Medical practices are under more financial pressure than ever. Reimbursements continue to shrink, payer requirements keep shifting and patients are shouldering a larger share of health care costs through high-deductible plans. Meanwhile, claim denial rates have climbed steadily, and the administrative burden of chasing down payments drains staff time that could be spent on patient care.
This is designed for physicians, practice administrators and billing managers who want to tighten up their revenue cycle. Below, we break down the most common pain points in billing and collections today and offer practical, evidence-based strategies for addressing them.
Q: How bad is the claim denial problem right now, and why does it seem to be getting worse?
The trend lines are stark and getting steeper. An Experian Health survey of 250 health care professionals found that 41% of providers now report denial rates above 10%, up from 30% just three years earlier. A Change Healthcare study cited in Physicians Practice found that roughly 86% of denials are potentially avoidable, yet in 65% of cases, providers never resubmit denied claims. According to the Council for Affordable Quality Healthcare, administrative costs tied to denials now exceed $31 billion a year across the industry.
Several forces are driving the increase. A Physicians Practice analysis of coding and denials pointed out that the number of claims rejected on initial submission doubled in 2021, and practices have struggled to recover since. Payer requirements grow more complex each year, coding rules change, and staff turnover erodes institutional knowledge. Adding fuel to the fire, a Medical Economics report on the state of claims noted that insurers are now deploying AI-powered algorithms to scrutinize claims with unprecedented speed, flagging minor discrepancies that human reviewers might have overlooked. Meanwhile, Fierce Healthcare reported that payer audits rose 30% year over year in the first three quarters of 2025 and that the average denied outpatient hospital claim topped $5,300.
Q: What are the most common reasons claims get denied?
The usual suspects fall into a handful of categories. A detailed Physicians Practice explainer on understanding denials breaks claims denials down by type and insurance class. Among the most frequent triggers are incorrect or missing patient demographic information collected at registration; coding errors, including unbundling problems and mismatched diagnosis codes; lapsed or missing prior authorizations; and claims submitted after a payer’s filing deadline has passed. Many of these originate at the front desk, well before a coder or biller ever touches the claim.
A Physicians Practice article on coding dilemmas emphasized that misuse of modifiers and failure to code diagnoses to the highest level of specificity remain persistent sources of rejections. The Medical Group Management Association’s denial management guidance echoed this, noting that registration and eligibility issues account for nearly 27% of all denials and underscoring the need for greater automation at the front end of the revenue cycle.
Q: Our first-pass resolution rate is below 90%. Where should we start?
If your first-pass resolution rate is lagging, the most productive first step is to log and categorize every denial your practice receives. As outlined in a Physicians Practice guide to tracking claims and denials, you should sort denials by insurance class and denial code, then look for patterns. You may discover that a single payer accounts for a disproportionate share of rejections, or that one recurring error type is responsible for a large chunk of lost revenue.
It also helps to separate the roles of claims processing and denial management. The Physicians Practice piece noted the advice of a health care consultant with the Medical Group Management Association (MGMA): designate someone in the office with the analytical temperament to specialize in researching denials and pursuing appeals, rather than lumping that work in with routine claims processing. An MGMA Stat poll found that 60% of medical group leaders reported an increase in their practices’ claim denial rates, yet only 11% had managed to bring those rates down, a gap that underscores how many practices still lack a structured denial prevention workflow.
For a step-by-step framework, Physicians Practice published a six-step denial management guide that walks administrators through identifying root causes, correcting errors promptly, building a clear appeal process and refining billing systems over time.
Q: Prior authorization seems to be eating our staff alive. Is there anything we can do?
You are not alone. In a Physicians Practice survey of top challenges for 2025, 58% of respondents cited dealing with payers, and prior authorization requirements in particular, as their single biggest obstacle. The American Medical Association’s (AMA) 2024 prior authorization survey of 1,000 physicians found that the average practice completes 39 authorization requests per physician per week, consuming roughly 13 hours of staff time. Nearly 9 in 10 physicians said the process contributes to burnout, and more than 1 in 4 reported that prior authorization has led to a serious adverse event for a patient in their care.
An American Journal of Managed Care® analysis of the AMA data highlighted an additional concern: 61% of physicians worry that insurers’ use of AI is increasing denial rates, with some tools accused of producing denials at rates up to 16 times higher than traditional review. A Physicians Practice article on managing the prior authorization burden suggested several practical steps: maintain master lists of which drugs and procedures require authorization from each insurer, configure your electronic health record (EHR) to flag orders that need preapproval, favor evidence-based treatment pathways that are less likely to trigger authorization requirements, and seek out less expensive therapeutic alternatives where clinically appropriate.
On the legislative front, the bipartisan Improving Seniors’ Timely Access to Care Act would require real-time electronic prior authorization in Medicare Advantage and create a gold-card program for physicians with high approval rates. Several states have already enacted their own reforms, including Texas, whose Gold Card Act exempts physicians with at least a 90% approval rate for a given service from future authorization requirements for that service.
Q: Patient collections have become a major headache with high-deductible plans. What works?
The rise of high-deductible health plans has fundamentally changed the collections landscape for practices. As a Physicians Practice feature on collecting from high-deductible patients put it, the days of collecting simple $10 copays are long gone. Patients now shoulder a much larger percentage of total costs, and practices need a deliberate financial strategy to keep up. The Experian Health State of Claims 2025 report found that half of providers are now very or extremely concerned about patients’ ability to pay, up 6 percentage points from the prior year.
The foundation is a clear, written financial policy that sets expectations before the patient ever sees a provider. A Physicians Practice guide to easing patient collections recommended presenting the policy at check-in and having the patient sign it. Staff should be prepared to explain concepts like deductibles, copayments and coinsurance in plain language because a surprisingly large number of patients do not understand their own benefits.
Beyond policy, the mechanics matter. A Physicians Practice piece on consistently collecting patient payments emphasized collecting at the time of service, verifying insurance eligibility before every visit, offering multiple payment options (including credit card-on-file programs) and monitoring collection rates by staff member. The chance that a patient will pay drops significantly once they leave the office.
Q: Can we legally waive copays for patients who are struggling financially?
This is a common impulse, but it carries real legal risk. A Physicians Practice article on the consequences of waiving copays explained that routinely waiving patient cost-sharing can violate contracts with both private and government payers. Federal anti-kickback statutes may also apply. If an insurer determines that a practice is habitually forgiving copays, it could argue that the physician’s actual fee is lower than what was billed, potentially triggering a fraud investigation.
That does not mean practices have no flexibility. Financial hardship policies, sliding-scale fees and payment plans can all help patients who genuinely cannot afford their portion. The key is to document the process, apply it consistently and ensure it complies with payer contracts and applicable regulations.
Q: How should we be managing accounts receivable to avoid cash-flow problems?
Healthy accounts receivable (A/R) management starts with knowing your numbers. A Physicians Practice A/R primer explained that every practice should track its days in A/R and monitor the percentage of receivables in each aging bucket on a monthly basis. The healthiest practices aim to keep at least 80% of their total A/R in the zero-to-30-day category. Research consistently shows that for every dollar that remains unpaid past 120 days, you can expect to recover roughly 10 cents.
One of the simplest and most effective steps is to bill claims daily rather than batching them weekly or monthly. A Physicians Practice article on healthier A/R noted that daily billing alone can keep claims from automatically aging into the 30-to-60-day category. Equally important is responding to documentation requests from your billing department within 24 hours; delays at this step can push a claim from the 45-day mark to 90 days before anyone notices. A Physicians Practice guide to A/R best practices added that an MGMA Stat poll found 56% of medical groups saw their time in A/R increase in 2022, driven by high-deductible patients delaying payment.
Q: What should we know about the 2026 Medicare physician fee schedule?
The Centers for Medicare & Medicaid Services finalized the 2026 fee schedule in late 2025, and a Physicians Practice breakdown of the rule’s key takeaways gave administrators plenty to digest. The rule includes a modest rate increase with additional money earmarked for primary care, but it also introduces new efficiency adjustments and updated telehealth provisions. Practices should factor the efficiency adjustment into 2026 budgets, especially those that rely heavily on non-time-based procedures.
A separate Physicians Practice article on the fee schedule’s impact on remote care highlighted expanded billing codes for remote patient monitoring and remote therapeutic monitoring, along with permanent virtual direct supervision rules. New advanced primary care management behavioral health add-on codes also simplify billing for integrated behavioral health at federally qualified health centers and rural health clinics. Practices should ensure billing teams are trained on the new G-codes and that EHR templates align with the 2026 coding changes.
Q: Can AI really help with our revenue cycle, or is it just hype?
AI’s role in revenue cycle management has moved well beyond the theoretical. A Physicians Practice article on reducing administrative waste reported that roughly 30% of total U.S. health care spending is consumed by administrative waste, and that practices using AI-powered workflow automation tools are seeing measurable reductions in the number of human touches required to get a claim paid. The article found that across millions of claims, as many as half of all human touches on the revenue cycle are wasted.
The American Hospital Association reported that generative AI is being applied to tasks ranging from automated appeal letter drafting to real-time documentation review. Auburn Community Hospital, for example, reported a 50% reduction in discharged-not-final-billed cases and a more than 40% increase in coder productivity after implementing AI tools. On the coding side, a Physicians Practice piece on coding automation described how AI can flag incomplete documentation earlier in the process and reduce coding backlogs.
A Physicians Practice guide on AI versus legacy coding tools drew an important distinction between older computer-assisted coding software, which merely suggests codes for a human to review, and modern AI systems that learn from a practice’s historical data and can code common encounters independently. And a Physicians Practice article on putting AI to work noted that a January 2025 MGMA Stat poll ranked AI tools as the No. 1 technology priority for health care organizations, though only about one-third of organizations had actually integrated them into workflows. The Experian Health survey found that just 14% of providers are currently using AI to reduce denials, even though 69% of those who do report fewer denials or more successful resubmissions.
Q: Should we outsource billing, or keep it in-house?
There is no universal right answer. A Physicians Practice evaluation of billing partnerships stressed that the quality of the billing relationship can make or break a practice. Before signing any agreement, the article recommended verifying that the billing company has specific experience with your specialty, meeting the staff who will handle your claims, asking for references and clearly outlining each party’s duties in the contract, including how the transition will work if the relationship ends.
In-house billing offers more direct control and immediate access to data, but it requires ongoing investment in staff training and technology. Outsourced billing can provide access to dedicated denial specialists and the latest software, but many revenue cycle management companies charge a percentage of collections, which means costs grow as the practice grows. An MGMA analysis of revenue pressures in 2025 noted that vacancies in revenue cycle management roles remain difficult to fill and wages continue to rise, which may tip the calculus for smaller practices that struggle to recruit and retain skilled billers.
Q: What’s the single most impactful thing a practice can do right now to improve its revenue cycle?
Experts consistently point to the front end of the process. A Physicians Practice feature on preventing denials emphasized that the most common denial triggers (incorrect demographics, missing insurance information, absent preauthorizations) originate at registration, not in the billing department. Investing in front-desk training, real-time eligibility verification and a culture of accountability around clean data entry delivers outsized returns.
Combine that with a disciplined denial log and a dedicated appeals workflow, and most practices will see a meaningful improvement in first-pass resolution rates without adding headcount. As a Medical Economics deep dive on rising denials summarized, the rework process for denied claims is time-consuming and expensive, and persistent denials can threaten financial sustainability for practices operating on thin margins. The good news is that the majority of denials are preventable, and the practices that treat denial management as a strategic priority, rather than a cleanup task, are the ones protecting their bottom line.
