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

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.

Denial, Write-Off and Bill: Three Events Patients Confuse

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.

You only get a patient bill when Medicare’s rules shift liability to you. The $25,000 is also just the hospital’s list price. A hospital that accepts Medicare takes its set rate plus your cost sharing as payment in full for covered care. For a covered inpatient stay, your 2026 share is the $1,736 Part A deductible, which covers the first 60 days of a benefit period no matter what the hospital charged. For covered outpatient care, you owe the $283 Part B deductible, then 20% of what Medicare approves.

Four Ways a $25,000 Denial Can Land

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

Advance notice can determine who pays. When a hospital expects Medicare to deny certain services as medically unnecessary, it generally must notify the patient beforehand to transfer financial responsibility. Hospitals use an Advance Beneficiary Notice (ABN) for applicable Part B services and a Hospital-Issued Notice of Noncoverage (HINN) in specified inpatient situations. CMS guidance states that when a provider fails to deliver a valid notice when required, the beneficiary cannot be billed for the service. A valid notice names the specific service, explains why Medicare may turn down, and estimates the cost. A blanket form that every patient signs at registration generally fails that test.

Medigap pays cost sharing only on claims Medicare approves, so a supplement leaves rows three and four uncovered.

Fix, Redetermination or Reconsideration: Pick the Right Path

Your Medicare Summary Notice (MSN) lists every claim, the denial reason, and a column marked Maximum You May Be Billed, which shows the total amount the provider is allowed to bill you. If the hospital’s invoice exceeds that figure, ask the hospital to explain the gap in writing.

• Billing correction: If the denial traces to a wrong code, a missing record or a duplicate claim, the hospital’s billing office corrects and resubmits it. You don’t need a formal appeal.
• Redetermination: For a coverage or medical-necessity denial, you file the first-level appeal with the Medicare Administrative Contractor within 120 days of receiving the MSN. Decisions generally arrive within 60 days.
• Reconsideration: If the contractor upholds the denial, you have 180 days to request a second-level review by a Qualified Independent Contractor. That review is level two of 5 levels of appeal.

While an appeal is pending, ask the billing office in writing to suspend collection activity and confirm whether it will hold the account until the dispute is resolved.

Three Moves to Make Before You Pay a Dollar

1. Match the denial to your MSN. Log in to your Medicare.gov account or pull the paper notice, find the claim, and write down the denial reason and the Maximum You May Be Billed amount.
2. Request the itemized bill and copies of every notice you signed. If Medicare denied the care as unnecessary, ask whether a valid ABN or HINN was required and provided. If the hospital cannot document proper notice, dispute the charge in writing and ask Medicare to confirm who is financially responsible.
3. Send the dispute to the right place. Coding problems go back to the hospital for resubmission. Coverage disputes go to redetermination before the 120-day deadline, along with a letter from your doctor explaining why the care was necessary.

Until you have the denial reason and the itemized charges in hand, nobody has shown that the $25,000 is yours to pay.

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