, podiatrist, etc.) to determine what amount is fair. This is called ‘Reasonable & Customary.’ Depending on the type of contract your doctor has with your insurance company the allowed amount for a service may be even lower than the Reasonable & Customary amount in that locale.
Part of the "Understanding Insurance" series.
