Medical Billing and Claim Denial Statistics (2026)
In short: initial denial rates reached 11 to 12 percent of hospital claims by 2024 (7 to 8 percent for medical groups) after rising four years running; Kodiak’s first-half 2026 data shows the first dip, but insurer takebacks rose 13.8 percent, so providers kept less cash. Insurers still pay about nine in ten claims in the end, but the rework costs $40 to $60 a claim and US hospitals spent $43 billion in 2025 chasing money for care they had already delivered. Nearly half of denials start at registration, eligibility and authorization, which is the part a practice controls.
The 12 statistics that matter most
Hospitals lost $48.4 billion in revenue to denials and uncollected bills in 2025, a 25% rise in net revenue leakage.
In 2023, 20% of in-network claims in ACA Marketplace plans were denied (86 million of 436 million submitted).
Hospitals spent $43 billion in 2025 trying to collect payments from insurers for care already delivered.
80.7% of Medicare Advantage prior authorization denials that were appealed were partially or fully overturned in 2024, but only 11.5% of denials were appealed.
Physicians complete an average of 39 prior authorization requests per week.
Hospital denial rates rose from 9% in 2016 to 10% in 2020 and 12% in 2023, based on about 124 million claim remits worth $500 billion.
Registration and eligibility was the top cause of hospital denials at 24.33% in 2023.
Checking eligibility manually costs $12.95 per transaction versus $2.04 electronically.
Across 14 insurers covering about 71 million enrollees, 2025 prior authorization denial rates averaged 12% in Medicare Advantage, 14% in Medicaid managed care and 18% in ACA Marketplace plans.
41% of providers report denial rates of 10% or higher, up from 38% in 2024, marking the third straight yearly increase in denials.
63% of healthcare organizations use AI or automation in the revenue cycle, but only 15% report positive ROI.
HHS OIG found 13% of Medicare Advantage prior authorization denials and 18% of payment denials met Medicare coverage rules and were wrongly denied.
Claim denial rates in 2026
Initial denial rates rose every year from 2020 to 2024 on every large dataset that tracks them, and the first-half 2026 figures show the first decline, offset by higher takebacks. The figures below come from different cohorts (hospitals, medical groups, Marketplace plans, Medicare Advantage), so compare each one with its own prior year rather than across sources.
In 2023, 20% of in-network claims in ACA Marketplace plans were denied (86 million of 436 million submitted).
ACA Marketplace out-of-network claims were denied at a 36% rate in 2023.
Medicare Advantage insurers denied 7.7% of the 52.8 million prior authorization determinations in 2024 (4.1 million denials).
Traditional Medicare denied 22.9% of roughly 625,000 prior authorization reviews completed in FY2024, well above the Medicare Advantage rate.
Across 14 insurers covering about 71 million enrollees, 2025 prior authorization denial rates averaged 12% in Medicare Advantage, 14% in Medicaid managed care and 18% in ACA Marketplace plans.
Medicaid managed care organizations denied 12.5% of prior authorization requests in 2019 (2.2 million of 17 million), more than double Medicare Advantage's 5.7%.
Hospital initial claim denial rates averaged 11.81% in 2024, a 2.4% rise from 2023, per data from 2,100+ hospitals and 300,000 physicians.
The initial denial rate rose for a fourth straight year, from 11.5% in 2023 to 11.8% in 2024, driven by commercial plans and Medicare Advantage.
Kodiak's 2025 benchmarks put the average initial denial rate at 11.6% (11.4% in 2024) and the median final denial rate at 2.7% (2.5% in 2024).
In the first half of 2026 initial and final denial rates fell against the first half of 2025, but insurer takebacks rose 13.8% to 1.57% of accounts receivable and the final commercial denial rate rose 9.1% to 2.89%, so cash performance did not improve (2,300+ hospitals, 375,000 physicians).
Hospital denial rates rose from 9% in 2016 to 10% in 2020 and 12% in 2023, based on about 124 million claim remits worth $500 billion.
MGMA benchmarking shows first-submission denial rates of 7% to 8% across the past four years.
60% of medical groups reported higher claim denials in early 2024 than a year earlier; only 11% saw a decline.
41% of providers report denial rates of 10% or higher, up from 38% in 2024, marking the third straight yearly increase in denials.
About 18% of insured adults had a claim denied in the past year (21% employer, 20% Marketplace, 12% Medicaid, 10% Medicare).
Nearly 15% of claims submitted to private payers are initially denied, per a Premier survey of 516 hospitals in 36 states.
What denials cost
Most denied claims are eventually paid, which is the point: the money is recoverable, but only after rework that costs $40 to $60 a claim and staff time that small practices do not have.
Hospitals spent $25.7 billion contesting denials in 2023, a 23% increase over 2022.
Premier estimated providers potentially wasted almost $18 billion in 2023 arguing over claims that should have been paid.
Each contested claim carried just over $57 in additional administrative cost in 2023 (Premier survey of 280 hospitals).
69% of contested claims were eventually paid in 2023, up from 54% in 2022.
Premier's survey found it cost hospitals an average $43.84 per claim to fight a denial, about $19.7 billion a year industry-wide.
Medicare Advantage and other private payers eventually overturned 54% of denials in Premier's survey.
Hospitals spent $43 billion in 2025 trying to collect payments from insurers for care already delivered.
Hospitals lost $48.4 billion in revenue to denials and uncollected bills in 2025, a 25% rise in net revenue leakage.
Average denial overturn success slipped to 42.1% in 2025 from 42.7% in 2024.
Insurers ultimately pay roughly 90% of claims despite initial denials.
84% of denials are avoidable and 22% of those avoidable denials are likely non-recoverable.
80.7% of Medicare Advantage prior authorization denials that were appealed were partially or fully overturned in 2024, but only 11.5% of denials were appealed.
Only 1% of the 86 million denied in-network ACA claims in 2023 were appealed internally (376,508), and insurers upheld 56% of those.
HHS OIG found 13% of Medicare Advantage prior authorization denials and 18% of payment denials met Medicare coverage rules and were wrongly denied.
Why claims are denied
Nearly half of denials start at the front desk. Eligibility, registration and authorization errors are the largest cause on every study, and they are the cheapest to prevent.
Registration and eligibility was the top cause of hospital denials at 24.33% in 2023.
Missing or invalid claim data caused 15.89% of denials in 2023.
Authorization and precertification caused 12.80% of denials in 2023; 60% of those were missing or invalid authorizations.
44% of denials originate at the front end of the revenue cycle, 16% mid-cycle and 8% back end.
Registration and eligibility issues accounted for nearly 27% of all denials in 2020 and had been the leading cause since 2016.
50% of providers cite missing or inaccurate data as a top denial cause, 35% authorization issues and 32% incomplete registration.
For in-network ACA denials, 21% were administrative, 14% excluded services, 9% lacked prior authorization or referral and 6% were medical necessity.
Prior authorization burden
Prior authorization is the single largest administrative load on physicians, and the AMA survey numbers below have barely moved in five years.
Physicians complete an average of 39 prior authorization requests per week.
Physicians and staff spend about 13 hours per week on prior authorization.
40% of practices employ staff who work exclusively on prior authorization.
93% of physicians say prior authorization delays patient care.
82% of physicians say prior authorization can lead to patients abandoning treatment.
29% of physicians report prior authorization led to a serious adverse event for a patient.
Medicare Advantage insurers received 1.7 prior authorization requests per enrollee in 2024 (33 million enrollees).
Days in A/R and payment speed
Payment speed varies more by payer type than by practice: traditional Medicare pays clean claims in about two weeks, Medicare Advantage in a month or more.
Days in A/R rose in 32% of practices year over year, and 43% reported no change (MGMA July 2026 poll).
48% of practice leaders name denials and appeals as their largest source of revenue leakage.
Traditional Medicare typically pays clean claims in 10 to 14 days versus 30 to 45 days for Medicare Advantage plans.
90% of denied claims require human review before resubmission.
The administrative cost of billing
A third of US health spending is administration. The CAQH Index shows how much of that is the gap between manual and electronic transactions.
U.S. healthcare avoided an estimated $258 billion in administrative costs in 2024 through electronic transactions.
A further $21 billion could be saved by fully automating manual and partially manual transactions.
Checking eligibility manually costs $12.95 per transaction versus $2.04 electronically.
A manual claim status inquiry costs $18.18 versus $3.68 electronic, the largest per-transaction gap.
Manual prior authorization costs $16.29 per transaction versus $5.43 electronic.
Administrative costs were 34.2% of U.S. health spending in 2017 versus 17% in Canada ($2,497 vs $551 per capita).
Administrative complexity accounts for an estimated $265.6 billion of the $760 to $935 billion wasted in U.S. health care each year.
Patient collections
Patient balances are the hardest dollars to collect: rates fall sharply once the patient has left the office.
Self-pay collection rates for insured patients fell to 34.46% in 2024 from 37.58% in 2023.
72% of copayments are collected at the time of service, but only 27% of other patient-due balances.
Only 24.5% of 2,000 reviewed hospitals fully complied with the federal price transparency rule; 5.8% posted no usable file.
41% of provider revenue leaders now prioritize the patient financial experience, up from 19% in 2025; 49% cite collections as a top priority.
Telehealth and behavioral health billing
Behavioral health and telehealth claims are denied more often than average, mostly on place-of-service, modifier and eligibility rules that changed after 2024.
About 22% of insured adults who used mental health services reported a denied claim.
Telehealth-related claim denials rose 84% in 2025, per MDaudit's benchmark of 1.2 million providers.
Staffing and outsourcing
Billing staff are hard to hire and slow to replace, which is why outsourcing intentions keep rising. Market-size figures are estimates and are labelled as such.
The U.S. revenue cycle management market was valued at $307.6 billion in 2023 and is projected to reach $658.7 billion by 2030 (11.5% CAGR).
83% of ancillary administrators plan to outsource some or all RCM functions by fiscal year 2027 (Black Book survey of 3,125 staff).
BLS projects 8% employment growth for medical records specialists from 2025 to 2035 (about 14,000 openings a year), much faster than average.
Median pay for medical records specialists was $51,140 in 2025, with about 200,700 jobs.
43% of providers report being understaffed in claims and billing roles.
Filling an entry-level revenue cycle role took 84 days and $2,167 on average (HFMA Pulse Survey of 514 CFOs and revenue cycle leaders).
AI and automation in the revenue cycle
Adoption is broad but shallow: most organisations are piloting something, few report a return, and the tools that work best are the ones aimed at denials.
63% of healthcare organizations use AI or automation in the revenue cycle, but only 15% report positive ROI.
80% of health systems are exploring, piloting or using GenAI in the revenue cycle, up from 58% in 2023.
Only 14% of providers use AI in claims today, though 67% believe it can improve the process.
69% of providers using AI report fewer denials or better resubmission success.
37% of health systems use generative AI in the revenue cycle, and 45% apply AI to denial-related workflows.
More than 50% of health plans and 25% of provider organizations use AI tools in administrative workflows.
What the numbers mean for a practice
- Fix the front end first. Registration, eligibility and authorization cause 40 to 50 percent of denials on every dataset, and they are visible before the visit. Real-time eligibility checks at scheduling and a prior-authorization log remove most of them. Check each visit record with our free superbill template before the claim is built.
- Work every denial, and work it fast. Insurers pay about 90 percent of claims eventually and overturn 54 to 80 percent of appealed denials, yet only 1 to 12 percent of denials are ever appealed. The unworked denial is the expensive one. Appeal windows are short, so check the payer’s deadline in our timely filing limits by payer and state. Templates for the common codes are in our appeal letter templates.
- Measure the right rate. The initial denial rate tells you about your front end; the final denial rate (median 2.7 percent) tells you about your follow-up. A practice should know both, by payer, every month.
- Budget for rework honestly. At $40 to $60 per contested claim, a practice submitting 2,000 claims a month with a 10 percent denial rate spends $8,000 to $12,000 a month on rework before any write-offs.
- Automate transactions, not judgement. The CAQH gap between manual and electronic eligibility ($12.95 vs $2.04) and claim status ($18.18 vs $3.68) is where automation pays; AI on denials shows results, but only 15 percent of adopters report a return so far.
BilNow’s clients run a 98 percent first-pass clean-claim rate and denial rates under 5 percent across 300+ providers and 50+ specialties, through our outsourced medical billing services, revenue cycle management services and medical coding services. Use our denial code lookup to decode CARC and RARC codes on a remittance.
Method and sources
Every figure on this page was checked against the page it links to. We prefer government data (CMS, HHS OIG, BLS), association research (KFF, AMA, MGMA, HFMA, AHA, CAQH) and large industry datasets (Kodiak Solutions, Optum, Experian Health, Premier). Where we could only reach a study through a news report, the card says “as reported” and links to that report. Market-size figures are labelled as market-research estimates and should be read as ranges. Denial-rate figures from different studies use different cohorts and definitions, so we show each with its own year rather than combining them into one trend. The page is updated when a source publishes a new edition; tell us about a correction at bilnow.com/contact-us.
How to cite this page
You are welcome to use these statistics with a link to the source and to this page.
BilNow Editorial Team. “Medical Billing and Claim Denial Statistics (2026).” BilNow, September 2026, https://bilnow.com/medical-billing-statistics/Denials under 5 percent, without hiring
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