Moody鈥檚: 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鈥檚 Investors Service reports. 鈥淐hanges 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,鈥 the report states. 鈥淟egislative 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.鈥 The authors say that long-term bad debt trends 鈥渨ill continue to erode financial performance despite health systems' efforts to reduce them.鈥