Before a single denial is overturned — before anyone wins or loses an argument about medical necessity — American providers pay an entry fee just to have the argument. Premier, surveying hospitals and health systems on 2023 claims activity, put that fee at $25.7 billion a year: the administrative cost of adjudicating claims disputes with payers.1
The sharper number sits inside it. Premier estimates roughly $18 billion of that spend is potentially unnecessary — money burned fighting denials on claims that should have been paid as submitted.1 Not the cost of catching real billing errors: the cost of re-litigating correct work.
$25.7B1
spent per year adjudicating claims disputes with payers (2023)
~$18B1
of it potentially unnecessary — spent overturning claims that should have been paid
54.3%2
of denied claims ultimately overturned after appeals in Premier's earlier survey wave
The unit cost is the whole story
National billions are abstract; the per-claim numbers are what decide behavior at a front desk. Estimates of what one denial costs to work vary by who is measured — a small practice reworking a claim, or a hospital system fighting a formal appeal — but they agree on the shape:
Sources 2–4. Figures measure different units of work (rework vs. full adjudication vs. formal appeal) — see methodology.
Set those unit costs against the revenue at stake on a typical small-practice claim and the arithmetic turns bleak: an evaluation-and-management visit bills in the low hundreds of dollars; at $43–$57 of staff time per fight, the rational practice writes small denials off. Which is precisely what happens at scale — across the ACA marketplace, fewer than 1% of denied in-network claims are ever appealed by consumers, and the provider-side pattern that MGMA documents is the same: most denied claims are never resubmitted.5
Where the money actually goes
Premier's survey decomposes the spend into the mundane parts of the fight: staff time to research the denial, gather records, draft and route the appeal, track its status, and post the eventual outcome. None of it is clinical work. All of it happens after care was already delivered — which is why revenue-cycle teams describe denials as a tax on work already done.1
| What the fight consumes | Who carries it | Where it shows up |
|---|---|---|
| Research & documentation pulls | Billing staff, medical records | Hours per denial before any argument is made |
| Drafting and routing the appeal | Billers; clinicians for medical-necessity language | The scarcest hour in a small practice |
| Status tracking & follow-up | Billing staff | 25-minute phone calls, per interaction, per payer |
| Write-offs when the clock runs out | The practice's margin | Invisible — it never becomes a line item |
Categories per Premier's description of adjudication activities (source 1); the 25-minute claim-status call is CAQH Index's measured task time (source 6).
Sources
- 1Premier — Claims adjudication costs providers $25.7B; $18B of it potentially unnecessary · 2024–2025 (2023 activity)
- 2Premier — Trend Alert: providers spend $19.7B a year adjudicating with payers ($43.84/claim; 54.3% of denials overturned) · Mar 2024 (2022 activity)
- 3Fierce Healthcare — Providers potentially wasted almost $18B in 2023 overturning denials, Premier estimates · 2025
- 4MGMA — cost to rework a denied claim (~$25.20); MGMA/Change upper range for appeals · series
- 5KFF — Claims denials and appeals in ACA marketplace plans (fewer than 1% of denied in-network claims appealed) · 2024 data
- 6CAQH Index — manual claim-status inquiry ≈ 25 minutes of staff time per call · 2024–2026 editions