Health care costs are weird

So I recently had my first physical in a few years.  I'm a bit unfamiliar with how this works, since it's been a while.

No cost to me for the physical - I thought it might be $20, but I'm fine with that.  But it's free.

Today I got an invoice for the lab tests on blood and urine samples.  Now this gets weird.

11 different tests were done, with costs for each ranging from $33.27 to $234.30.  But CareFirst says that the "allowed costs" for these tests range from $0.62 to $8.20.  Apparently LabCorp would charge $234.30 if I did not have the clout of Blue Cross Blue Shield on my side?

LabCorp wanted to charge $1,135.85 for the tests.  CareFirst is paying them $43.53.  I pay nothing (other than my premiums.)

This whole thing baffles me.  What's up with the rest of the $1100+ of the bill?  Is this just some kind of game that everybody plays?  My insurance pays for 3.8% of the bill, and the lab writes off 96.2% of the bill?

This is a bizarre system, to say the least.

Should get to the Bill Murray reviews soon.  The Bond series is in limbo until I can find a way to re-watch the Dalton films, but they're not on cable much, and not to be found in the library system.  Bodes poorly - they are apparently the least popular.