I am convinced, although I have no evidence, that there is a kickback somewhere along the line back to the insurance company for approving the inflated bill, knowing that they can kick 20% of it over to the customer as co-insurance.
I had my own Stanford bill for a child's ER visit which included a basic blood chemistry and a single shot of insulin that turned into a 5-figure bill of which they wanted me to pay 20%. They "coded" the visit as intensive care, even though my child never left a basic exam room, and the only treatment was a subcutaneous injection. The good news is that after a year of fighting they wrote it off and I paid nothing. But it took about 100 hours of calls, letters, and threats. Patients should not have to go through this.
I blame the regulators. I blame the insurance company. But most of all, I blame Stanford Hospital. They should have their non-profit status revoked, because in fact, they are one of the most profitable hospitals in the country.