What is the term used to describe the reduction of an amount owed?

The term that describes the reduction of an amount owed is "adjustment." In a medical administrative context, adjustments are often made to patient accounts to account for various factors such as contractual obligations with insurance companies, discounts offered to patients, or corrections in billing errors.

Adjustments can reduce the total balance that a patient owes, effectively lowering their financial liability. This is important in maintaining accurate financial records and ensuring that both the healthcare provider and the patient have a clear understanding of the outstanding amounts.

While other terms like "charge" and "payment" pertain to different aspects of financial transactions—charges relate to fees billed for services and payments refer to the money exchanged to settle debts—only an adjustment specifically indicates a modification that decreases the amount owed. A refund typically refers to returning money that has already been paid, rather than reducing an outstanding balance.