WORDS IN ITALICS ARE EXPLAINED IN PART 2. Page 8 Part 2 Explanation of Terms The following words are shown in italics in this Subscriber Certificate, your Schedule of Benefits, and any riders that apply to your coverage in this health plan. The meaning of these words will help you understand your benefits. Allowed Charge (Allowed Amount) Blue Cross Blue Shield HMO Blue calculates payment of your benefits based on the allowed charge (sometimes referred to as the allowed amount). This is the maximum amount on which payment is based for covered health care services. This may be called “eligible expense,” “payment allowance,” or “negotiated rate.” The allowed charge that Blue Cross Blue Shield HMO Blue uses depends on the type of health care provider that furnishes the covered service to you. If your health care provider charges you more than the allowed amount, you may have to pay the difference (see below).  For Preferred Providers in Massachusetts. For health care providers who have a preferred provider arrangement (a “PPO payment agreement”) with Blue Cross Blue Shield HMO Blue, the allowed charge is based on the provisions of that health care provider’s PPO payment agreement. For covered services furnished by these health care providers, you pay only your deductible and/or your copayment and/or your coinsurance, whichever applies. In general, when you share in the cost for your covered services (such as a deductible, and/or a copayment and/or a coinsurance), the calculation for the amount that you pay is based on the initial full allowed charge for that health care provider (or the actual charge if it is less). This amount that you pay for a covered service is generally not subject to future adjustments—up or down—even though the health care provider’s payment may be subject to future adjustments for such things as provider contractual settlements, risk-sharing settlements, and fraud or other operations. A preferred provider’s payment agreement may provide for an allowed charge that is more than the provider’s actual charge. For example, a hospital’s allowed charge for an inpatient admission may be based on a “Diagnosis Related Grouping” (DRG). In this case, the allowed charge may be more than the hospital’s actual charge. If this is the case, Blue Cross Blue Shield HMO Blue will calculate your cost share amount based on the lesser amount—this means the preferred provider’s actual charge instead of the allowed charge will be used to calculate your cost share. The claim payment made to the preferred provider will be the full amount of the allowed charge less your cost share amount.  For Health Care Providers Outside of Massachusetts with a Local Payment Agreement. For health care providers outside of Massachusetts who have a payment agreement with the local Blue Cross and/or Blue Shield Plan, the allowed charge is the “negotiated price” that the local Blue Cross and/or Blue Shield Plan passes on to Blue Cross Blue Shield HMO Blue. (Blue Cross and/or Blue Shield Plan means an independent corporation or affiliate operating under a license from the Blue Cross and Blue Shield Association.) In many cases, the negotiated price paid by Blue Cross Blue Shield HMO Blue to the local Blue Cross and/or Blue Shield Plan is a discount from the provider’s billed charges. However, a number of local Blue Cross and/or Blue Shield Plans can determine only an estimated price at the time your claim is paid. Any such estimated price is based on expected settlements, withholds, any other contingent payment arrangements and non-claims transactions, such as interest on provider advances, with the provider (or with a specific group of providers) of the local