Definition
Billed charges are the amounts a provider reports on a claim, taken from the practice fee schedule or a hospital chargemaster. Most providers use a single set of charges for all payers, so charges rarely match what is paid. The payer applies its allowed amount, and the difference becomes a contractual adjustment.
Why it matters
Billed charges cap what you can be paid, since Medicare and many contracts pay the lesser of charges or the set rate. Charges set too low leave money unpaid. They also drive gross collection rate, which is why that metric is easy to misread.
Example
A practice bills $250 for a visit. The payer allows $140, pays $110, and assigns $30 to the patient, and the remaining $110 posts as a contractual adjustment.