Rate of Initial Denials of Medical Insurance Claims Continued to Rise in 2024

Kodiak Solutions' proprietary data showing that initial denial rates rose to 11.81 percent in 2024 — continuing a multi-year upward trend — provides physician practices with a benchmark that should inform both their expectations and their strategies. An 11.81 percent initial denial rate means that roughly one in eight and a half claims is denied on first submission. For a practice submitting 2,000 claims per month, that translates to approximately 236 denials requiring review, potential appeal, or write-off every month. The trend line is what makes this data particularly concerning: initial denial rates have been climbing steadily, suggesting that the forces driving denials are structural, not cyclical.

The Multi-Year Trend

The Kodiak data tracks initial denial rates across a large sample of healthcare providers over multiple years. The consistent upward trajectory indicates that this is not a temporary spike driven by a single payer's policy change or a one-time coding transition. Initial denial rates have been rising because the underlying dynamics favor higher denials:

• Payers continue to expand the scope and complexity of clinical documentation required for claim adjudication
• Automated claim review systems apply increasingly granular rules that flag more claims for denial
• The shift toward value-based care and alternative payment models has not reduced fee-for-service denial behavior
• Low appeal rates mean payers face minimal financial consequences for aggressive denial practices

The trend also persists despite significant industry investment in revenue cycle technology. Practices and health systems have deployed clearinghouse scrubbing, coding assistance tools, and eligibility verification systems, yet the aggregate initial denial rate continues to rise. This suggests that payer denial criteria are evolving faster than provider prevention capabilities — a dynamic that demands more sophisticated approaches to denial management.

What 11.81 Percent Costs

The financial impact of an 11.81 percent initial denial rate depends on the practice's claim volume, average reimbursement per claim, and appeal recovery rate. But the math is consistently unfavorable. Industry estimates place the cost of reworking a denied claim between $25 and $118, depending on the complexity of the denial and the appeal process required. At the lower end, 236 denials per month at $25 each represents $5,900 in monthly rework costs. At the higher end, the same volume at $118 per denial represents $27,848 monthly — over $334,000 annually — just in administrative costs to address denials, before accounting for the revenue at risk.

The revenue impact compounds. Claims that are denied and not appealed represent permanent revenue loss. Claims that are appealed and overturned represent delayed revenue with administrative cost attached. Claims that are appealed and upheld represent both lost revenue and wasted administrative effort. At an 11.81 percent initial denial rate, the aggregate impact is material for practices of any size.

Benchmarking Your Practice

The 11.81 percent figure provides a useful benchmark, but practices should be cautious about applying it uniformly. Initial denial rates vary significantly by specialty, payer mix, geographic region, and the types of services a practice provides. Practices that submit a high proportion of claims for services requiring prior authorization or clinical documentation review may experience initial denial rates well above the Kodiak average. Practices with straightforward service mixes and clean coding may operate below it.

The value of the benchmark is directional: if your practice's initial denial rate is significantly above the industry average, it signals an opportunity for upstream improvement in documentation, coding, or submission processes. If your rate is at or below the average, the focus should be on appeal efficiency for the denials that do occur and on monitoring whether your rate is trending upward along with the industry.

The Strategic Response

A rising initial denial rate is not an inevitable cost of doing business. It is a measurable problem with identifiable causes and addressable solutions. Practices that analyze their denial data by payer, reason code, and service type can identify the specific patterns driving their denial rate and target interventions where they will have the greatest impact. The Kodiak data shows the industry trend. Your practice's data shows your specific opportunity.