The short answer
The allowable amount is the most CHAMPVA recognizes for a covered service. It's usually about what Medicare or TRICARE would pay, and it's often less than the provider's bill. Your deductible and 25% cost share are figured from this number, not the bill. A provider who accepts assignment takes it as payment in full.
What is the allowable amount?
It's CHAMPVA's price for a covered service or supply. VA's CHAMPVA care page says that in most cases, CHAMPVA pays the same as Medicare or TRICARE for the same service, and that's the allowable amount.
Under 38 CFR 17.272, CHAMPVA figures this amount first, before your deductible, cost share, or any other insurance.
Why is it lower than my bill?
Because the provider sets the bill, and CHAMPVA sets the allowable amount using its own payment rules.
Example: an office bills $300. CHAMPVA's allowable amount is $200. If your deductible is met, you owe 25% of $200, which is $50, and CHAMPVA pays $150. The $300 never enters the math.
A lower allowable amount isn't a denial. It's just CHAMPVA's price.
How does VA set it?
It depends on the kind of care. 38 CFR 17.275 uses different methods:
| Type of care | How the price is set |
|---|---|
| Doctors, therapists, and other professionals | The lowest of CHAMPVA's maximum allowable charge, the usual local rate, or the amount billed |
| Most hospital stays | A set amount per type of stay (DRG), not more than the bill |
| Inpatient mental health | A daily rate |
| Hospital outpatient care | TRICARE's outpatient payment method |
| Skilled nursing, hospice, home health | Medicare's payment methods |
| Medical equipment and supplies | Medicare's equipment fee schedule |
| Ambulance | Generally Medicare's ambulance fee schedule or the bill, whichever is less |
| Retail pharmacy | Contract rates or set formulas |
| Care outside the U.S. | VA decides the method |
Is it the same as the VA fee schedule?
No. The VA fee schedule is for Veterans' community care. VA's fee schedule page says CHAMPVA runs on its own payment rules.
Why does assignment matter?
A provider who accepts assignment agrees to take the allowable amount as payment in full. They can bill you only your deductible and cost share.
A provider who doesn't accept assignment can bill you more than the allowable amount, and that extra doesn't count toward your $3,000 yearly cap. More here: CHAMPVA assignment and balance billing.
How to read the numbers on your EOB
- Billed: what the provider charged.
- Allowed: CHAMPVA's price.
- Deductible and cost share: your part of the allowed amount.
- Other insurance paid: if another plan paid first.
- CHAMPVA paid: what VA sent.
If the provider accepted assignment, the gap between billed and allowed isn't yours to pay. More here: How to read a CHAMPVA EOB.
For billing offices
CHAMPVA pays by method, not as a percentage of charges. Verify eligibility, check coverage and preauthorization, code accurately, and know which method in 38 CFR 17.275 applies to the service. More here: CHAMPVA provider quick start.