Which Denied Claims Are Worth Appealing

Where denied claims actually go

A denied claim does not usually end in an appeal, win or lose. Most of the time it ends in silence. Industry research cited by HFMA on denial management puts the share of denied claims that are never resubmitted or appealed at as high as 65 percent. The claim sits in a work queue, gets written off, or simply falls out of the billing system's view once it passes a certain age.

This is not because appeals fail when practices try them. Premier Inc.'s research on denials found that roughly 70 percent of the appeals providers actually file succeed. Appealing works, most of the time it is tried. The gap between a 70 percent win rate and a 65 percent abandonment rate is not a story about denial letters winning on the merits. It is a story about staff time.

The real constraint is labor, not odds

Working a denial takes time before a single dollar comes back: pulling the claim and the medical record, reading the payer's denial reason, drafting an appeal letter, tracking the resubmission, and following up when the payer sits on it. CAQH-adjacent industry research, echoed by MGMA, puts the cost of reworking a single denied claim at $25 to $118, depending on how complex the claim is. A simple coding correction sits at the low end. A denial that needs a clinical appeal letter and a records pull sits at the high end.

That range matters more than it looks. A practice that appeals every denial on principle is spending $25 to $118 in staff time on claims worth far less than that in expected recovery. A practice that appeals nothing is walking away from a 70 percent win rate on money it already earned. Neither position holds up once the categories are separated out.

The problem is getting harder to ignore by default. Denials tied to prior authorization are up roughly 31 percent across commercial and Medicare Advantage plans. That is more claims landing in the same queue, worked by the same staff, with no matching increase in hours. A practice that does not sort denials by category before deciding what to appeal is choosing, without meaning to, either to burn out its billing staff or to leave a growing pile of recoverable money on the table.

A filter any practice can build with its own numbers

The decision does not need a vendor or a model. It needs a spreadsheet, sorted by denial reason code or payer, with a few columns per category:

• Number of denials in the category over a fixed period, such as the last two quarters
• Average dollar value per denied claim in that category
• An estimated rework cost, using $25 for straightforward corrections and closer to $118 for anything needing a clinical letter or a records pull
• A win rate for that category, pulled from the practice's own appeal history if it has tracked one, or the 70 percent industry figure as a starting point where it has not

From those four numbers, expected recovery per claim is the win rate multiplied by the average dollar value. A category clears the bar for routine appeal when that expected recovery comfortably exceeds the rework cost. A category fails the bar when the expected recovery sits below or close to the cost of working it, in which case the staff hours are better spent elsewhere, with an occasional check for high-dollar outliers inside that category.

A worked example

Take a four-provider orthopedic practice sorting its last two quarters of denials by reason code. One category, denials for missing prior authorization, averages $310 per claim and needs a records pull and a payer call, so the rework cost runs close to $95. At a 70 percent win rate, expected recovery is $217 per claim, well above the $95 cost. That category is worth appealing as standard practice.

A second category, duplicate claim denials, averages $40 per claim and takes the same $95 to work because the payer's portal requires a full resubmission packet regardless of the reason. Even at a 90 percent win rate, expected recovery is $36, below the cost of working it. Appealing every duplicate denial in this category loses money on average, even though most of the appeals would succeed. The fix here is not to give up on the money; it is to find a cheaper path, such as a bulk resubmission process, before deciding to appeal claim by claim.

Keeping the filter current

Denial categories do not stay still. A reason code that was a minor nuisance last year can become a major share of volume this year, particularly with prior authorization denials rising as fast as they are. A category worth ignoring at low volume can turn into real money once a payer tightens its rules.

Two things keep the filter useful. First, revisit the categories and dollar amounts on a set schedule, such as quarterly, rather than once and forgetting it. Second, once a practice has tracked its own win rate by category for a few quarters, that number replaces the 70 percent industry benchmark in the calculation. A practice's actual results for a given payer and reason code are a better input than an industry-wide average, and they often diverge from it in both directions.

None of this argues for appealing more claims or fewer as a blanket rule. It argues for deciding by category, with real cost and recovery numbers in front of the person making the call, instead of defaulting to either "appeal everything" or "appeal nothing," the two positions that both the 70 percent win rate and the 65 percent abandonment rate suggest most practices are currently choosing between.