What is the Difference Between Contracted Rates and Billed Charges?

Contracted rates are the amounts payers agree to reimburse for specific services under network agreements, while billed charges are the amounts providers submit on claims. For in-network services, providers accept contracted rates as payment in full, writing off the difference between charges and contracted amounts. Billed charges should always exceed contracted rates. Some out-of-network payments are based on a percentage of billed charges or “usual and customary rates,” making charge amounts strategically important. Regular charge review ensures they remain competitive and appropriate.