Insurance Denial Statistics 2025: What the Data Says About Your Claim

Understanding the scale of insurance claim denials in the United States — and what the data shows about outcomes — helps patients make informed decisions about their own situations. The numbers tell a story that the insurance industry rarely publicizes: denials are common, many are improper, and appealing works.

How Many Claims Are Denied?

The scale of insurance denials in the US is substantial:

ACA marketplace plans deny approximately 15–20% of in-network claims on average, according to KFF analysis of CMS data. But individual insurer Denial Rates by Insurer (2026)" class="auto-link">denial rates vary enormously — from under 5% to over 40% depending on the insurer, the state, and the claim type.

In absolute terms, marketplace plans alone deny tens of millions of claims annually. When employer-sponsored insurance (the largest coverage category, covering roughly 160 million Americans) is included, the total number of denied claims runs into the hundreds of millions per year.

Medicare Advantage denial rates have attracted particular attention. A 2022 HHS OIG report found that Medicare Advantage plans denied 13% of Prior Authorization Denied: How to Appeal" class="auto-link">prior authorization requests that met Medicare coverage criteria — meaning they should have been approved under Medicare's own rules. The same report estimated this affected approximately 1.5 million Medicare Advantage beneficiaries annually.

The Most Common Denial Reasons

CMS data and state insurance department reports consistently identify the same top denial categories:

1. Prior authorization not obtained or denied: The most common reason, affecting millions of claims annually. Many prior authorization denials are overturned when providers submit additional clinical information.

2. Medical necessity: The insurer's utilization management criteria determined the service wasn't medically necessary. Success rates on appeal are highest for this category when physician documentation is submitted.

3. Network/out-of-network: Services rendered by out-of-network providers, or in states with inadequate network standards, generate large numbers of denials.

4. Experimental or investigational: Used to deny coverage for treatments that may have FDA approval and clinical guideline support but don't appear on the insurer's approved list.

5. Benefit not covered or benefit limits exceeded: Plan design exclusions and annual/lifetime limits (within the scope still allowed by law).

Appeal Rates: The Participation Gap

One of the most striking statistics in the denial data is how rarely patients appeal. KFF analysis of ACA marketplace plans found that only about 0.2% of denied claims result in a formal internal appeal. For Medicare Advantage, CMS data shows that fewer than 2% of denied prior authorization requests are appealed.

Given that appeal success rates are meaningful — often 30–50% or higher for external appeals — the implication is that billions of dollars in legitimate claims go unreversed each year simply because patients don't know they can fight back or believe it won't be worth it.

What Happens When Patients Do Appeal

The data on appeal outcomes is consistently more favorable than patients expect:

Internal appeals: Reverse insurer decisions in roughly 25–40% of cases where patients submit complete documentation. Without documentation, internal appeal success rates are much lower.

External appeals: State-level data from New York, California, and other states that publish External Independent Review: Complete Guide" class="auto-link">external review outcomes consistently shows overturn rates of 30–50%. California's Independent Medical Review program, one of the most active in the nation, overturns insurer decisions in approximately 40% of reviewed cases.

Medicare ALJ hearings: Federal CMS data shows that Administrative Law Judges rule in the patient's favor in a majority of contested Medicare Advantage cases, with some claim categories showing overturn rates above 80%.

The Role of AI and Algorithms

A significant and underreported driver of denial rates is the increasing use of algorithmic review tools. A 2023 Senate investigation found that UnitedHealthcare's AI-driven review tool denied claims at rates significantly higher than human reviewers in the same clinical situations. A separate investigation found that an algorithm used by multiple major insurers was set to deny 90% of certain claim types with minimal human review.

These findings suggest that a portion of denials across the industry are not the result of individualized clinical review but of algorithmic outputs that may not account for patient-specific circumstances. Appeals that provide individualized clinical documentation directly challenge the algorithmic denial by introducing evidence the algorithm never considered.

Trends: Are Denials Getting Better or Worse?

The data suggests that claim denial rates have increased modestly over the past decade, driven by:

• Expanded prior authorization requirements across all major insurers
• Increased use of algorithmic review tools
• Narrower network designs that create more out-of-network situations
• More restrictive formularies that generate more specialty drug denials

Congressional scrutiny and regulatory action have accelerated in recent years, and some states have enacted prior authorization reform legislation. But the fundamental incentive structure — insurers benefit financially from denials that are never appealed — means patients remain their own best advocates.

Fight Back With ClaimBack

The data is clear: denials are common, many are wrong, and appeals succeed. ClaimBack helps you become one of the patients who fights back — and wins. Start your appeal at https://claimback.app/appeal.

Related Reading

• Common Reasons Insurance Claims Are Denied
• What Are Your Odds of Winning an Insurance Appeal?
• Internal vs. External Insurance Appeals