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Insurers deny less just to claw back more later: analysis

An analysis shows that claim denial rates are falling slightly, but providers aren't necessarily seeing an improvement in revenue as payers seek clawbacks.

Jacqueline LaPointe
By
Published: 23 Sep 2026

Claim denial rates are down across payers, but healthcare providers are not seeing an overall increase in revenue, according to a new analysis from Kodiak Solutions.

The overall initial claim denial rate for providers fell to 10.63% in the first half of 2026, compared to 12.00% in the first six months of 2025, showed Kodiak's proprietary revenue cycle data from 2,400 hospitals and 375,000 physicians.

Final denial write-offs also declined during that time, falling to 3.07% of net revenue from 3.31% over the same period. These denials occur when providers have exhausted all their appeal options.

Providers have focused on reducing claim denials amid immense financial pressures stemming from payer behavior and the macroeconomic environment. The analysis indicates that they've been successful, but revenue isn't quite following.

Near-term cash performance actually deteriorated slightly at the start of the year, the analysis found. The difference was most noticeable with 60-day cash performance, which declined 96.74% from 100.28%.

This weaker 60-day performance, coupled with stagnant one-month performance, suggests that revenue didn't convert to cash faster, researchers explained. They pointed to post-payment payer activity.

Payers can claw back reimbursements even after providers collect the payment. The analysis revealed they are doing this more often, with takebacks increasing to 1.57% at the start of the year from 1.38% compared to the same period the previous year.

This means that providers can improve their denials rates and still lose the edge in  cash performance, researchers stated.

How denial rates compare

These trends were especially salient in Medicare, according to the analysis.

The initial denial rate for Medicare Advantage inpatient claims was still twice as high at 9.15% as the Medicare metric (4.21%) in the first half of this year, the analysis found. Still, this marks improvement from the first half of last year, when initial denial rates were 10.75% for MA and 5.58% for Medicare.

MA, in particular, hit providers with prior authorizations and requests for information. Nearly 2.5% of MA inpatient initial denials were related to prior authorization and precertification requests. About 2.5% were also requests for information. That compares to 1.25% for medical necessity and 1.11% for coordination of benefits during that time.

Final denial rates for MA were also significantly higher compared to Traditional Medicare, at 3.76% versus 2.22% from January to June 2026.

Meanwhile, the initial denial rate for claims sent to private payers was 19.98% in the first half of 2026, compared with 21.44% in the same period last year. Medical necessity, prior authorization and non-covered services were the top reasons for initial denials of inpatient claims.

Jacqueline LaPointe is an Executive Editor at Xtelligent Healthcare Media, covering revenue cycle management, healthcare payers, health policy and health IT since 2016.

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