Metric

RCM Benchmarks & Strategy

Denial rate

Denial rate

Denial rate

Also known as: Initial denial rate, remittance denial rate, claim denial rate

Definition

Denial rate is the share of claims, or of claim dollars, that payers deny. The initial denial rate measures denials on first adjudication; the final denial rate measures what is written off after appeals. HFMA’s Remittance Denial Rate divides claims denied by claims remitted, while dollar-based versions divide denied dollars by billed dollars.

Denial rate is the share of claims, or of claim dollars, that payers deny. The initial denial rate measures denials on first adjudication; the final denial rate measures what is written off after appeals. HFMA’s Remittance Denial Rate divides claims denied by claims remitted, while dollar-based versions divide denied dollars by billed dollars.

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Why it matters in orthopedics

Denials delay cash, add rework and, when no one appeals them, become lost revenue. Orthopedic practices carry high-dollar exposure: one denied joint replacement or arthroscopy claim can outweigh many denied office visits. Global surgical package rules, modifier use and prior authorization add risk. In a January 6, 2026 MGMA Stat poll (288 responses), 48% of practice leaders named denials and appeals as their biggest revenue cycle leak, and the causes they described included bundling and global-package edits.

How to calculate it

Measure

Formula

Defined by

Remittance denial rate (count)

Claims denied ÷ claims remitted

HFMA MAP Key AR-5

Denied on first submission (count)

Claims denied on first submission ÷ claims submitted

MGMA DataDive survey

Denial rate (dollars)

Dollars denied ÷ dollars submitted in the same period

AAFP

Final denial (write-off) rate

Net denial write-offs ÷ average monthly net patient service revenue

HFMA MAP Key AR-6

HFMA’s AR-5 counts at the claim level, includes both initial and appeal denials, and excludes patient-responsibility denials, duplicate claims, RAC recoupments and shadow claims. AR-6 uses a three-month average of net revenue and excludes non-covered services and patient-responsibility denials.

Front-end rejections never reach adjudication, so they do not appear on remittances. Track them in your clean claim rate analysis instead. For example, 880 denials out of 11,000 remitted claims is an 8.0% count-based rate.

Orthopedic benchmark

We found no public orthopedic-specific denial benchmark. Published reference points:

  • MGMA’s 2023 DataDive Practice Operations data showed a single-specialty aggregate of 8% of claims denied on first submission, the same rate as in 2019.

  • Kodiak Solutions reported that payers initially denied 11.81% of claims in 2024, up from 11.53% in 2023, using data from more than 2,100 hospitals and 300,000 physicians on its platform.

  • Kodiak later reported that the median final denial rate across more than 2,300 hospitals rose from 2.5% in 2024 to 2.7% in 2025.

  • The AAFP calls 5% to 10% the industry average and says below 5% is more desirable.

Our orthopedic RCM benchmarks guide explains why these sources differ.

What moves it

  • Eligibility and registration errors.

  • Missing prior authorization or referral.

  • Thin medical-necessity documentation, for example for MRI, arthroscopy or joint replacement.

  • Coding and modifier issues, including global-period, NCCI and same-day E/M problems.

  • Timely-filing and credentialing gaps.

  • Payer policy changes that your edits have not caught up with.

How to improve it

Group denials by CARC and RARC code, then by root cause and owner: front desk, coding, provider documentation or payer. Fix the top categories upstream, appeal what is winnable, and track how often appeals succeed. Report count and dollar rates side by side, and watch final write-offs through your net collection rate.

Frequently asked questions

What is the difference between an initial denial and a final denial?

An initial denial is the payer’s first adjudication refusing all or part of a claim. Many initial denials are corrected and resubmitted or overturned on appeal. A final denial is what remains unpaid after you exhaust appeals or decide not to pursue the claim, and it is written off. HFMA measures that loss as denial write-offs as a percentage of net patient service revenue.

Why do Kodiak and MGMA report different denial rates?

They measure different populations in different ways. Kodiak’s figures come from a platform used by hospitals as well as physicians, while MGMA’s come from medical practices that answer its survey. Definitions also differ, including whether appeal denials and partial denials count and whether the base is claims or dollars. Compare your rate only with a benchmark that uses the same formula and period.

Does a partially paid claim count as a denial?

Under HFMA’s Remittance Denial Rate, yes: zero-payment and partial-payment claims that carry a denial code on the remittance count as denials, while denials for patient responsibility do not. Whatever rule you adopt, apply it the same way every month and write it into your KPI definitions, because including or excluding partial denials can change the rate noticeably.

Sources

  1. HFMA MAP Keys — Healthcare Financial Management Association, accessed October 2026

  2. Indicators of Revenue Cycle Excellence, 2023 Edition (MAP Keys definitions) — Healthcare Financial Management Association, October 2023

  3. Practice Finances and Revenue Cycle Management — American Academy of Family Physicians, accessed October 2026

  4. Financials and Operations, P&L Definitions — Medical Group Management Association, 2025

  5. Strategic improvements in your RCM to reduce your practice’s claim denials — MGMA Stat, March 6, 2024

  6. Detecting and fixing leaks across the revenue cycle — MGMA Stat, January 7, 2026

  7. Rate of initial denials of medical insurance claims continued to rise in 2024, Kodiak Solutions’ proprietary data show — Kodiak Solutions via Business Wire, May 21, 2025

  8. Insurers, patients pay less of their bills — Healthcare Financial Management Association, June 5, 2025

  9. Healthcare Provider Organizations Saw Net Revenue Losses From Final Denials and Bad Debt Grow by 25% in 2025, According to Kodiak Solutions’ Proprietary Data — Kodiak Solutions via Business Wire, March 31, 2026

This entry is educational and is not legal, coding-compliance or billing advice. Payer rules change often, so confirm requirements with the payer before you bill. CPT® is a registered trademark of the American Medical Association; code descriptions here are Rette’s plain-language summaries.

See how Rette catches orthopedic denials before claims go out

See how Rette catches orthopedic denials before claims go out

See how Rette catches orthopedic denials before claims go out

Rette reads the operative note in the EHR you already use, suggests codes and checks claims against payer and NCCI rules before submission.