With a PPO contract, the practice accepts a lower allowed fee and writes off the difference from its full fee. The write-off is full fee minus the contracted allowed amount.
The example
$200 full fee, $150 allowed.
| A | B | |
|---|---|---|
| 1 | Item | Value |
| 2 | 200 − 150 | — |
| 3 | Write-off | → $50 |
The formula
The formula:
How it works
How it works:
- The allowed fee is the maximum the PPO contract permits you to collect.
- Write-off = full fee − allowed fee — a contractual adjustment, not bad debt.
- The write-off % = write-off ÷ full fee — the effective discount of the plan.
- Sum write-offs by plan to see which PPOs discount hardest.
Know each PPO’s effective discount before signing. A plan’s write-off percentage (full fee minus allowed, over full fee) is the real cost of participation — a 25%+ write-off across your common procedures can outweigh the new patients it brings. Totalling write-offs by plan turns “we take that insurance” into a number you can decide on, and flags plans to renegotiate or drop.
Try it: interactive demo
Full fee and PPO allowed fee.
Variations
Write-off percent
Effective discount:
Total by plan
Which PPO discounts most:
Net collectible
What you can bill:
Pitfalls & errors
Adjustment, not loss. Contractual write-offs aren’t uncollectible AR.
Allowed = ceiling. You can’t bill above the contracted allowed fee.
By plan. Total write-offs per PPO to evaluate participation.
Practice workbook
Frequently asked questions
How do I calculate a PPO write-off in Excel?
What's the write-off percentage?
Is a write-off bad debt?
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