$25.7B
provider spend adjudicating denials in 2023 — up 23% in one year
Premier, 2025
The economics
The most expensive part of a denial is the rebuttal.
In 2023, providers spent $25.7 billion adjudicating denials with payers — a 23% jump in a single year — and Premier estimates roughly $18 billion of it was potentially unnecessary, spent fighting claims that should have been paid the first time.1 The unit cost is climbing too: the price of contesting a single denied claim rose from $43.84 to $57.23 in a year.1 At the practice level, even a clean rework runs about $25 per claim.2 We walk that whole figure in The $25 billion rework.
~$18B
of that potentially unnecessary — spent on claims that should have paid first time
Premier, 2025
$57.23
to contest one denied claim, up from $43.84 the prior year
Premier survey
A denial booked as a write-off looks free. It isn’t — you already paid to produce the
claim, and the only way to recover it costs more every year.
The leak
Most denied dollars are recoverable — if anyone works them.
The denials aren’t mostly “correct.” Premier found roughly 70% of denials are ultimately overturned and paid;1 a 2025 Health Affairs study of 270 million Medicare Advantage claims put the initial denial rate at 17% with 57% of denials eventually overturned.3 The money is recoverable. The leak is that working a denial competes for the same scarce staff hours as everything else — so the smaller-dollar ones quietly age out. The economics of that decision to stop are in the economics of giving up.
Illustrative: the ~70% overturn rate is Premier’s 2023 dataset; recovery requires the appeal to actually be filed and worked.
The instruments
The four KPIs that actually move the number.
HFMA’s MAP Keys give the standard definitions, so a denial program can be benchmarked rather than guessed at:4
Clean Claim Rate
Claims passing edits with no manual touch ÷ claims accepted for billing (target >90%).
Remittance Denial Rate
Actionable claims denied ÷ total claims remitted (often targeted <5%).
Denial Write-Offs
Net dollars written off as denials ÷ average monthly net patient revenue.
% Denials Overturned
The recovery yield of the appeals you actually file — the lever this brief is about.
A 70%-overturnable denial pool with a low filed-appeal rate is a write-off problem disguised as a coverage problem — and it moves the moment filing gets cheap.
The constraint
You’re asked to recover more with fewer people.
The reason the recoverable money sits there is rarely strategy — it’s capacity. One in four healthcare finance leaders say they’d need to hire 20 or more people to fully staff their revenue cycle, and the post-pandemic shortage has pushed organizations toward automation, outsourcing, and rising wage costs just to hold the line.5 Denial work is labor-elastic: when the queue is long, the low-dollar appeals are the first to be abandoned — which is exactly where a per-appeal cost reduction changes the math. We looked at who is left holding the queue in who still works the denials.
1 in 4
finance leaders need 20+ RCM hires to be fully staffed
HFMA
$25.7B
provider spend adjudicating denials, 2023
Premier · 2025
~$18B
of it potentially unnecessary
Premier · 2025
The tailwind
2026 hands you better raw material for appeals.
The CMS Interoperability and Prior Authorization Final Rule (CMS-0057-F) phases in over 2026–2027 and structurally favors the appealer:6
What CMS-0057-F changes for your denial program
- From Jan 1, 2026Impacted payers must decide standard PA in 7 days, expedited in 72 hours.
- From Jan 1, 2026Payers must give a specific reason for every denial — the raw material of a targeted appeal.
- From Mar 31, 2026Payers must publicly report approval, denial, and appeal-outcome rates.
- From Jan 1, 2027Required FHIR prior-authorization APIs standardize the data exchange.
And the backdrop hasn’t changed: across Medicare Advantage in 2024, only 11.5% of denials were appealed while 80.7% of those appeals were overturned.7 Specific denial reasons plus structured data make each appeal faster to build — which only matters if you have the capacity to build them.
A 70%-overturnable pool the team never gets to isn’t a coverage problem. It’s a capacity problem — and capacity is the one input the 2026 rule can’t hand you.
The move
Lower the cost per appeal until “work everything” pencils out.
Merits Appeals turns a denial into a ready-to-send, payer-specific appeal in minutes — the denial-reason rebuttal, the medical-necessity argument, and the governing policy citation, assembled from the denial and the chart, every quote verified verbatim. It doesn’t change your overturn rate on the appeals you already file; it collapses the labor per appeal so the recoverable-but-unworked tail finally gets worked. Your team reviews and signs.
The KPI it moves is the one with the most slack: percentage of denials actually appealed. When filing costs a few dollars and minutes instead of $57 and an afternoon, the low-dollar tail — where most of the un-worked money hides — is finally worth working.