Hospitals and physician groups had 11.65% of their claims denied on first submission in 2025 through November, up from 11.41% in 2024, according to Kodiak Solutions data reported by HFMA. Kodiak’s March 2026 report put the combined loss from final denials and unpaid patient bills above $48 billion.
Much of that loss begins with routine errors. In Experian Health’s 2025 State of Claims survey of 250 billing and finance decision-makers, published September 22, 2025, 41% said at least one claim in ten is denied. Half named missing or inaccurate claim data as the top trigger.
For a practice owner, a biller or a coding student, that is useful news. An error made inside the office can be fixed inside the office. The 12 steps below follow a claim from scheduling to final payment, which is the most practical way to improve medical practice revenue cycle performance.
Table of Contents
Front-end steps that improve medical practice revenue cycle performance
1. Verify eligibility electronically before every visit
Coverage changes more often than patients report it. Run an electronic eligibility check (the X12 270/271 transaction) when the appointment is booked and again one to two days before the visit. Confirm the active plan, the copay, the remaining deductible and the provider’s network status.
The 2025 CAQH Index estimates that electronic transactions already spare the US health system $258 billion a year, with roughly $21 billion more available from converting the manual work that remains. Phone calls and payer portal lookups are that manual work.
2. Run prior authorization against the federal clock
The AMA’s 2025 prior authorization survey of 1,000 practicing physicians, fielded in December 2025, found that practices complete about 40 requests per physician each week. The work takes about 13 hours of physician and staff time, and 40% of physicians employ staff who do nothing else.
Since January 1, 2026, the CMS rule known as CMS-0057-F has required Medicare Advantage, Medicaid and CHIP plans to decide urgent requests within 72 hours and standard requests within seven calendar days. They must also give a specific reason for each denial. Log every submission date and escalate on day eight.
Two limits apply. The rule excludes drugs, and it does not bind commercial employer plans. The electronic Prior Authorization API that payers must offer is due on January 1, 2027.
3. Fix registration data where it is entered
Incomplete or incorrect registration data ranked third among denial causes in the Experian survey, cited by 32% of respondents (30% in 2024). About a quarter said at least 10% of their denials trace back to intake.
One transposed digit in a member ID is enough. Scan both sides of the insurance card at every visit, and enter the name exactly as the card shows it, even if the chart uses a nickname. Ask about secondary coverage and accident-related injuries, so coordination of benefits is settled before the claim leaves.
4. Collect patient balances at the time of service
Kodiak’s first-quarter 2026 benchmarking data shows point-of-service collections rising to 24.82% of patient payments, from 22.74% a year earlier. Even so, providers collected only 30.07% of the patient portion owed after insurance, slightly less than the 30.59% of the prior year.
Those figures come mainly from hospitals, but the pattern holds in a clinic. A balance is easiest to collect while the patient is at the desk. Give a written estimate, take the copay at check-in and offer a payment plan before the service.
Uninsured and self-pay patients have had a legal right to a good faith estimate under the No Surprises Act since January 1, 2022. They may dispute a bill that exceeds the estimate by $400 or more.
Mid-cycle steps: documentation, coding and clean claims
5. Document so the record proves medical necessity
CMS put the fiscal year 2025 Medicare fee-for-service improper payment rate at 6.55%, or $28.83 billion. For Part B providers the rate was 8.44%, or $9.62 billion, according to the agency’s Comprehensive Error Rate Testing data. CMS attributes most of the total to insufficient documentation, and says that category rarely indicates fraud.
A correct code still fails review if the note lacks a signed order, a treatment plan or a stated reason for the service. Commercial payers apply the same test. Kodiak’s 2025 data shows clinical initial denials rising to 2.6% from 2.4%, while providers overturned only 42.1% of them.
6. Load code changes before their effective dates
The fiscal year 2027 ICD-10-CM set took effect on October 1, 2026, with 190 new codes, 30 deletions and four revisions. Students will also see the figure 238 in an AAPC analysis. That count includes non-billable category headings.
The changes are specific. Dilated cardiomyopathy code I42.0 is no longer billable on its own, and plantar fasciitis now has its own codes by side (M67.A01 right foot, M67.A02 left foot). A cardiology or podiatry practice that kept last year’s favorites list has been collecting rejections since October 1.
CPT codes change every January 1. Plan for two update cycles a year.
7. Reconcile charges every day
A missed charge is invisible. It produces no denial and appears on no report.
Compare each day’s schedule and procedure log with the charges entered, and investigate any visit without a claim within 48 hours. Filing limits make this urgent. Medicare accepts a claim only within 12 months of the date of service, and many commercial contracts allow far less time. Keep every payer’s limit on a single reference sheet.
8. Scrub claims and track first-pass results by payer
A claim scrubber tests each claim against payer rules, modifier logic and Medicare’s National Correct Coding Initiative edits before submission. CMS revises those edits quarterly, so the scrubber’s rule library needs the same schedule.
Payer mix changes what a normal result looks like. A TriZetto Provider Solutions analysis of more than 630 million professional claims found an average denial rate of 14.6%, with Medicaid at 20% to 23%. A practice with heavy Medicaid volume should staff for more rework than a Medicare-heavy one.
Back-end steps: denials, receivables and payment accuracy
9. Sort denials by cause, then appeal
Kodiak’s median final denial rate for 2025 was 2.7%, against an initial rate near 11.6%. The gap between those two numbers is revenue that was recovered by someone who followed up.
Group denials by payer and reason code each month. Send each group back to the step that produced it: eligibility denials to the front desk, authorization denials to scheduling, coding denials to the coder. Track appeal deadlines by payer, because a late appeal is a write-off.
10. Work receivables on a fixed schedule
MGMA defines net days in A/R as total accounts receivable divided by average daily net patient revenue (annual net patient revenue divided by 365). Calculate it for each payer separately. A blended figure can hide one slow payer behind three fast ones.
Sort unpaid claims by age and dollar value, and check the status of everything older than 30 days. Waiting until day 90 leaves little time before many appeal and filing limits expire.
11. Check every payment against the contract
A paid claim can still be underpaid. Load each payer’s fee schedule into the practice management system and flag any remittance line below the contracted amount.
Small gaps add up. As an illustration, a $6 shortfall on a code billed 2,000 times a year is $12,000, and no denial notice will ever announce it. Look also for evaluation and management visits paid at a lower level than billed.
12. Review a short list of metrics every month
| Metric | How to calculate it | What it shows |
| Initial denial rate | Claims denied on first submission ÷ claims submitted | Accuracy of intake, authorization and coding |
| Net collection rate | Payments ÷ (charges − contractual adjustments) | Share of collectible revenue actually collected |
| Net days in A/R | Total A/R ÷ (net patient revenue ÷ 365) | Speed of payment |
| A/R over 90 days | A/R older than 90 days ÷ total A/R | Follow-up discipline |
| Point-of-service collections | Collected at the visit ÷ total patient payments | Front-desk collection performance |
Compare each result with the practice’s own previous 12 months first. External benchmarks vary by specialty and payer mix, so a surgical group and a pediatric office should not expect the same numbers.
Where to start
Three figures set the priorities. Half of the organizations Experian Health surveyed in 2025 blame claim data errors for their denials. About 11.6% of claims are denied at first pass, yet the median final denial rate is 2.7% (Kodiak Solutions, 2025), so most denied revenue is recoverable by a team that follows up. Medicare alone made $28.83 billion in improper payments in fiscal year 2025, most of it tied to documentation.
A practice that wants to improve medical practice revenue cycle performance should therefore begin with steps 1, 3 and 5. Clean intake data and complete notes prevent the denials that steps 9 through 11 exist to repair.
