Moody’s: Coverage, cost trends driving up bad debt for hospitals

Non-profit hospitals are experiencing more bad debt (unpaid bills) after an initial decline following Medicaid expansion in 2014, Moody’s Investors Service reports. “Changes in insurance design that shift greater financial responsibility to the patient, rising health care costs and confusing medical bills will continue to drive growth in bad debt, often faster than net patient revenue, a credit negative,” the report states. “Legislative proposals to simplify billing have the potential to reduce bad debt, but the proposed changes will be negative for hospitals because they introduce additional complexity to the billing processes and complicate relationships with contracted physician groups.” The authors say that long-term bad debt trends “will continue to erode financial performance despite health systems' efforts to reduce them.”