In the above example, the remaining balance gets accounted for as a loss to maintain the fiction of the facility’s not-for-profit status. It also provides the basis for a kickback the federal government sends to this hospital called Disproportionate Share Hospital payments [0].

In medical parlance, this is called uncompensated care or uncompensated revenue. The Center for Medicare and Medicaid provides a ton of detail [1].

[0]: https://en.wikipedia.org/wiki/Disproportionate_share_hospita...

[1]: https://www.cms.gov/Regulations-and-Guidance/Guidance/Manual...

It's a negotiation. The $200k is simply the starting/maximum ask by the hospital to the insurance company. A bunch of automated and (sometimes) manual systems go back and forth until a price is agreed upon. Eventually everyone agrees on paying $50k.

Like any negotiation you want to start high rather than low.

No one. The rest just evaporates. The original bill has little relation to the actual costs the hospital has to recoup.

Nobody. You aren't ment to pay the price they charge.

The insurance company negotiated a lower bill.