2025 state of claims: Why are denials increasing?

Health care claims denials remain a growing challenge for providers, draining administrative resources, delaying payments and impacting patient experiences. Denials often occur due to incomplete documentation, coding errors, eligibility issues or lack of medical necessity, and while many are ultimately reversed, the rework process is time-consuming and expensive. Industry data indicates that denial rates have steadily climbed in recent years, driven in part by increasingly complex payer requirements and more aggressive claims review processes. For physician practices and health systems operating on thin margins, recovering even a portion of denied dollars requires significant staffing and revenue cycle expertise, and persistent denials can threaten financial sustainability. In addition, denials can create frustration for patients facing unexpected bills or delays in care, further straining trust between providers and payers.

Artificial intelligence is emerging as a promising tool to reduce denials by targeting problems earlier in the claims process. AI-driven platforms can review clinical documentation in real time to flag missing elements, suggest proper coding and ensure prior authorization requirements are met before a claim is submitted. Predictive analytics models, trained on historical claims data, can identify which claims are most likely to be denied and why, allowing staff to intervene proactively. Some tools automate appeal letters with payer-specific language and supporting documentation, helping improve overturn rates. Generative AI is also increasingly used to interpret complex payer rules, summarize evolving medical policies and provide guidance at the point of care to reduce clinical denials. While many physicians remain cautious about AI, surveys show growing recognition that well-designed tools have the potential to alleviate administrative burden and allow clinicians to spend more time with patients. Rather than replacing human decision-making, these technologies are being deployed as decision-support systems aimed at improving accuracy and efficiency. As adoption expands, experts say the most successful AI solutions will be those that integrate seamlessly into clinical and billing workflows while providing transparency into how recommendations are made, helping rebuild trust in the claims process for providers and patients alike. Medical Economics spoke with Experian Health's Clarissa Riggins to learn more about the latest data on denials and AI.