Contractual Allowance - Definition:
The Contractual Allowance is the difference between Covered Charges and the Plan Benefit. Changes in the hospital's charge structure, utilization patterns and payor mix can cause significant fluctuations in this difference. 

The AnalyTXs AllPayor system calculates a contractual allowance for each filed claim. Adjustment claims (late charges, series claims, replacement claims, etc.) are consolidated in accordance with plan specific consolidation rules and the contractual allowance is automatically recalculated to reflect these adjusted charges and the revised plan benefit. At period-end, the AnalyTXs AllPayor system will contain the most up-to-date contractual allowance possible for the entire filed claim population.

Your hospital will also have an inventory of un-filed and in-house charges. These unfiled charges are grouped into the AnalyTXs AllPayor system by payor. Then a user-defined range (by discharge date) of the filed claim population is used to precisely estimate the contractual allowance for these period-end charges. This process is marked to remain open while the hospital is working on the period-end financials. When the accounting period is closed, this process is marked closed. Once marked closed it cannot be changed. This precision provides auditable evidence the hospital has diligently established, monitored, evaluated, and verified the accuracy of this most important portion of their internal financial process consistent with the intent of the Sarbanes-Oxley Act.