Your clinicians provide expert care. Billing submits the paperwork. And then the denial notice arrives in return, usually for something minor. It’s a pattern that plays out daily in hospital business offices across the country.
There’s no getting around the fact that payers are hitting their stride with AI, using it to deny and delay insurance payments at historic rates. As a result, the claims process has turned into a maze of uncertainty for providers. It’s long, tedious, and debilitating by design: a strategy implemented by payers to “outlast” understaffed and under-resourced RCM teams.
Now, new research reveals the toll these surging denials are taking on hospitals and their ability to collect revenue for services they’ve already provided.
An Uphill Climb
A Harvard study published in Health Affairs found that out of 270 million Medicare Advantage claim submissions, 17.7% were denied. However, 57% of those denials were later overturned, an indicator of how far payers are willing to go to find a reason— any reason—to deny a claim.
According to the study, even after successful appeals, providers lost 7.2 percent of the total dollars they initially billed. So, if your organization submits $10 million in Medicare Advantage claims, you can realistically expect to lose about $700,000. That’s a significant loss to absorb. (Vabson et al., 2025)
An Industry-Wide Phenomenon
Unfortunately, the increase in denials isn’t just reserved for Medicare Advantage claims. It’s a widespread issue that affects the entire healthcare industry.
In a 2024 study of 516 U.S. hospitals, Premier, a healthcare consulting group, found that approximately 15% of their roughly 3 billion claims were denied, and that revising and resubmitting each claim costs about $44 (not including additional labor costs). (Premier, 2024)
These denials and subsequent appeals create a significant administrative burden for hospitals that are already dealing with a shortage of qualified RCM professionals and razor-thin operating margins.
With more denial notices coming back and without the resources to handle them in a timely manner, backlogs of past-due claims start to pile up, and RCM results move in the wrong direction. As hospitals struggle to keep pace, payers can pile on, burying business offices in denials and aging accounts while increasing the probability that some denials will never be appealed.
The State of Denials
To summarize the key findings of both studies:
- The majority of denials get overturned. Both the Harvard and Premier studies found that upon appeal, most denials are reversed. While on the surface this appears to be positive news, it reveals a concerted effort by payers to flag a high volume of claims for minor discrepancies, creating a long, drawn-out appeals process that many hospitals aren’t equipped to handle.
- Appealing and winning is still a losing proposition for hospitals. It takes effort to settle a denial, and all the back-and-forth drains time, energy, and money from hospitals that don’t have an excess in any of those categories.
- Even pre-approved services aren’t immune. The Premier report revealed that insurers deny about 3% of procedures that were already pre-approved, underscoring that no claim is safe from denial.
With billions of dollars at stake—money that can directly impact a hospital’s ability to maintain an exemplary level of patient care—healthcare organizations have no choice but to adapt their claim-denial strategies to the current payer blueprint.
There’s an obvious way to do it: fight payer AI with AI of your own. For example:
• Prevention: Hospitals can use AI to identify potential flaws in insurance claims before they’re ever submitted. If your AI is scouring outbound claims for red flags with the same tenacity as payer AI, the likelihood of a denial goes way down.
• Appeals: When denials do occur, AI allows hospitals to automate as much of the appeals process as possible, creating faster resubmissions with less strain on internal teams.
• Optimization: Automating your submission and appeals process as much as possible frees up your RCM staff to focus on higher-level tasks, improving performance across the entire revenue cycle.
It’s Time to Start “Denial-Proofing” Your Claims
As recent studies show, payers clearly have the upper hand when it comes to the current state of claim denials. The good news is that the right technologies and tools are readily available to help providers wrest away some control, get paid for the services they’ve provided, and devote their energies and resources to furthering patient care instead of fighting claim denials.
Meduit offers a proven approach to claim denials that features advanced AI and human expertise. Meduit’s solution helps hospitals recover more of the money they’re owed by making sure claims are clean and complete before submission. This helps accelerate payments, minimize appeals, and ease the administrative workload. The result is a more sustainable cash flow, and a long-term process built to stand up to payer AI.
For more information about how to level the denials playing field, visit https://www.meduitrcm.com.
Source: Vabson B, Hicks AL, Chernew ME. “Medicare Advantage Denies 17 Percent Of Initial Claims; Most Denials Are Reversed, But Provider Payouts Dip 7 Percent.” Health Affairs. June 2025, https://doi.org/10.1377/hlthaff.2024.01485
Source: (Kacik, Alex. “Claim denials cost hospitals $20 billion a year.” Modern Healthcare. 3/22/24)