That is insane. Did his insurance cover this? What happens if you refuse to pay such outlandish fees? I'm sorry he had to deal with this.
The billed numbers are almost completely made up. The insurance company (Medicare in this case) will only reimburse up to a set amount.
The reimbursement is calculated as min(billed_amount, allowed_amount). If the facility accidentally bills less than the allowed_amount, they get less than they could have. So to make sure they get 100% of the possible payout, they bill extremely high numbers to insurance.
It's a dumb system, but it's something you have to keep in mind whenever someone talks about how much things cost in the US system. With expensive procedures, products, or drugs, virtually nobody ever pays the big number. It's just a placeholder to make sure insurance payouts are not left on the table.
$1798 total
-$388 Medicare paid
-$1324 Service adjustment
$86 Amount you owe.
I don't think dumb is sufficient to explain this. It's pretty easy for me to see how someone leaps from this de facto legal system to outright fraud, because the line between them is pretty thin.
I'm nearly done dealing with an instance of this myself (for someone else). Had a $1k copay that was legit per their "insurance" plan. The hospital also sent a fraudulent bill for another ~$2k rather than doing the work of figuring out how to bill "insurance" for it. Told them we'd pay in full once they presented a complete set of non-fraudulent bills. Half a year later, with me holding the hands of both bureaucracies, they finally were able to get "insurance" to pay that second bill. I told them we were ready to pay the $1k legit copay, and they told me they had taken care of it months ago using some internal charity fund. The system is an utter joke.
The provider has a list of prices called the chargemaster. The insurance (and Medicare) have lists of prices they'll pay. For private insurance, there will often be negotiations to set prices for patients with the insurer getting treatment at the provider, called the network agreement. These fall between the two lists, generally.
If you're out of network, the provider bills their chargemaster, the insurer tries to pay their price depending on the terms of the insurance. In network, the provider bills the negotiated rate and the insurer (probably) pays it.
Now what happens if the patient doesn't have insurance? The provider bills their chargemaster and the patient (rarely) pays it. If they do, confetti. If they don't, the provider graciously takes a percentage off and offers a repayment plan. They collect on a meaningful percentage of these.
The patient pays more if the chargemaster is higher.