Blue
Cross and Blue Shield
Blue Cross and Blue Shield (the Blues) are different from traditional
commercial
insurers in the following important areas:
- The
Blues provide the majority of their benefits on a service basis
rather
than on a reimbursement basis. This means that the insurer pays
the
provider directly for the medical treatment given the insured,
instead of
reimbursing the insured.
- The Blues have contractual relationships with the hospitals
and doctors.
As participating providers, the doctors and hospitals contractually
agree
to specific costs for the medical services provided to subscribers.
Corporate Structure
Blue Cross/Blue Shield organizations, which are often
referred to as service
organizations, are examples of producers’ cooperatives. Physicians
and hospitals
that sponsor Blue Cross/Blue Shield plans provide the insurance,
so are considered
to be the producers in the cooperative.
Blue Cross traditionally has been a hospital service
plan and Blue Shield a
physicians service plan, but these distinctions are becoming blurred.
In most
states, Blue Cross and Blue Shield have merged, but each group still
covers
the expenses for which it was first developed: Blue Cross covers
hospital
expenses and Blue Shield covers medical and surgical expenses. In
some
states both Blue Cross and Blue Shield serve as hospital and physician
service
plans. With occasional exceptions, reimbursements for incurred expenses
are made directly to the providers, not to the subscribers.
