How much does a denied claim cost your practice?
Fixing a denied claim takes about $25 of staff time. A claim that pays the first time costs about $6.50. Two numbers from your denial report show what denials cost your practice.
By Jake Schwartz, CEO & Founder
Your biller spends about $25 of staff time on each denied claim they fix and send back, by MGMA's estimate. A claim that's paid the first time costs about $6.50 to send, according to Practice Fusion. A denied claim that nobody gets to costs you the whole claim.
In the example practice below, those unfixed claims cost twice as much as all the fixing.
Fixing denials doesn't bring in any new money. You're paying your staff to collect money you already earned.
How do I add up what denials cost my practice?
Ask your biller for two numbers from your denial report, covering the last three months.
- How many denied claims your team fixed and sent back. Multiply that by $25.
- The dollar total of denied claims you wrote off, meaning you stopped trying to collect them.
Add the two together to get what denials cost you last quarter.
Treat $25 as a starting point. MGMA measured it in 2014, and wages have gone up since. If you know your biller's hourly pay and how long a typical fix takes, use those instead.
An example practice loses $25,500 a quarter to denials
Take a practice that sends about $200,000 in claims a month, at about $125 a claim. Eight of every 100 claims come back denied, which is close to MGMA's average for practices. The billing team has time to fix about $10,000 of denials a month.
Here are three months at that practice:
| What happened | Claims | Dollars |
|---|---|---|
| Claims sent | 4,800 | $600,000 |
| Claims denied | 384 | $48,000 |
| Denials fixed and sent back | 240 | $30,000 |
| Staff time to fix them, at $25 each | $6,000 | |
| Denials that couldn't be fixed | 48 | $6,000 |
| Fixable denials nobody got to | 96 | $12,000 |
| Fixed, then denied again | 12 | $1,500 |
| What denials cost this quarter | $25,500 |
Fixing 240 claims cost the practice $6,000 in staff time. Letting 96 fixable claims expire cost it $12,000, twice as much for fewer than half as many claims.
Each of those 96 claims had a mistake the billers could have corrected. They sat in the queue until the insurance company's deadline passed, because the billers ran out of hours first.
Over a year, the practice loses about $102,000 to denials. The claims it did fix paid late, too. A billing lead at a family medicine practice told us a fixed claim takes 30 to 45 days to pay, compared with 7 to 14 days for a clean one.
Should I fix a denial or write it off?
Fix it when you expect to collect more than the fix costs. For a quick correction, like adding the missing side to a knee code, that's an easy yes.
A formal appeal is a bigger job. Someone pulls records, writes a letter, and waits again. Practice Fusion's example is a $45 claim that would take $60 of staff time to appeal, and writing that one off is the right call.
Appeals often pay off. In a Premier survey of hospitals, 54 of every 100 denied claims were paid in the end, usually after more than one round.
The write-offs to worry about are the ones nobody decided on. Every insurance company sets a deadline for corrections and appeals. Keep a list of those deadlines and work the oldest fixable denials first.
How much do providers spend fighting denials?
Premier surveyed 516 hospitals and health systems about their 2022 claims. It estimated they spent $19.7 billion fighting denials. About $10.6 billion of that went to claims that were paid in the end, which should have been paid the first time.
How do I stop denials before the claim goes out?
Practice Fusion puts it this way: "The cheapest denial is the one that never happens."
Checking a patient's insurance before the visit catches coverage problems. A claim scrubber, which is software that checks each claim against insurance rules before it's sent, catches many coding errors.
A scrubber reads the claim and never sees the doctor's note. Whether a code matches the note gets settled in the chart, before it's signed. Three common examples from primary care:
- The note says right knee, but the code is M25.569, knee pain with no side given. The right-knee code is M25.561.
- Two diagnosis codes contradict each other, which can get the claim denied. See which code pairs cause this.
- The note doesn't support the visit level billed, whether higher or lower. If the insurance company asks for records, the note has to back it up. Check a 99213 vs. 99214 note.
Cortex Lens checks each Practice Fusion chart for these problems before the claim goes out. Your team makes the fix in Practice Fusion, and Lens never changes the chart. The impact page counts the denial risks Lens caught and the ones your team fixed, by week, month, or quarter. Put those next to your own quarterly number.
Sources: Clean claim cost and the $45 appeal example: Practice Fusion, October 21, 2026. Cost to fix a denied claim: an MGMA study cited in Family Practice Management, March/April 2015. National spending and appeal results: Premier Inc., March 21, 2024, a survey of 516 hospitals and health systems about 2022 claims. Denial rate: MGMA Stat, March 6, 2024. The example practice is made up for illustration. Payment times come from a billing lead at a family medicine practice.