What One Denial Costs a Small Practice

Ask what it costs to fight one denied claim and the published answers disagree by a factor of almost five. MGMA puts the average cost to rework a denied claim at $25.20.¹Premier's hospital surveys measured $43.84 per claim in 2022 and $57.23 in 2023.²³ And an MGMA-cited Change Healthcare index found that a formal appeal averages $118 per denied claim.⁴

None of these figures is wrong. They measure different work, in different settings. Quoting any one of them as the cost of a denial flattens a range that matters — because the decision a practice actually makes, claim by claim, is whether the fight is worth more than the check.

The spread comes from the unit of work, not from sloppy measurement. MGMA's $25.20 is a rework figure: a practice-level estimate of touching a denied claim again to correct and resubmit it.¹ Premier's figures cover the full adjudication of a disputed claim in hospitals and health systems: researching the denial, pulling documentation, drafting and routing the argument, then tracking it until it resolves.² The $118 is narrower and heavier at once — the cost of a formal appeal, the kind that consumes clinical time as well as billing time.⁴

A small practice sits awkwardly across all four. Its billing person does the rework and the appeal; its physician writes the medical-necessity language a hospital would route to a clinical documentation team. So rather than hand you a fifth estimate, this piece hands you the arithmetic.

The calculator below starts from sourced defaults and lets you replace them with your own. Count the minutes your staff actually spends on one denial from first touch to resolution — the phone time counts, the status checks count. Set the loaded hourly cost of that staff time: the default of $35 is the BLS mean wage for billing and posting clerks, $24.55 an hour as of May 2025,⁵ grossed up for benefits using BLS employer-cost data.⁷ If your physician spends time on the denial, add those minutes; they are priced at the BLS mean wage for family medicine physicians, $123 an hour.⁶

The toggle is the honest part. If you only appeal claims you are certain to win, your break-even is simply your working cost. If your results look like the industry's — Premier measured 54.3 percent of denied claims ultimately paid after appeals² — then every win has to carry the cost of the losses, and the break-even claim value rises accordingly.

The second output — break-even claim value — is the number that quietly governs practice behavior. At the defaults, working one denial costs about $26, and at a 54.3 percent win rate the break-even lands near $48. A denied claim below that line is a rational write-off: appealing it loses money on average even though the appeal would probably win. That arithmetic, multiplied across the country, is the appeal gap — most denied claims are simply never contested.

Two things move the line most. Physician minutes are expensive: ten minutes of physician time adds about $20.50 to the cost of a single denial, nearly doubling the default. And the win rate is not a constant — Premier's 54.3 percent is an average across payers and denial types. A well-grounded medical-necessity appeal and a duplicate-claim dispute do not carry the same odds, so if you track your own overturn rate by denial category, use that instead.

What the calculator cannot show is the third option between fighting and writing off: lowering the cost side of the inequality. Every dollar shaved off the cost of working a denial drops the break-even by roughly two dollars at industry win rates — which is why the economics of denial work are more sensitive to process than to any single payer's behavior.