The charge amount is the amount you are charging to the payer (i..e insurance company). Usually, because of contracted rate adjustments, the amount you charge an insurance company is not what you expect to be reimbursed by the payer. The charge amount is the amount that you are actually charging the insurance companies. The charge amount should be consistent across all payers, that is, you should not charge a different rate for the same service to different insurance companies (they really do not like that). The expected rate is the amount that you expect to receive as reimbursement. For more information about expected rates, please see: Expected Rates for Contracted Rate Adjustments.
Disclaimer: All amounts in this example are completely fictitious and should not be used as guidance when determining your fee schedule.
In this example, we will use 92507 as the CPT code that we are billing. Let's say we accept Blue Cross Blue Shield (BCBS) and we accept Aetna and we are contracted (in-network) with each of these payers. Blue Cross Blue Shield pays $75.00 for the 92507 service and Aetna pays $95.00 for the 92507 service (remember, these are fictitious amounts).
You should NOT send $75.00 as the charge amount for 92507 to Blue Cross Blue Shield and $95.00 as the charge amount for 92507 to Aetna. If you do, Aetna will be wondering why you are charging them more for the same service. Instead, you should set your charge amount (your fee) for 92507 to an amount greater than any insurance company will ever pay. For example, you might set your fee for 92507 to $120.00. This is the Charge Amount.
When you bill a session out to BCBS, your A/R increases by $120.00 (the charge amount). However, you do not really expect to receive $120.00 as payment. You expect to receive $75.00. This is the Expected Amount. Likewise, if you were to bill 92507 out to Aetna, your A/R increases by $120.00, but you expect to receive $95.00.
Example in A/R
We will expand our example above to show how expected rates versus charge amount play out in your A/R. In this simple case, we bill out one charge (for 92507) to BCBS and one charge (for 92507) to Aetna and we have not yet received payment on either.
Your actual A/R is $240.00. This is the $120.00 charge for each of the sessions we billed out.
Your expected A/R is $170.00. This is $75.00 + $95.00, the sum of the expected amounts on those charges.