Hospitals lost more than $48 billion in 2025 to denied claims and uncompensated care — a 25% jump from $38.6 billion the year before. (Kodiak Solutions) Across a national sample of 2,300 hospitals and 350,000 physicians, the median final denial rate climbed from 2.5% to 2.7% in a single year. (Kodiak Solutions)

That's not a rounding error. It's a growing share of care that gets delivered, billed, and then contested — and increasingly, never fully collected.

Where the Denials Are Actually Coming From

Clinical denials — for lack of prior authorization or a dispute over medical necessity — accounted for nearly all of the increase in denial rates last year. (Kodiak Solutions) Insurers aren't rejecting more claims because care got sloppier. They're applying more automated scrutiny to claims that used to clear without a second look, and prior authorization requirements keep expanding into procedures that didn't used to need them.

The scale of that scrutiny is bigger than any one hospital's billing team. 41% of providers now have a denial rate above 10%, up from 30% in 2022 — well past the 5–10% range HFMA considers a healthy benchmark.

The Cost of Fighting Back

Denials that get contested don't just disappear if they're wrong — someone has to prove it. Hospitals spent close to $18 billion in 2025 overturning denials, and the American Hospital Association estimates providers spend roughly $43 billion a year trying to collect money insurers already owe for care that's already been delivered. (AHA)

Here's the part that makes the fight worth it, and also makes it maddening: in a Health Affairs analysis covering Medicare Advantage plans, insurers initially denied 17% of claims — and 57% of those denials were eventually overturned on appeal. (Health Affairs) More than half the fight was, in retrospect, unnecessary. It just took staff time, appeals paperwork, and months of delayed cash flow to prove it.

A Number That Looks Fine Until You Sit With It

A 2.7% median denial rate sounds manageable next to headlines about "50% of claims denied." But that median hides the range. Some hospitals are well inside HFMA's healthy zone; a large and growing share are well outside it, and the gap between those two groups is where operational maturity — not case mix or payer mix — starts to matter most.

Denials rarely trace back to one clean cause. They trace back to a missing prior auth that was never logged, a credentialing gap that delayed a claim past its filing window, or a policy version nobody could confirm was current when the documentation was filed. None of those are clinical failures. They're operational ones, happening upstream of billing, in departments that don't always talk to each other in real time.

Why This Belongs on the Operations Side of the Ledger

Revenue cycle teams have gotten better at appeals. What's harder to fix with more appeals staff is the upstream problem: authorizations that fall through the cracks before a claim is ever submitted, and documentation that's incomplete by the time it reaches billing. It's the same pattern we've written about before — bigger, more consolidated systems, same unfixed operational bottlenecks. That's the layer MCCore is built around — not replacing a hospital's billing system, but closing the operational gaps further upstream that turn into denials months later.