Hospitals Wrote Off an Estimated $132 Billion in Bad Debt and Denied Claims. A Medicare Patient With a $25,000 Denial Must Find Out Whether He Actually Owes It

Detailed summary

A retiree opens his mail and finds Medicare denied a $25,000 hospital claim. His first instinct is to call the billing office and set up a payment plan, but that one call could commit him to money he never owed.

Hospitals wrote off an estimated $132 billion in bad debt and final claim denials in 2025, according to a Kodiak Solutions analysis reported by Healthcare Dive. That figure rose nearly 18% from 2024. Consider a hypothetical retiree on Original Medicare who opens his mail and discovers that Medicare denied a hospital claim for $25,000. That sum equals about 11.5 months of a typical retiree's Social Security check, which the 2027 COLA raises to $2,170. His first instinct is to call the hospital and set up a payment plan. That call could commit him to money he never owed.

Everything here applies to Original Medicare and uses the 2026 cost-sharing amounts the Centers for Medicare & Medicaid Services (CMS) published on November 14, 2025. Medicare Advantage members appeal through their plan, which uses different notices and deadlines.

Claim denials reflect payment decisions by insurers, including Medicare, while write-offs represent amounts hospitals remove from their accounts. Kodiak's figures cover hospitals' revenue losses across payers, not Medicare alone. Kodiak found that final denials held at about 3% of net revenue and bad debt at about 7%. Bad debt covers balances the hospital billed and never collected, so the write-off amounts include plenty of patients the hospital chased first.

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What you owe depends on why Medicare said no and what you signed before treatment.

Normal cost sharing only, once the hospital corrects and resubmits the claim (for example, the $1,736 Part A deductible for a covered stay)

Potentially $0 if advance notice was required and the hospital absorbs the loss for failing to provide it

The patient may owe the charge for the denied service, depending on the notice, Medicare's liability determination and…

Advance…

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