Why Are Medical Claims Denied, and How Do You Stop Denials in 2027?

Most medical claims are denied for a short list of preventable reasons: missing or inaccurate patient data, missing prior authorization, eligibility problems, coding and modifier errors, and late filing. In Experian Health’s 2025 survey, providers named missing or inaccurate data (50%), authorizations (35%) and registration errors (32%) as their top causes. MGMA puts the typical first submission denial rate for medical practices at 7% to 8%, and well run practices get under 5%.

The way to stop denials is to find the few causes that repeat in your own claims and fix them before the claim goes out. This guide covers the national numbers, the most common denial reasons and their codes, what changes on January 1, 2027, and a prevention plan a small practice can run.

How common are claim denials?

The takeback figure matters. Payers are denying slightly fewer claims up front and recovering more money after payment. A clean remittance is no longer the end of the story. Our 2026 denial benchmarks white paper has the full data and sources.

What are the most common reasons claims are denied?

Every denial carries a Claim Adjustment Reason Code (CARC) on the remittance. These are the codes behind the most common preventable denials.

A single blended denial rate hides these patterns. Split your denials by payer, by CPT family and by CARC, and the top three causes usually account for most of the money.

Which denials grow in 2027?

Several changes on January 1, 2027 will create new denials for practices that are not ready.

1. CPT 2027 brings 453 code changes, including six new ABA codes, the deletion of 0362T and 0373T, the deletion of speech therapy code 92507 and the end of global maternity billing. Claims with deleted codes will deny. See CPT 2027 changes for small practices.
2. Medicare Advantage, Medicaid and marketplace plans must run electronic prior authorization APIs, and every denial must state a specific reason. See prior authorization changes in 2027.
3. Medicare Advantage plan exits move patients to new plans. KFF counts 193 counties with no Medicare Advantage drug plan for general enrollment in 2027, up from 123. Providers who are not enrolled with the new plan will see out of network denials.
4. Payer downcoding of level 4 and 5 E/M visits continues, with Blue Cross Blue Shield plans and Cigna among the payers reviewing E/M levels. See BCBS downcoding by state.
5. CMS has proposed paying an E/M visit at 50% when it is billed on the same day as a minor procedure with a global period. See the 2027 modifier 25 payment cut.

How do you reduce claim denials in a small practice?

Run these steps in order. Each one closes a cause from the table above.

1. Measure your denial rate the way benchmarks do: claims denied on first adjudication divided by claims adjudicated in the same period, counted by claim and by dollars. Leave clearinghouse rejections out and track them separately.
2. Split denials by payer, CPT family and CARC for the last 90 days, and find your top three causes.
3. Verify eligibility and benefits before every visit, including returning patients.
4. Build an authorization list by payer and service, and check it at scheduling.
5. Review every claim before submission against the payer’s rules for your specialty, including modifiers and NCCI edits.
6. Track credentialing and CAQH attestation dates for every provider.
7. Work every denial within days. Payers set appeal deadlines, and denials that wait become write offs.
8. Fix the cause behind each denial so it does not come back next month.

Working denials one at a time costs money. MGMA cites Change Healthcare data putting the average cost to rework a denied claim at $25.20. Prevention costs less than rework.

Should you appeal denied claims?

Yes, when the denial is wrong and the documentation supports the claim. Appeals succeed often. KFF found that 80.7% of Medicare Advantage prior authorization denials that were appealed in 2024 were overturned, yet only 11.5% were appealed. An appeal should answer the payer’s specific denial reason with the documentation that disproves it. Since January 1, 2026, plans covered by the CMS Interoperability and Prior Authorization Final Rule must give a specific reason for every authorization denial, which makes that answer easier to build.

How WeBill Health stops denials

WeBill Health works denials at the root cause. WeBill Health maintains internal payer rule libraries organized by specialty and by carrier, built and updated by experts who work claims in your specialty every day. Every claim receives human pre submission review against them before it goes out, across more than 500 payer rulesets. When a payer changes a policy, an expert updates the library and applies it to your claims.

That review stands behind a 98% clean claim rate and a 48 hour submission guarantee. Clinical Virtual Assistants handle eligibility and prior authorization before the visit, so the most common causes of denials are closed at the front desk. Denials that do arrive are traced to their source and fixed so they do not repeat. See how this works in Denial Defense 2.0.

Want to know your top three denial causes? Request your Revenue Defense Audit and we will break down your denials by payer, code and reason. For a quick read first, get your Revenue Defense Score in 60 seconds.

Frequently asked questions

What is the most common reason medical claims are denied?

Missing or inaccurate patient and registration data is the most common cause. In Experian Health’s 2025 survey, 50% of providers named it, ahead of authorizations at 35%.

What is a good denial rate for a medical practice?

MGMA puts the typical first submission denial rate for medical practices at 7% to 8%. Well run practices get under 5%.

What is the difference between a rejection and a denial?

A rejection is returned before the payer processes the claim, usually by the clearinghouse for a format or data error, and can be corrected and resent. A denial is a payer decision after processing and needs a corrected claim or an appeal.

What does CARC 197 mean?

CARC 197 means the claim was denied because a required precertification, authorization or notification was absent.

How long do I have to appeal a denied claim?

Each payer sets its own appeal deadline, and Medicare’s first level redetermination must be filed within 120 days of receiving the initial determination. Check your payer contracts for commercial deadlines.

How do I stop the same denial from happening again?

Find the cause behind the denial, change the step that created it, such as eligibility checks, authorization tracking or coding review, and check the next month’s denials to confirm the fix worked.

Sources

1. Experian Health, State of Claims 2025
2. MGMA Stat, days in A/R and payer pressure in 2026
3. Kodiak Solutions 2024 denial data via Business Wire
4. TechTarget on Kodiak Solutions takeback data, September 2026
5. X12 Claim Adjustment Reason Codes
6. KFF, Medicare Advantage plan availability for 2027
7. CMS, Medicare appeals: redetermination
8. CMS Interoperability and Prior Authorization Final Rule fact sheet