Agree with you here.
But based on my discussion with my chiropractor, as far as the time line goes, the insurer first pays it, then go through treatment procedures done at his office a year or two after the fact in an audit, and disqualifies those the insurer find unnecessary. It appears what my chiropractor told me about the audit procedures was in line with what the OP is saying.
Now, then there an issue of where the patient stands in all of this??
It seems health care providers would point to agreements they have patients sign where anytime some disagreement between the insurer and provider arises, the patient is held holding the bag, and MADE TO PAY. In the ridiculous case you cited, the poor patient is then called on to make the payment. I find this even more ridiculous.
I myself was put in for collections by a hospital system after my insurer informed me and the state insurance department that the hospital bills were paid in full. The hospital claimed the bills were not paid in full and cited agreements I signed saying I pay what my insurer failed to pay. My insurer claims the payment were in line with an agreement they had with the hospital system.
Think about it for a moment. Am I supposed to hire lawyers to review what agreements were made between the hospital and insurer???
So I did some research, and found a NYS insurance law that prohibited providers from suing patients where procedures are covered under insurance plans. Also, under my plan, a patient only makes a co-pay of $50.00 to the hospital, and that's it. When I made my $50.00 check to the hospital, I marked down "payment in full" on the back.
In answer to the collection efforts, I told them that state law prohibits providers suing patients where there is coverage, and it is up to them to fight it out with the insurer. Second, I pointed out that I marked "payment in full" on the check, and they accepted the check as payment in full.
Payment in full to me does not mean I pay the max of $50.00 as called for under my plan, and cover any billing disputes between the insurer and provider.
I'm mentioning this because many people I came across assumed that if they sign agreements with providers, they are stuck with the bills. In my case, my answer stopped the hospital system in it's tracks. They agreed that they cannot come after me after receiving my written letter, despite all the agreements they claimed I signed. I told them most of them were in violation of the state law anyway.
I did not say this to my chiropractor, but if he was to sue me for bills that the insurer disqualifies, I would also point him to the same insurance law that says that he cannot sue me. I only told him I won't be paying it, and he agreed he won't ask me to.
Ironically, my wife works for that same hospital system that sued me right now.

