What is the term used to describe the difference between the full charges for services rendered and the amount actually paid by a third-party payer?

The term that describes the difference between the full charges for services rendered and the amount actually paid by a third-party payer is accurately identified as deductions from revenue. This reflects the adjustments made to the reported revenue figures that account for the amounts that health care providers do not actually receive from payers such as insurance companies or government programs.

In the context of healthcare operations, when a service has been billed, the full charges typically reflect the list prices for those services. However, due to negotiations with third-party payers, discounts, copayments, and other contractual arrangements, the actual revenue received is often lower than the billed amount. These deductions are crucial for financial reporting and budgeting purposes, as they impact the net revenue recognized by the facility. Understanding this concept helps administrators manage financial expectations and inform strategic decisions accordingly.

By contrast, the other terms such as cost adjustments, service rate agreements, and revenue discrepancies, while related to financial processes, do not accurately capture the specific situation of billing and payment differences that deductions from revenue describes. Cost adjustments might refer to various modifications in pricing or expenses unrelated to payer agreements, service rate agreements typically involve negotiated rates and terms established with payers but do not specifically address the difference in charges and payments, and revenue discrepancies