Many health insurance claim denials are later overturned — but that reversal reflects persistent failures in claims review, not stronger oversight. New survey data from national hospital alliance Premier shows those breakdowns begin at the very start of the adjudication process, a concern the organization raised during January 22 congressional hearings.

“Structural problems in claims adjudication begin at the front door,” says Mason Ingram, senior director of government affairs at Premier. “Initial denials often trigger a costly, time-consuming cycle because the first review is rigid and prone to error.”

According to Ingram, many early denials have little to do with medical necessity. Instead, they stem from administrative missteps; coding mismatches, incomplete documentation, or inconsistent submission requirements that vary by plan. Continued reliance on outdated rules engines and manual review processes further compounds those issues.
The result, Ingram says, is a system that routinely penalizes providers and patients for paperwork errors while delaying legitimate care decisions. To address those failures, Premier is advocating for bipartisan reforms, including stronger oversight by the Centers for Medicare & Medicaid Services (CMS), greater transparency, broader technology adoption, and passage of the Prompt and Fair Pay Act to standardize timely, accurate claims processing for Medicare Advantage.

The patient impact
Even when denials are overturned, the delay itself can influence patient decisions. Reports show that nearly one-third of adults have delayed or skipped care because of cost concerns.

“Claims processing issues have real consequences for patients,” Ingram says. “The threat of having a claim not covered creates significant anxiety for patients and their families.”

Higher-cost claims, those exceeding $14,000, are more likely to be denied, Ingram says, compounding uncertainty. As appeals move through the system, patients are often forced to decide whether to proceed with recommended treatment or wait, sometimes with clinical consequences.

The hidden cost to hospitals
Providers absorb much of the operational fallout, Ingram points out. Hospitals devote substantial resources to contesting denials and tracking delayed payments, resources that could otherwise be directed toward patient care.

Premier estimates hospitals spend more than $57 per claim, on average, pursuing denied or delayed reimbursements, with most of that cost driven by labor.

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