Denial rates are rising, here’s how to fight back

Claim denials are getting worse. Data from Kodiak Solutions shows payers initially denied 11.8% of claims in 2024, up 15.7% from 2020, and the Medical Group Management Association’s 2024 benchmarking report on denials and appeals found more than half of U.S. health care organizations now report denial rates exceeding 10%.

Kem Tolliver, CEO of Medical Revenue Cycle Specialists and co-author of “Advanced Strategy for Medical Practice Leaders: Financial Management Edition” (MGMA), told Physicians Practice that the practices getting ahead of this problem share one habit: they show up to payer disputes with data, not grievances.

“When you approach a payer, data is what really matters to them,” Tolliver said. “If we provide them with data, give them examples, show them why something should have been paid, give them justification, that’s what is going to break through and lead to a correction on a claim. Frustration is not a strategy for a solution.”

She recommends documenting every payer interaction with reference numbers, dates, and the name of each representative. Teams should also resist the habit of working the easiest accounts first.

“What we really want to encourage our teams to do is look at denial drivers, identify root causes, and dig into the complex accounts too,” she said.

Finding the root cause

When denials spike, Tolliver starts by sorting them into four buckets: front-end intake, documentation and coding, payer communications, and practice management system data. From there, she pulls denial reason codes from X12.org, groups them by root cause, and builds correction and training plans from what the data shows.

CPT coding is one of the most common and preventable denial drivers she encounters. Her fix: document payer-specific reimbursement guidelines internally, covering coding, modifiers, authorizations, and referrals. Industry data backs up the priority: roughly 50% of all denials trace back to front-end errors, with eligibility issues alone accounting for about 22% of preventable denials.

Metrics that matter, and ones that mislead

Tolliver said practices often take false comfort in the gross collection rate and total charges, neither of which captures the full picture. The metrics she trusts are aging accounts receivable, time-of-service collections, clean claims rate, and denial rates by dollar amount.

“If patients have out-of-pocket balances of $5,000 for the day and you’re only collecting 60% or less of that, those are dollars that could be collected with no expense to the practice,” she said. “No statement, no collections agency, just a person asking for the money.”

The stakes are real: Kodiak Solutions data shows the patient collection rate from commercially insured patients fell to 34.5% in 2024, down from 37.6% the prior year.

Stop the leakage before it becomes routine

Tolliver’s sharpest warning is about revenue leakage: the slow, quiet losses that never feel urgent enough to fix. Under-coding, writing off collectible balances, accepting virtual credit card payments without negotiating, and failing to renegotiate fee schedules are the forms she sees most often.

“Revenue leakage is something that is often hidden,” she said. “It gets masked under other things and doesn’t feel as urgent. But I think it is a serious threat to financial stability, because it has a way of becoming routine.”

A January 2026 MGMA Stat poll found denials and appeals account for 48% of the biggest revenue cycle leaks practices report. Industry analyses put the total cost of leakage at 4% to 5% of revenue, as much as $800,000 to $1 million annually for a $20 million practice.

“These are not emergencies today, but they add up,” Tolliver said. “Stop letting it slide.”