This comment says that there are other reasons:
Marking down hospital bills is known as “claims repricing”. It exists because gigantic unpaid bills are profitable to several groups in unexpected ways. Here’s a doctor (who owns a hospital) explaining it.Wow, I did not know this. If this is right, then you are doing the provider a favor when you refuse to pay an inflated bill.
Basically, when a bill of $558 is marked down to $89 (-$469):
– Hospitals claim a $469 “accounting loss” to maintain their fiction of being a non-profit tax-exempt org (while paying directors multi-million$ salaries).
– Hospitals get a partial rebate on “losses” from Washington via Medicare/Medicaid payments (the bigger the loss, the more they profit!).
– Insurers back-charge large policy holders 35% of the $469 “savings” they “negotiate” (much more profitable than just charging a % on top of what they pay out, which most people presume how insurers work).
– Lawyers seek hospitals with the biggest sticker prices when suing for damages, because the amount awarded is independent of what their client ends up paying.