They do perform one useful service: forcing a hospital that tries to issue a $100,000 bill that should be $10,000 to reissue it, and not leave the patient saddled with a giant debt.

(Medicaid & Medicare claims processors do the same thing. Medicaid claims processing is mostly handled by private, third-party insurers now, and seems to be able to do so more efficiently and cheaply than when it was being run directly by states; the savings is mostly in the area of catching fraud.)

Companies do this because it's massive song and dance by everyone. Hospitals issue big bills to insurance companies knowing they will want a discount so there is plenty of wiggle room. Also, it's free marketing for insurance companies because people see 100k, see all discounts for their insurance and are happy it's only 10% of true cost. It's like car buying except with your healthcare.

Medicare is much cheaper because they have fixed rates and hospitals know what to bill.