The cost of sending a "we're not gonna pay" letter is very low, like $5. Then the labor involved in the appeals process is maybe $200. Lets say the average bill is $12K to the customer but negotiated its $6K to the insurance. That means if more than 200/6000 or about 3% give up and pay the $12000 to the hospital, the insurance company runs a profit, plus obviously they didn't pay anything for the service they contracted for which is worth an additional $6K to them. The finances are complicated.
Not many people can pay $12K out of pocket, but you only need a bit more than 3% to be rich or die in the hospital and get a life insurance benefit where it'll all get rolled up into the burial costs.
This is also a big data thing. Why waste maybe $200 on the appeal process if big data shows the customer is too poor to pay up, may as well honor the contractual obligation and pay because that $200 of appeals labor would be wasted. On the other hand if big data shows the customer is old/rich/cognitive issues then blow $200, $400, $1000 of labor on the appeals process because the odds will be much better. Lets say "big data" finds out the victim is looking to buy a house... sure would be a shame if something happened to that credit rating...
Targeted vulnerable people will be screwed over as a standard doctrine in the future of big data. Probably the "real story" of the linked article is some big data algorithm screwed up and incorrectly decided she could pay $12K.
Their coverage is not based on the insurance policy they sold you. It's based on what they can get away with and make the most profit.
I don't think it's a coincidence that the largest medical bill I had to pay for a hospitalization was likewise initially denied and then caught-up in bureaucratic hell for several months before they finally paid. I honestly thought I was going to have to hire a lawyer to fight them. But somehow, probably based on my push-back, their calculation eventually favored paying-up.
They make things difficult and confusing for people on purpose. They deny perfectly legitimate procedures on purpose.
