Preheat oven to 375°F.
In a medium saucepan over medium heat, melt the butter. Once melted, add the flour, salt, and pepper. Cook for 1 minute.
Slowly drizzle in milk, whisking constantly. After adding the milk, continue cooking until the mixture thickens, 5-8 minutes, whisking frequently.
Remove from heat. Stir in half of the cheddar cheese and half of the mozzarella cheese. Continue stirring until the cheese is melted and smooth, about 30 to 60 seconds. Set aside.
Carefully set the potato slices in the bottom of a large, 12-inch oven-safe skillet (trying to keep the shape of the potato together), fanning them out in a single layer.
Sprinkle most of the bacon evenly over the top of the potatoes, reserving about 2 tablespoons for the topping.
Pour the cheese sauce over the top. Then, top with the remaining cheeses and reserved bacon.
Cover with aluminum foil or a tight-fitting lid. Bake for 60 minutes, or until the potatoes are fork-tender.
Remove the foil. Broil for 2-3 minutes, or until brown, watching carefully.
Serve hot, garnished with chives. Add salt and pepper to taste.