What Are Denials Really Costing You?
A denial isn’t lost money until nobody works it. The real cost is three things added together: denied claims never reworked, appeals you lose, and the staff time spent fighting the rest. This calculator adds them up for your practice.
- Initial denial rate against the 5% target
- Annual revenue lost to unworked and failed appeals
- The staff cost of rework, so the trade-off is visible
Runs entirely in your browser — nothing you enter is stored or sent anywhere.
Your claims, per month
Initial denials, before any appeal.
Your estimate: minutes × hourly cost.
Initial denial rate
11.0%
Denials are costing about $472K a year in lost payments and rework. Getting to 5% would save roughly $257K.
Denied per year
$586K
billed value
Never reworked
$352K
written off by default
Rework spend
$38K
staff time per year
Claim value is billed value, so the dollar figures are an upper bound on what is truly collectable. The rate itself is exact — it is the number to track month over month.
How It Works
The Cheapest Denial Is the One That Never Happens
Denial rates have been rising: initial denials reached 11.8% in 2024, up from 10.2% a few years earlier, and HFMA reports up to 65% of denied claims are never reworked at all. Most denials trace back to front-end data — eligibility, registration, authorization, and coding — which is why prevention pays better than better appeals.
The formula
Denial rate = Claims denied on first submission ÷ Claims submitted × 100
Count claims, not dollars, for the rate. Use dollars when deciding which denial categories to fix first.
Prevent
Fix the front end
Real-time eligibility at every visit, authorization tracking, and payer-specific claim edits stop most denials before submission. Experian Health reports three-quarters of denials trace to missing or inaccurate data.
Work
Appeal everything worth it
Unworked denials are the largest loss line for most practices. Track every denial to a resolution — paid, corrected, appealed, or consciously written off — never just “aged out”.
Learn
Trend by reason code
Group denials by CARC/RARC code and payer each month. A single recurring reason usually accounts for a large share of volume, and fixing it once removes it for good.
Denial-rate reference points
| Figure | Value | Source |
|---|---|---|
| Average initial denial rate (2024) | 11.8% | Kodiak Solutions / HFMA |
| Family-medicine median, denied on first submission | 7.08% | MGMA data via Forvis Mazars (2026) |
| Commonly cited “optimal” target | Under 5% | HFMA-style guidance |
| Denied claims never reworked | Up to 65% | HFMA |
Benchmarks vary by specialty and payer mix — track your own rate monthly against your own baseline.
Questions
Frequently Asked Questions
What is a good claim denial rate?
Under 5% is the commonly cited target, and 5–10% is typical across the industry. The average initial denial rate reached 11.8% in 2024, so many practices are above where they should be.
What is the difference between a rejection and a denial?
A rejection is stopped before the payer accepts it — usually by the clearinghouse or payer front-end edits — and can be corrected and resubmitted. A denial was accepted and processed, then refused payment, and needs a corrected claim or a formal appeal.
Should I count partially paid or downcoded claims as denials?
For the rate, count full denials on first submission. But track downcoded and underpaid claims separately — payers increasingly reduce E/M levels without issuing a denial, which never shows up in a denial report.
Is it worth reworking low-value denials?
Often yes, if the root cause is fixable — the same error is usually happening on higher-value claims too. Set a dollar threshold for individual appeals, but always log the reason so the pattern gets fixed.
How long do I have to appeal a denial?
It depends on the payer and contract. Medicare’s first-level redetermination must be requested within 120 days of the initial determination; commercial payers set their own limits, often 60–180 days. Missing the window turns a recoverable denial into a write-off.
How do billing companies lower denial rates?
By catching errors before submission — eligibility checks, payer-specific edits, authorization tracking — and by feeding every denial’s root cause back to the front desk and coders so it stops recurring.
Sources
- [1]Kodiak Solutions / HFMA — initial denial rate trends
- [2]Forvis Mazars, “Know Your KPIs” (Kansas MGMA, April 2026), citing MGMA DataDive
- [3]CMS — Medicare Parts A & B appeals process (redetermination timelines)
This is an independent planning tool built by MedVersify from published methodology. It is not an official CMS, payer, or clinical tool, and results are estimates — confirm decisions against your own reports, payer contracts, and clinical judgment.
Keep Going
Denial Management Guide
How to cut your denial rate below 5%: the CARC patterns and front-end controls that matter.
Read the guidePayers Are Using AI to Downcode You
The silent revenue cut that never appears in a denial report — and the 2026 state laws pushing back.
Read the articleMedical Billing Services
Denial prevention and appeals handled end to end, with root-cause reporting every month.
See the serviceMore free tools
Free Denial Audit
Find Out Which Denials Are Costing You Most.
We’ll group your denials by reason and payer, and show you the three fixes worth the most money.