What a Good Denial Rate Looks Like for a Physician Practice

A good denial rate for a physician practice is under 5%, the level the American Academy of Family Physicians (AAFP) calls more desirable. The 5% to 10% range you often see quoted is what AAFP calls the industry average, not a target. To measure your own rate, use AAFP's formula: divide the dollars payers denied in a period by the dollars you submitted in that period.

MGMA's benchmarking sits in the middle of that band. It puts first-submission denials at 7% to 8% across the past four years, MGMA reported in July 2026. The same article says MGMA's 2025 data report suggests practices can push the rate below 5% with targeted process fixes. Our list of the top 10 claim denial reasons shows where each one starts and what prevents it.

That MGMA figure is an initial denial rate, counted on first submission. Your final denial rate counts the claims that stay denied after every correction, resubmission and appeal. The initial rate measures rework and delay. The final rate measures revenue you lose.

Where the 5% to 10% denial rate benchmark comes from

AAFP publishes the 5% to 10% range in its practice finance guidance. It is not an HFMA or MGMA benchmark. A rate inside that band matches the AAFP average, and a rate above 10% is worse than even that average.

HFMA's own standards give definitions, not targets. Its MAP Keys define the remittance denial rate, AR-5, as claims denied divided by claims remitted, meaning claims the payer has answered on a remittance. AR-5 counts both initial denials and denials on appeal. The keys apply to physician organizations as well as hospitals. HFMA's benchmark data comes from subscribers who report through its MAP App tool.

MGMA publishes the rates that practices report to it. Its 2023 practice operations report put the share of claims denied on first submission at 8.00% in both 2019 and 2022. The survey behind it covered almost 1,000 organizations.

Denial rate benchmarks alongside days in A/R and collections

AAFP pairs the denial rate with two other metrics: days in accounts receivable and the adjusted collection rate. On its practice finances page, AAFP says days in A/R should stay below 50 at minimum, with 30 to 40 days preferable. The adjusted collection rate compares what you collected with what you should have collected. AAFP puts it at 95% at minimum, 95% to 99% on average and at least 99% for the highest performers, measured over 12 months.

The three move together. Each denied claim "restarts the collection clock and pushes the balance into older aging buckets while staff rework and resubmit it," MGMA wrote in July 2026.

Initial vs final denial rate

An initial denial rate includes every claim the payer denies on first submission, even if it pays the claim later. A final denial rate counts only what the payer never pays. HFMA's Claim Integrity Task Force counts "only the first denial that was made for a given claim" in its initial denial rate. Rebills stay out, including any CMS-1500 claim with an R in Box 22. For the final side, the task force uses MAP Key AR-6: denial write-offs as a share of net patient service revenue. HFMA says AR-6 tracks the "final disposition of lost reimbursement," after appeals run out or the practice writes the amount off.

Kodiak Solutions publishes both kinds of rate. In data from more than 2,100 hospitals and 300,000 physicians, Kodiak found the initial denial rate rose to 11.81% of claims in 2024. That figure blends hospitals and physicians, so it describes that mix rather than an independent practice. Kodiak's Matt Szaflarski said payers appear to use initial denials to slow payments. He added that initial denials "slow cash flow" even when the claims are paid in the end. Kodiak's March 2026 release put the median final denial rate for the hospitals in its data at 2.5% in 2024 and 2.7% in 2025.

Published rates can be either kind, so check which one before you compare. KFF's marketplace figures are final rates: a claim the insurer denied, then paid after resubmission, does not count as denied. MGMA's 7% to 8%, and the below-5% rate it says practices can reach, are first-submission rates, so hold them against your initial rate. Vendors define the metric in different ways too, as our guide to evaluating billing vendors explains.

How to calculate your practice's denial rate

AAFP's formula divides the dollars payers denied in a period by the dollars you submitted in that period. If payers denied $9,000 of the $150,000 you submitted in March, your March denial rate is 6%. HFMA's task force calculates the initial rate two ways, by claim count and by gross charges. In the count version, the denominator is the average number of claims submitted over the three months before the reporting month.

Run it both ways. The count shows how often claims fail. The dollar rate shows how much cash sits in denial, and the two can diverge when denials cluster on expensive services. Count only the first denial on each claim and leave rebills out, as HFMA's task force does, or one problem claim counts twice. HFMA's MAP Keys also leave out denials for duplicate claims. Count clearinghouse rejections apart from payer denials, since a rejected claim never reached the payer.

Denial rate benchmarks by specialty

MGMA's 2023 practice operations report gives one denial rate for single-specialty practices as a group, not one for each specialty. That 8.00% combines primary care, nonsurgical and surgical practice data, per the report. Treat any specialty target that does not name its survey, year and sample with caution.

Specialty still shapes your rate through what you bill. In Kodiak's 2025 data on hospitals and health systems, clinical denials, for missing prior authorization or medical necessity, accounted for almost all of the increase in denial rates. A specialty that bills more services needing authorization carries more of that exposure. Our posts on cardiology denials and urology denials show how it plays out in two specialties.

Denial rate trends in 2025 and 2026

Survey answers point up, while MGMA's practice data has held steady and Kodiak's claims data now points down. In Experian Health's State of Claims survey, 30% of respondents in 2022 said payers denied at least 10% of their claims. That share reached 38% in 2024 and 41% in 2025. The 2025 survey of 250 healthcare professionals ran in June and July 2025, and 68% said submitting clean claims is more challenging than a year earlier.

Those are answers to a survey question, not denial rates, and Experian's report does not say how many respondents work in physician practices. MGMA's benchmark has held at 7% to 8% of claims denied on first submission for four years, it reported in July 2026. An older MGMA poll told a less steady story. In a March 2024 MGMA Stat poll with 235 responses, 60% of medical group leaders said their denial rates had risen from the same period of 2023. A poll records who saw a rise, not how large it was.

Kodiak's newest data shows denial rates falling. Comparing the first half of 2026 with the first half of 2025, Kodiak found lower initial and final denial rates across more than 2,300 hospitals and 375,000 physicians. Cash did not improve, because payers took back more money from claims they had already paid. Takebacks rose from 1.38% to 1.57% of accounts receivable. Commercial claims went the other way on final denials, which rose 9.1% to 2.89% of accounts receivable. Kodiak's advice is to measure results by "the final revenue yield from claims" rather than by one or two parts of the revenue cycle.

How payer mix changes your denial rate

Denial rates differ by payer type, so your blended rate depends on which plans your patients carry. In Kodiak's 2025 data, Medicaid had the highest initial and final denial rates of any payer category. Medicare Advantage plans had initial and final denial rates more than double those of traditional Medicare. Commercial denials still cost more revenue, because commercial plans pay higher rates. Kodiak frames these findings around hospitals and health systems and gives no rate for each payer type in its release.

Rates also differ from one insurer to the next. KFF's analysis of HealthCare.gov plans found insurers denied 19% of in-network claims in 2024, with individual insurers ranging from 3% to 36%. Among large parent companies' HealthCare.gov plans, Elevance Health denied 8% of in-network claims, UnitedHealth Group 19% and Oscar Health 25%. Those rates cover marketplace plans only and combine medical and prescription drug claims. They also count only claims that stayed denied, so they are not comparable with MGMA's practice figures.

Read each payer against its own history rather than a national average. A practice that adds Medicare Advantage or Medicaid patients can watch its blended rate climb with no change in how it bills.

Plan exits added an eligibility problem in 2026. A JAMA research letter found that 2.9 million of 28.6 million enrollees in non-employer Medicare Advantage HMO and PPO plans faced forced disenrollment in 2026. Their plan ended its contract or stopped serving their county. That is 10.0% of enrollees, up from a 1.0% average for 2018 through 2024. Each of those patients needed a new plan or traditional Medicare for 2026. Verify coverage at every visit rather than trusting the card on file, or the claim can come back with a coverage denial such as CO-27.

How to read your own denial rate: by payer, by reason code, over time

A single blended rate hides which payer, code or month is driving your denials. Split it three ways, starting with payers. MGMA advises running A/R aging by payer, not only in total. It says practices can track payer-side problems the same way and escalate the ones that recur. A payer whose rate climbs while the others hold steady points to something that changed at that payer. Our payer guides cover denials, authorization and appeals for major payers.

Then sort by reason code. Each denial on a remittance carries a claim adjustment reason code, and the codes show shifts that the total hides. In Kodiak's 2024 data, the rate of authorization denials fell, yet the initial denial rate still rose. Rising medical necessity and request-for-information denials more than offset the drop. Our post on denial workflow design covers grouping denials by code, payer and procedure to find the cause. MGMA suggests reviewing your five most common denial codes for preventable causes, and our denial code guides cover the fix for each code.

Then track the rate month by month. HFMA calls AR-5, its remittance denial rate, a "trending indicator" in its MAP Keys. January deserves a close look. MGMA notes that new coding guidelines each January "often spur a spike in denials," whether from coding mistakes or from payers' failure to update their claims systems. The AMA's CPT 2027 code set adds 299 new codes, with 80 deletions and 74 revisions, and takes effect January 1, 2027. CMS also posts changes to its NCCI procedure-to-procedure edits every quarter. Compare each month with the same month a year earlier, and check the weeks after each of those updates.

Appeal overturn rates and the denials that stay denied

Most hospital denials end up paid, but slowly. In Premier's survey of 280 hospitals covering 2023 claims, payers overturned 70% of denials and paid the claims, but only after multiple rounds of review. Respondents reported an average of three rounds, each taking 45 to 60 days. Fighting a denial cost them $57.23 per claim in 2023, up from $43.84 in 2022. Those are hospital figures, so read them as a direction rather than a benchmark for your practice.

Overturn rates slipped in Kodiak's 2025 hospital data. Szaflarski said payer behavior led to "a slight decline in the rate of overturning initial denials" from 2024 to 2025, in the March 2026 release. Patients seldom appeal a denied claim themselves. In HealthCare.gov plans, KFF found that consumers appealed fewer than 1% of denied in-network claims in 2024, and insurers upheld 66% of those denials on appeal.

Track your own overturn rate next to your denial rate. HFMA's task force lists the percentage of initial denials overturned among its measures, with the time from denial to appeal and from denial to resolution. Every appeal runs against a payer deadline, and a missed deadline turns an initial denial into a final one. Our post on denial management fundamentals covers how appeals get built and paid.

Altair runs the whole revenue cycle, from eligibility checks to payment posting, and keeps what it learns about each payer in the system rather than in a person. Altair's AI and in-house billers work every denial. The practice owner sees every claim and every dollar as it moves, not in a monthly report. The practice hires no one and manages no one, and it keeps the EMR and clearinghouse it already uses. Every claim is checked against the payer's current policy before it goes out, so it holds up if the payer reviews it later, and the money stays with the practice. See how Altair runs denial management.

Your initial denial rate shows how claims fare on the first pass. The number that decides your revenue is what you keep after every denial has been worked.

Common questions