Contractual Adjustment
The difference between the billed charge and the contracted allowed amount — written off, not collected.
Get a Free Billing AuditDefinition
A contractual adjustment is the portion of a billed charge that a provider agrees to write off under its contract with a payer. It is the gap between the practice’s charge and the payer’s allowed amount, and it is not billable to the patient.
On the remittance, this write-off is distinct from patient responsibility and from a denial. It reflects the negotiated rate, not a problem with the claim.
Why it matters for billing
Posting contractual adjustments correctly is what keeps the books honest — and mislabeling a denial as a contractual adjustment is a classic way to lose recoverable revenue. Knowing the allowed amount also makes it possible to spot underpayments.
Related terms
Terms that come up alongside Contractual Adjustment in the revenue cycle.
Billing that gets Contractual Adjustment right
EnVisionMD RCM handles eligibility, coding, documentation, denials and follow-up end to end — so the details behind terms like this one are managed for you, not left to chance.
Request a free billing reviewContractual Adjustment — frequently asked questions
No. It is a write-off the provider agreed to under the payer contract and cannot be shifted to the patient.
A contractual adjustment reflects the negotiated rate; a denial is the payer refusing to pay for a stated reason, and denials may be workable or appealable.