Six years ago when I was auditing medical claims, the doctor or facility that provided the service would submit a claim to the local Blue Cross/Blue Shield plan. They would electronically submit the claim information to the plan (Host Plan) that wrote the policy through what they call the "Blue Card" system. If the claim is a covered service under the policy they electronically notify the local plan to pay the provider at the local negotiated rate. The local plan then bills the host plan for reimbursement. This only pertains to Blue Cross/Blue Shield Major Medical policies.
The PPO's and HMO's are a whole other ballgame and sometimes out of system providers are not covered or are only covered at the local plan rates. The difference can then be billed to the patient, sometimes at the fully charged rate. You also get into precertification and other limitations except in cases of emergency.
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