Claim Denials Keep Climbing: What the 2026 Benchmarking Data Means for Billing Teams

Two data points released this year confirm what most billing teams already feel in their weekly AR huddles: denials are getting worse, not better, and the cost of fighting them is rising faster than the cost of the claims themselves.

The denial rate ticked up again

Kodiak Solutions, which aggregates revenue-cycle data from more than 2,300 hospitals and 350,000 physicians, reported that the median final denial rate — claims that are never paid after all appeals are exhausted — rose from 2.5% in 2024 to 2.7% in 2025. Bad debt climbed alongside it, from 1.1% to 1.3% of net patient revenue. Combined, providers in Kodiak's data set missed out on $48.4 billion in 2025, a roughly 25% increase in "revenue leakage" year over year.

The report attributes nearly all of the increase to clinical denials — claims turned down for lack of prior authorization or failure to meet medical-necessity criteria — rather than the technical, clerical denials (wrong modifier, missing NPI, timely-filing miss) that dominated denial conversations a decade ago. That shift matters operationally: technical denials are usually caught and fixed by front-end clean-claim edits, while clinical denials require documentation and, increasingly, appeals built around payer-specific medical policy.

The cost of fighting back is rising even faster than the denials themselves

Premier Inc.'s national survey of 280 hospitals and health systems across 23 states — representing more than 48,000 acute care beds — put a dollar figure on the other side of the ledger. Providers spent an estimated $25.7 billion adjudicating claims in the period the survey covered, a 23% increase over the prior year's $19.7 billion. The average cost to adjudicate a single claim rose to $57.23, up from $43.84.

Premier's data also found that roughly 70% of denials that go through the appeal process are eventually overturned — a number that should reframe how billing teams think about appeal ROI. If seven out of ten appealed denials are winnable, the bottleneck usually isn't whether an appeal is worth filing; it's whether the practice has staff time to file it before the payer's appeal window closes.

What this means for denial-prevention priorities

Read together, the two reports point in the same direction: the fight has moved upstream. Clean-claim edits and clearinghouse scrubbing still matter, but they no longer touch the fastest-growing category of denials. The higher-leverage work in 2026 is:

• Front-loading medical necessity documentation before a claim goes out, not after a denial comes back — since clinical denials are the category driving the increase.
• Tracking prior-authorization status as a first-class data field, not an afterthought, given that lack-of-authorization denials are named specifically in Kodiak's findings.
• Triaging appeals by dollar value and payer response window rather than working them in the order they land, given the volume increase and the high overturn rate Premier documented.

None of this is a silver bullet — denial rates rose despite most practices already running some version of these plays. But the data is a useful gut check: if your denial rate has been flat while these two industry benchmarks moved, you may be quietly falling behind rather than holding steady.