Why payers deny claims
The best public data on denial reasons comes from KFF's analysis of insurers selling on HealthCare.gov, which must report denials to the federal government. In 2024 they denied 19% of in-network claims. Of those denials, 36% were coded 'other', 25% were administrative, 9% were for lack of prior authorization or referral and 5% for lack of medical necessity (KFF). These are Marketplace plans, not every payer, but the pattern is familiar: most denials are not clinical judgments.
| Category | Typical cause | Where to fix it |
|---|---|---|
| Eligibility and coverage | Inactive coverage, wrong plan or member ID, coordination of benefits not updated. | Front desk: re-verify at every visit (eligibility). |
| Missing information | Missing or mismatched patient, provider or referral details. | Charge entry and scrubbing. |
| Prior authorization or referral | Service required approval that wasn't obtained, expired, or doesn't match what was billed. | Scheduling and authorization tracking. |
| Coding edits | Code pairs that conflict, missing modifiers, units over limits (e.g. Medicare's NCCI edits). | Coding and the scrubber's edit set. |
| Medical necessity | Payer says documentation doesn't support the service under its policy. | Documentation, then appeal with records. |
| Timely filing | Claim or appeal sent after the payer's deadline (Medicare: one calendar year after the date of service, 42 CFR 424.44). | Submission and follow-up tracking. |
| Duplicate claim | Resubmission sent as a new claim instead of a corrected claim. | Billing workflow. |
Every denial on a remittance carries a standard Claim Adjustment Reason Code (X12). Group by those codes and by payer, and the pattern usually tells you which row of that table you're in.
Denials that shouldn't have happened
HHS-OIG reviewed a sample of Medicare Advantage denials and found that 13% of prior authorization denials and 18% of payment denials met Medicare coverage rules and billing rules: they should have been approved or paid. It found plans applying clinical criteria not contained in Medicare coverage rules, asking for documentation that wasn't needed, and making manual review and system errors (OIG, 2022).
Yet appeals are rare. In KFF's Marketplace data, fewer than 1% of denied claims were appealed, and insurers upheld 66% of appeals, meaning about a third were overturned (KFF). A billing company that writes off denials instead of appealing them leaves money behind.
How payer policy changes show up
Payers announce most changes in provider bulletins, policy updates and revised prior-authorization lists, and practices rarely have time to read them all. In practice, a change usually reaches you as data before it reaches you as news:
- A new denial code, from one payer, on one service. Often a service newly added to a prior authorization list, or a new coverage policy.
- More requests for records. A payer starting to review a service before paying it.
- Payments lower than the fee schedule. A payment policy change, or a claim paid at a lower level than billed. Compare paid amounts to your contract.
- Bundling. A service that used to pay separately now denied as included in another.
- Slower payment. Claims pending longer without a denial, which pushes them toward deadlines.
- A practice's weekly report shows one commercial payer denying a common imaging service for missing authorization, five times in a week where it used to be zero.
- The biller checks the payer's provider portal and finds the service was added to its prior authorization list in a recent bulletin.
- Scheduling is told to request authorization for that service with that payer from now on; the five denied claims are reviewed for retroactive authorization or appeal under the payer's process.
- The billing company adds the rule to its scrubber so claims without an authorization number are held, not sent.
Five denials instead of a month of them. This is what weekly denial tracking by payer and reason is for.
Prior authorization: the rules changing now
Under CMS's Interoperability and Prior Authorization Final Rule, Medicare Advantage organizations and Medicaid and CHIP programs and plans must send prior authorization decisions within 72 hours for expedited requests and 7 calendar days for standard requests, generally starting January 1, 2026; requirements to build prior authorization APIs generally start January 1, 2027 (CMS-0057-F). Commercial plans aren't covered by those timeframes. Track how long each payer takes to decide, and escalate requests that run past the rule's deadlines where it applies.
The workload is real: the AMA's 2024 survey found physicians averaged 39 prior authorizations a week, with 13 hours of physician and staff time, and 93% said prior authorization delays access to necessary care (AMA).
How practices respond
Track denials weekly, by payer and reason code
Monthly is too slow to catch a rule change before deadlines pass. Ask your billing company for a weekly view.
Appeal by default where the rules support you
Set criteria for which denials are appealed, rather than writing them off case by case. Include medical records and the payer's own policy language.
Fix the cause upstream
Feed every pattern back to the step that caused it: front desk, scheduling, coding or documentation. See what billing companies do.
Keep a payer rule log
Record each change you find, with the bulletin, date and service, so the next biller doesn't learn it again from denials.
Escalate patterns
When a payer repeatedly denies claims that meet its own policy, raise it with your provider representative, and with the plan's regulator where appropriate (state insurance departments for state-regulated plans; CMS for Medicare Advantage).
Questions people ask
What is the most common reason claims are denied?
In KFF's analysis of HealthCare.gov Marketplace insurers, the largest category was 'other' (36% of denials), followed by administrative reasons (25%) (KFF). In a practice, check your own denials by reason code.
Is it worth appealing a denied claim?
Often. HHS-OIG found 13% of Medicare Advantage prior authorization denials it reviewed met Medicare coverage rules (OIG), and about a third of Marketplace appeals in KFF's data were overturned (KFF).
How fast must payers decide prior authorization requests?
Under CMS-0057-F, Medicare Advantage, Medicaid and CHIP payers must decide within 72 hours for expedited and 7 calendar days for standard requests, generally from January 1, 2026 (CMS). Commercial plans set their own, subject to state law.
Sources
Every figure and rule on this page links to the organization that produced it. Check the source before you rely on it: payer and federal rules change.
- Claims Denials and Appeals in ACA Marketplace Plans in 2024 (March 24, 2026) · KFF
- Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Care (OEI-09-18-00260, April 2022) · HHS Office of Inspector General
- CMS Interoperability and Prior Authorization Final Rule (CMS-0057-F) fact sheet, January 17, 2024 · Centers for Medicare & Medicaid Services
- Physicians concerned AI increases prior authorization denials (2024 AMA prior authorization physician survey, February 24, 2025) · American Medical Association
- National Correct Coding Initiative (NCCI) edits · Centers for Medicare & Medicaid Services
- Claim Adjustment Reason Codes · X12
- 42 CFR 424.44: Time limits for filing claims · Electronic Code of Federal Regulations
- Altair Health · altair-health.com
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