There is no single national denial rate because the federal government does not track one centralized database across all insurance types. The most complete, publicly verifiable data comes from the Centers for Medicare & Medicaid Services (CMS) Transparency in Coverage filings for Affordable Care Act (ACA) Marketplace health plans, based on federal transparency filings for 2024 (the most recent year available).
- ACA Marketplace Plans (In-Network): 19%
- ACA Marketplace Plans (Out-of-Network): 37%
- ACA Marketplace Plans (Combined): 20%
Rates vary widely by insurer and state within this segment alone — from 3% to 36% in-network, depending on the insurer. Other market segments (commercial group plans, Medicare Advantage, Medicaid managed care) also see meaningful claim denials, but reliable, audited, publicly available national figures for those segments are harder to come by — see the next section for why.
Why There Is No Single “Official” National Number
The US health system relies on a fragmented reporting structure rather than one clearinghouse. Claim denial statistics come from separate sources, each covering a different slice of the market:
- CMS Transparency in Coverage Public Use Files: Covers non-group ACA qualified health plans (QHPs) sold on HealthCare.gov — it does not include employer-sponsored insurance, which covers the majority of insured Americans under 65.
- NAIC Market Conduct Annual Statement (MCAS): Tracks individual and group insurers across most states, though full plan- and insurer-level detail is available only to state regulators, not the public.
- Medicare Advantage Prior Authorization Data: Measures pre-service authorization denials, not post-service claim denials — a different metric than the ACA Marketplace figures above.
- State Insurance Commissioner Reports: Collected in unique formats by states like California, Connecticut, and Vermont, making cross-state comparisons difficult.
- Provider-Side Industry Surveys: Self-reported by health systems and hospitals, not independently audited.
Because of this fragmentation, the ACA Marketplace figures above are the most rigorous publicly available denial data in the US — but they represent only one slice of the market, not the country as a whole.
How Denial Rates Vary by State and Insurer
Within the ACA Marketplace, in-network denial rates for 2024 ranged from roughly 3% to 36% depending on the insurer. At the state level, Hawaii had the highest average denial rate (27%), while South Dakota had the lowest (7%).
Payer-level variation is just as significant. Among large national insurers, carrier-specific average in-network denial rates ranged from under 8% to upwards of 25%, depending on portfolio mix and regional network structure.
State averages can also mask wide internal variation. In Texas, for example, insurer-level denial rates ranged from 12% to 36% — meaning a Texan’s odds of a denial depend far more on which insurer they’re enrolled with than on the state average.
Root Causes: Medical Necessity vs. Administrative Paperwork
A common misconception is that most denials happen because a treatment or drug wasn’t medically necessary. In practice, clinical disputes make up a small fraction of total denials.
Of ACA Marketplace in-network denials in 2024:
|
Denial Category |
Share of Denials |
|
All Other / Unspecified Reasons |
36% |
|
Administrative Errors (duplicate claims, missing information, untimely filing) |
25% |
|
Excluded Service |
13% |
|
Lack of Prior Authorization or Referral |
9% |
|
Medical Necessity |
5% |
Roughly six in ten denials trace back to administrative friction, coding issues, or unspecified reasons rather than a clinical determination that care wasn’t needed.
For a structured way to catch these issues before a claim is even submitted, see Denial Prevention Before Claim Submission: A Practical Framework.
The Appeal Bottleneck: Success Rates vs. Action Rates
Denials happen often, but consumers rarely push back:
- Low appeal volume: Enrollees appealed fewer than 1% of the roughly 85 million in-network Marketplace claims denied in 2024. A related consumer survey found only about 1 in 10 insured adults who had an insurance problem in the past year filed a formal appeal.
- Internal appeal outcomes: When formal internal appeals are filed, insurers uphold their original decision about 66% of the time — meaning roughly a third of appeals succeed.
- External review: Only about 4% of upheld internal appeals are escalated to independent external review.
High “success rate” figures sometimes cited in consumer guides (as high as 80%) typically reflect outcomes among a self-selected group of people who chose to appeal — not the baseline odds for a typical denied claim.
Why Claim Denial Rates Are Rising
Several factors are pushing denial rates upward across payer types in 2025–2026:
- Expanded utilization review. Insurers both report tighter documentation and coding requirements, increasing the number of claims flagged for administrative denial.
- Automated claims screening. Commercial insurers have scaled up automated systems that screen claims before payment, and some providers report denial volumes rising as a result. For physician groups specifically, this shift cuts both ways — see How AI Improves Denial Management for Physician Groups for how the same technology payers use to flag claims is increasingly used on the provider side to prevent denials before they happen.
- Growth of Medicare Advantage. Medicare Advantage now covers more than half of Medicare beneficiaries and relies more heavily on prior authorization than traditional Medicare, which shapes overall utilization review trends across the industry.
- Rising administrative burden. As documentation and coding requirements tighten, the operational cost of preventing and managing denials is a growing focus for providers, independent of whether raw denial volume is rising or falling in a given segment.
Has the Denial Rate Changed Over Time?
The ACA Marketplace in-network denial rate has stayed relatively stable since CMS began requiring this reporting, hovering in the high teens (roughly 17–20%) most years since 2015. What has shifted is the distribution: the share of insurers with very high denial rates (30%+) fell from about 17% of reporting insurers in 2023 to about 3% in 2024 — suggesting some convergence toward the middle even as the overall average stayed flat.
Practical Steps for Patients Facing a Claim Denial
Because a large share of denials trace back to paperwork rather than a permanent coverage exclusion, a few steps make the biggest difference:
1. Read the denial reason code, not just the letter. Insurers must state a specific reason category — administrative, prior authorization, exclusion, or medical necessity — and the right fix depends on which one applies.
2. Check for a resubmission fix first. Since roughly a quarter of denials are administrative (wrong code, missing information, timing), many can be resolved by correcting and resubmitting rather than filing a formal appeal.
3. File the internal appeal anyway. A 66% uphold rate still means about a third of appeals succeed, and the process is free and legally time-bound.
4. Escalate to external review if the internal appeal is upheld. Independent external review exists because internal appeals are decided by the same insurer that issued the denial. Very few eligible patients use this option, so it’s worth pursuing if you’re upheld internally.
5. Check state-specific protections. States like California, Connecticut, and Vermont collect additional denial and appeal data and, in some cases, offer consumer protections beyond the federal minimum.
For a broader, systematic approach to lowering denial rates rather than fighting them one at a time, see How to Reduce Claim Denial Rates: A Step-by-Step Guide and Denial Management Services: How to Prevent Claim Denials Before They Happen.
Frequently Asked Questions
1. Is a 10–20% denial rate normal?
For ACA Marketplace plans specifically, yes — the in-network denial rate has held in the high teens (17–20%) every year since CMS began requiring this reporting in 2015. Out-of-network claims are denied at a substantially higher rate, around 37%.
2. Which types of insurers tend to have the lowest denial rates?
Among large ACA Marketplace insurers, average in-network denial rates for major carriers have ranged from under 8% to upwards of 25%, with meaningful differences tied to portfolio mix, network structure, and state footprint rather than insurer size alone.
3. Do most denied claims get overturned on appeal?
No. Fewer than 1% of denied Marketplace claims are formally appealed. Of those that are, insurers uphold their own denial roughly two-thirds of the time, meaning about a third of appeals succeed.
4. Does a high denial rate mean an insurer is denying necessary care?
Not necessarily. Most denials are coded as administrative or “other” reasons rather than medical necessity, meaning paperwork or coding issues — not clinical judgment — drive the majority of rejections.
5. Can technology reduce claim denials?
Tools that catch missing documentation, coding errors, eligibility issues, and authorization gaps before a claim is submitted can meaningfully reduce preventable, administrative-cause denials — the largest single category. They’re less effective against medical-necessity or coverage-exclusion denials, which require a different kind of intervention (stronger documentation of clinical rationale, not just cleaner data entry). For more on what this looks like in practice, see Healthcare Revenue Cycle Automation: What Actually Works.
Bottom Line
ACA Marketplace plans denied 19% of in-network claims and 37% of out-of-network claims in 2024, with the majority attributable to administrative or unspecified reasons rather than medical necessity. Yet fewer than 1% of denials are appealed, despite a 33% success rate. For healthcare organizations, closing this gap requires proactive intervention. QWay Healthcare’s AI-governed RCM solutions target these risk points before submission, optimizing clean claim rates and protecting recoverable revenue.
External Reference
- Federal Data & Transparency: Access raw datasets and federal exchange files via the CMS Health Insurance Exchange Public Use Files (Exchange PUFs) and guidelines on CMS Health Plan Price Transparency.
- Industry Performance Benchmarks: Explore clinical and operational baseline metrics through the MGMA (Medical Group Management Association) DataDive Practice Operations and research updates via HFMA (Healthcare Financial Management Association) Revenue Cycle Insights.
- Payer Trends & Utilization Policy: Review federal analyses on Medicare Advantage network controls, prior authorization impacts, and provider payment adequacy via the MedPAC March Report to Congress: Medicare Payment Policy.
- Regulatory Oversight Guidelines: Understand multi-state insurance oversight standards through the National Association of Insurance Commissioners (NAIC).