Claim denial rate
The percentage of submitted claims that are rejected or denied by payers on first submission. A denied claim means the payer refused to pay, either because of missing information, coding errors, eligibility issues, or authorization failures.
Why this matters for your clinic
Every denied claim costs you twice: once in lost revenue and once in the staff time required to rework and resubmit it. Every reworked claim costs staff time on top of the delayed payment, and the cost climbs with how complex the appeal is. Multiply that by hundreds of denials per month and it adds up fast.
The real problem with high denial rates is not the denials themselves. It is that most clinics do not track them by reason code. Without that data, you cannot fix the root cause. You just keep submitting bad claims and reworking them forever. Benchmarks by source, and what a healthy rate looks like, are on the denial rate answer.
What good looks like
HFMA calls an initial denial rate under 5% optimal and puts the industry average between 5% and 10%. MGMA's research separately found that 48% of medical group leaders name denials and appeals as their practice's single largest source of revenue leakage. The 2024 CAQH Index reports 12% of claims were denied in 2023, citing Optum for the figure. Track by reason code, not just the total percentage.
From Sorso
Eligibility-related denials are usually the easiest to fix, because the problem sits at the front desk, not in a coder's queue, and in mental health practices, where the same patient is seen week after week, one bad eligibility record can repeat for months. Rule that out before you assume the cause is clinical documentation.
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Founder of Sorso and a CFA charterholder. Before Sorso, Stan spent 19 years in corporate finance at institutions including UniCredit and Société Générale — managing a $450M loan portfolio and making senior partner at a major mezzanine lender by 29 — then built a fractional CFO firm exclusively for outpatient healthcare clinics.
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