The amount charged to Medicare does have an impact on how much they are reimbursed (to an extent).

For example, if the charges exceed the DRG payment by a specific amount, the hospital can get an "outlier" payment to help with the excess costs.

As for how the charges are calculated, hospitals have a lot flexibility in how costs are accounted for.

Also, keep in mind that hospitals that specialize in a specific procedure often have high volumes that drive down cost. If you're getting heart surgery at a hospital that specializes in it, it's often much cheaper than a hospital that rarely does heart surgery.

Well, probably a variety of reasons but certainly one key reason is... if you have to ask for 100K to get 25K, then if you ask for 25K your only going to get 8K?...

All prices are always negotiable, just that the individual consumer is so used to not having bargaining power that they forget this fact.

Medicare does not negotiate. The hospitals break down bills into CPT codes and get paid the published rate for the period for codes that are accepted (including geographic indexes and what not). It's a mess.