Hospitals will likely see bad debt soar when a pandemic-era rule expires allowing states to kick patients off Medicaid April 1, according to a January report from Moody’s Investors Service, Bloomberg News reported. The rule had encouraged states to keep beneficiaries continuously enrolled — regardless of eligibility — in order to receive higher reimbursements. Once states start trimming their rolls, however, hospital revenue is expected to decline as health-care providers will need to assume costs from an expected wave of uninsured patients. A loss of millions of insured patients — even at the lower rates Medicaid pays — comes at an already-grim period for the medical field, which is coping with the wind down of billions in federal pandemic relief funding and significantly higher labor costs and shortages. Those shortfalls have hampered hospitals’ ability to return to prepandemic conditions, Moody’s said. “Labor shortages, which resulted in weak volume trends in 2022 because hospitals were unable to fully staff beds or maintain services, will continue to contribute to an uneven volume recovery,” Moody’s analysts wrote. “The degree to which hospitals can make progress toward a return to prepandemic volumes will affect credit quality in 2023.” Before the pandemic, about two-thirds of people who lost Medicaid had a period of uninsurance, according to the Kaiser Family Foundation. It estimates that between 5.3 and 14.2 million people could lose Medicaid coverage in the following 12 months, while a report from the Department of Health and Human Services last year predicted up to 15 million Americans could be removed, or about 17% of those enrolled in Medicaid and the Children’s Health Insurance Program.
