Note that another word that straightforwardly describes this behavior is "fraud". Medical bills aren't like a bill from a car mechanic where there is a contract (either written or at least implied because the mechanic will readily give you estimates and quotes).
In the medical context, the only contract in the picture is possibly between the medical provider and the healthcare management organization. It would be fine if providers only sent the fake bills to them as they're both willingly playing this perverse game.
But the problem is when they send their fake numbers to patients as if they're some kind of legitimate bill. Medical bills to patients are presented on a "cost reimbursement" basis - helping you cost them this much, so you are responsible for reimbursing them. By inflating the numbers 3-5x they are straight up lying about the costs they incurred. That's fraud.
In the medical context, the only contract in the picture is possibly between the medical provider and the healthcare management organization. It would be fine if providers only sent the fake bills to them as they're both willingly playing this perverse game.
But the problem is when they send their fake numbers to patients as if they're some kind of legitimate bill. Medical bills to patients are presented on a "cost reimbursement" basis - helping you cost them this much, so you are responsible for reimbursing them. By inflating the numbers 3-5x they are straight up lying about the costs they incurred. That's fraud.