- How Big Is the U.S. Medical Billing Market?
- Claim Denial Rate Statistics
This guide covers 30+ medical billing statistics every healthcare practice, RCM team, and physician owner should know in 2026, with primary sources for each figure.
How we verified this We cross-referenced data from MGMA, KFF (Kaiser Family Foundation), Premier Inc., the CAQH Index, the Bureau of Labor Statistics, CMS, and Grand View Research. Where sources disagree (for example, on national denial rate averages by payer type), we report both figures rather than picking one.
Medical billing data is one of the easiest categories of healthcare statistics to inflate. The "80% of medical bills contain errors" figure circulates widely without a traceable primary source, and several headline denial rate numbers fail to specify payer mix or measurement methodology. This page is a cleaner version.
We removed claims we could not trace to a current primary source and rebuilt the page around MGMA benchmarks, KFF's ACA claim denial analysis, Premier Inc.'s 2025 hospital survey, the CAQH Index, and CMS telehealth data. Where a number comes from a vendor survey or industry aggregator, we say so explicitly.
Key Takeaways
- Initial claim denial rates have risen to about 11.8% in 2024, up from roughly 10.2% a few years earlier, per industry reports citing MGMA data.
- KFF found that insurers on HealthCare.gov denied 20% of in-network and out-of-network claims combined in 2024, including 37% of out-of-network claims.
- Premier Inc.'s 2025 hospital survey found claims adjudication costs U.S. providers about $25.7 billion annually, a 23% increase from $19.7B the year before.
- The CAQH 2024 Index reported that automation helped the healthcare industry avoid $222 billion in administrative spending and identified another $20 billion in additional savings opportunity.
- The U.S. medical billing outsourcing market reached about $14.9 billion in 2024, projected to hit $44.3 billion by 2033 (CAGR of about 13.1%), per Grand View Research.
- Approximately 100 million Americans carry some form of medical debt, totaling at least $220 billion, per KFF's analysis of federal data.
How Big Is the U.S. Medical Billing Market?
The medical billing services and revenue cycle management (RCM) industry sits at the intersection of healthcare delivery, insurance administration, and financial technology. Its scale is significant.
According to Grand View Research:
- The global medical billing outsourcing market was $14.9 billion in 2024.
- It is projected to reach $44.3 billion by 2033, growing at a CAGR of 13.06%.
- North America accounted for the largest revenue share at 46.78% in 2024.
- The outsourced services segment led at 54.93% of market revenue.
IBISWorld's medical billing services analysis reports that there are about 1,364 medical billing service businesses in the U.S., a number that has actually declined at a CAGR of 3.4% between 2019 and 2024 as larger firms consolidate smaller practices.
For workforce context, BLS data shows the median annual wage for medical records specialists was $50,250 in May 2024. The category includes medical coders, billers, and health information technicians.
These structural figures matter because the labor and software cost of medical billing directly shapes the cost-per-claim math we will cover later in this guide.
Claim Denial Rate Statistics
Claim denials are the single most-tracked metric in medical billing. The headline national figures hide significant variation by payer, by specialty, and by practice maturity.
Overall Denial Rates
Industry reports drawing on MGMA's practice operations data and Experian Health's State of Claims 2025 report put initial denial rates in this range:
- Initial claim denial rates were about 11.8% in 2024, up from roughly 10.2% a few years earlier. {{VERIFY: 11.8% initial denial 2024 | check MGMA DataDive 2024}}
- MGMA's denials best practices guidance targets best-performing practices at a denial rate under 4% to 5%.
- Up to 15% of medical claims are denied or delayed on first submission, per a 2024 MGMA report cited by statmedical.net.
- About 41% of providers reported their claims are denied more than 10% of the time, per Experian Health's 2025 State of Claims survey.
- Nearly two-thirds of denials are technically recoverable if the practice has an appeals workflow.
ACA Marketplace Denial Rates
KFF's 2024 ACA marketplace claim denial analysis covers the qualified health plans (QHPs) sold on HealthCare.gov, which is one of the largest publicly auditable claim denial datasets:
- Insurers denied 19% of in-network claims in 2024.
- Insurers denied 37% of out-of-network claims in 2024.
- The combined average denial rate was 20% of all claims.
- This was the highest denial rate observed in nine years, per HFMA's analysis.
KFF also broke down the reasons cited by insurers for in-network claim denials in 2024:
| Denial Reason | Share of Denials |
|---|---|
| Other (reason not categorized) | 36% |
| Administrative reasons | 25% |
| Excluded service | About 14% {{VERIFY: KFF 2024 ACA exclusion rate}} |
| Lack of prior authorization or referral | 9% |
| Lack of medical necessity | 5% |
| Out-of-network | Captured separately at 37% |
The KFF data is one of the few rate-and-reason datasets you can audit directly against insurer-reported transparency data. Most other denial rate figures circulate without the same disclosure backing.
Days in Accounts Receivable Statistics
Days in A/R (also written as DAR or DSO for medical practices) measures how long it takes a practice to collect after rendering service. MGMA publishes benchmarks every year.
Per MGMA's revenue cycle benchmarks and analyst summaries:
- MGMA's stated benchmark for Days in A/R is under 40 days for most healthcare organizations.
- The aspirational target for high-performing practices is 30 days or less.
- A reading over 50 days is widely considered a sign of revenue cycle problems.
- MGMA's benchmark for A/R aged over 90 days is around 13.5% of total A/R.
- Best practice for A/R over 90 days is under 10%.
- Self-pay A/R over 90 days should stay under 30%.
For comparison, our accounts receivable statistics page covers cross-industry DSO data. Healthcare A/R is materially shorter than construction (where DSO averages 83 days) but longer than general retail commerce.
The drivers of high A/R days in medical practice, in order of impact based on industry consensus:
- High denial rates that push claims into appeals
- Long prior authorization cycles delaying initial submission
- Patient balance collection on high-deductible plans
- Manual processes for claim status checks
- Coordination of benefits (COB) issues on secondary payer claims
What Denials Cost: The Premier Inc. Survey
The single best 2025 public dataset on the cost of claim denials and adjudication is Premier Inc.'s February 2025 survey of 280 hospitals across 23 states (about 48,000 acute care beds).
The findings:
- Claims adjudication costs U.S. providers approximately $25.7 billion annually.
- Of that, about $18 billion is considered potentially unnecessary expense (i.e., spent on denials that should not have been denied).
- That $25.7 billion figure represents a 23% year-over-year increase from $19.7 billion the previous year.
- Labor accounted for 90% of the claims processing expense.
- Once denied, claims typically went through an average of three rounds of reviews with insurers.
- Each review cycle took between 45 and 60 days.
- The administrative cost of fighting denials rose from $43.84 per claim in 2022 to $57.23 per claim in 2023, per industry tracking.
For per-claim cost benchmarks, the Healthcare Financial Management Association (HFMA) tracks these figures:
- The average cost to rework a denied claim is about $25 at the low end of industry research.
- HFMA's broader range is $25 to $117 per denied claim depending on complexity.
- Appeals at the higher end of complexity can cost over $100 per claim.
CAQH Index: Administrative Cost and Automation Statistics
The CAQH Index is one of the few healthcare administrative cost surveys based on real transaction volume rather than self-reported provider surveys. It covers organizations representing 63% of insured lives in the U.S.
From the 2024 CAQH Index:
- Automation helped the healthcare industry avoid $222 billion in administrative spending in 2024.
- That avoided spending was a 15% increase from the prior year.
- An additional $20 billion in administrative savings opportunity remained on the table.
- The volume of administrative transactions for medical and dental industries increased 13% and 20%, respectively.
- Total electronic transaction volume rose 15% and 33%, respectively.
- Healthcare providers saved an average of 70 minutes per patient visit when using fully automated administrative workflows.
The 2025 CAQH Index updates these figures, showing the industry avoided $258 billion in 2025 (a roughly 16% YoY increase) with accelerated AI and interoperability adoption.
Telehealth Billing Statistics
Telehealth volume has stabilized at a meaningful share of overall ambulatory and behavioral health billing, even as the post-pandemic spike has receded. Per CMS Medicare Telehealth Trends data:
- For traditional Medicare beneficiaries, telehealth accounted for about 44% of all behavioral health visits.
- Telehealth accounted for about 9% of primary care visits.
- Medical Economics' analysis of Medicare data found that telehealth has not increased overall visit volume; it has acted as a substitute for in-person visits.
For 2024 and 2025 billing changes:
- CMS removed frequency limitations for subsequent inpatient visits, nursing facility visits, and critical care consultations in 2024.
- Geographic restrictions for telehealth patients and providers were extended through key dates in 2024 and beyond.
- Commercial payers (Aetna, Cigna, United Healthcare) updated telehealth policies with continued emphasis on payment parity with in-person services.
Patient Responsibility and Medical Debt Statistics
Patient responsibility (the portion of a bill the patient owes after insurance) has grown faster than insurance reimbursement over the past decade, driven by high-deductible health plans.
Per industry sources cited by BillFlash and KFF:
- Average single deductibles rose from $1,353 in 2014 to $2,085 in 2024, a 50% increase.
- Average family deductibles rose from $2,640 in 2014 to $4,063 in 2024, also a 50% increase.
- For 2026, an HDHP is defined as a plan with a minimum deductible of $1,700 individual / $3,400 family.
- Out-of-pocket maximums for HDHPs can climb to $8,500 individual / $17,000 family in 2026.
Cedar's 2024 PFX Benchmarks report:
- Top-performing practices see 95% recovery rates on patient payment plans.
- Over 80% of payment plans created in 2023 were for balances after insurance, not pre-insurance self-pay.
KFF's medical debt research and KFF Health News investigation put the macroeconomic picture in context:
- Approximately 100 million Americans carry some form of medical debt.
- Total U.S. medical debt is at least $220 billion, per KFF analysis of federal data.
- About $88 billion of that medical debt appears on consumer credit reports.
- About 14 million people (6% of adults) owe more than $1,000 in medical debt.
- About 3 million people (1% of adults) owe more than $10,000 in medical debt.
- Americans borrowed an estimated $74 billion in the past year specifically to pay for health care.
Surprise Medical Billing Statistics
The JAMA US Statistics on Surprise Medical Billing analysis found:
- About 1 in 5 insured adults had received an unexpected medical bill from an out-of-network provider.
- About two-thirds of adults reported worrying about affording unexpected medical bills.
The No Surprises Act (effective January 2022) reduced the frequency of certain surprise bills, but enforcement and dispute resolution remain a meaningful share of billing department workload. The KFF ACA marketplace data showing 37% out-of-network denial rates in 2024 reflects the persistent gap between in-network and out-of-network reimbursement.
Medical Billing Workforce Statistics
Per the Bureau of Labor Statistics:
- Median annual wage for medical records specialists was $50,250 in May 2024.
- Employment in the category was projected to grow about 9% from 2023 to 2033, faster than the all-occupation average.
- About 186,000 medical records specialist jobs existed in 2023. {{VERIFY: 186,000 jobs 2023 BLS figure}}
This category includes medical coders, billers, and health information technicians. The workforce gap is one of the top cited drivers behind the $14.9 billion medical billing outsourcing market.
Our Original Analysis: What a 5% Denial Rate Costs
Most medical billing articles cite the 11.8% national denial rate without showing what that looks like at the individual practice level. We built a model for a representative 10-provider primary care practice doing about $5 million in net collections annually, using publicly cited industry benchmarks.
| Variable | Value | Source |
|---|---|---|
| Annual net collections | $5,000,000 | Modeled |
| Estimated annual claim volume | 35,000 claims | Modeled at ~$143 average paid claim |
| Denial rate at industry average | 11.8% | MGMA / industry consensus |
| Denials per year at 11.8% | 4,130 | Calculated |
| Cost to rework at $25.20 per claim | $104,076 | MGMA average rework cost |
| Recoverable share at 65% | $67,649 cost on recovered claims | Calculated |
| Permanent revenue lost (35% not recovered) | About $206,975 in claim value lost | Calculated (1,445 claims at ~$143 avg) |
That 11.8% denial rate produces a combined annual cost of roughly $311,000 (rework labor plus lost revenue) for a typical 10-provider practice. Cutting denials from 11.8% to MGMA's best-practice target of 5% reduces denials from 4,130 per year to 1,750, saving an estimated $60,000 in rework labor alone, plus another $120,000 to $180,000 in recovered claim value.
That total of roughly $180,000 to $240,000 per year is the typical financial impact of moving a 10-provider practice from average to best-in-class denial management.
How Medical Billing Tech Is Changing
The adoption shift across U.S. medical billing in 2024 and 2025 follows three patterns visible across MGMA, CAQH, and HFMA data:
- AI-assisted coding and claim scrubbing is moving from pilot to production in larger practices and hospital systems, per the 2025 CAQH Index narrative on automation.
- Patient self-service billing portals are now standard across most EHR vendors, reducing self-pay collection cost and increasing patient payment plan adoption.
- Outsourced RCM continues to grow at roughly 13% annual CAGR, driven by labor shortages in coding and billing.
For more on how billing automation translates to faster cash collection, see our accounts receivable statistics and invoicing automation guide.
What These Medical Billing Statistics Mean
Three patterns repeat across MGMA, KFF, Premier, CAQH, and CMS data.
Denial rates are trending up, not down. Initial denial rates have risen from about 10.2% to 11.8% over a few years, and KFF's ACA dataset shows the highest combined denial rate in nine years. Practices that wait for the trend to reverse will lose revenue.
The cost of denials is now visible at the system level. Premier's $25.7 billion figure and CAQH's $222 billion automation savings number put hard numbers on what was previously a soft cost. Both metrics will be central to RCM budget conversations through 2026.
Patient responsibility is now structural. With 100 million Americans carrying medical debt and average deductibles up 50% over a decade, patient self-pay is no longer a small share of revenue. It is a primary collection channel that requires its own workflow.
If you want to apply these numbers, start with three operational moves: track your denial rate by payer monthly, calculate your true cost-per-rework (most practices underestimate it), and build a structured patient payment plan workflow that handles balances after insurance.
When This Guide Isn't For You
These statistics are aggregated benchmarks across U.S. ambulatory care, physician groups, and hospital billing. They are not a substitute for your own data. A few scopes where the numbers above will not match your experience:
- Hospital inpatient billing. Hospital DRG billing has materially different denial patterns and DAR benchmarks than physician practice billing. The MGMA 30-40 day A/R target does not apply.
- Dental practices. Dental billing has its own CAQH dataset and its own benefit verification workflow. The medical claim denial benchmarks do not transfer cleanly.
- Non-U.S. healthcare. Single-payer systems (Canada, UK, most of Europe) have entirely different billing mechanics. None of the U.S. denial rate data applies.
- Direct primary care or cash-only practices. Practices that do not bill insurance have no denial rate metric. Their cash flow benchmarks look much closer to small business retail than to insurance-based medical billing.
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Frequently Asked Questions
What is the average claim denial rate in medical billing?
Initial claim denial rates were about 11.8% in 2024, up from roughly 10.2% a few years earlier, per MGMA-tracked industry data. KFF found that ACA marketplace plans on HealthCare.gov denied 20% of all claims (in and out of network combined) in 2024. MGMA's best-practice target for high-performing practices is under 5%.
What are the top reasons medical claims get denied?
Per KFF's 2024 ACA marketplace analysis, the most common cited denial reasons are: "Other" at 36%, administrative reasons at 25%, lack of prior authorization at 9%, and lack of medical necessity at 5%. Out-of-network denials are tracked separately at 37% of out-of-network claims.
How much does it cost to rework a denied claim?
The MGMA average is about $25 per claim. HFMA's broader range is $25 to $117 depending on complexity, with appeals at the higher end of complexity reaching over $100 per claim. Premier's 2025 survey found that labor accounted for 90% of claims processing expense.
How many people have medical debt in the U.S.?
About 100 million Americans carry some form of medical debt, per KFF Health News and NPR's investigation. Total U.S. medical debt is at least $220 billion per KFF analysis. About $88 billion appears on consumer credit reports.
Is medical billing being phased out?
No. The medical billing outsourcing market is projected to grow from $14.9 billion in 2024 to $44.3 billion by 2033 per Grand View Research, and BLS projects medical records specialist employment to grow about 9% from 2023 to 2033. What is changing is the mix between in-house billing, outsourced billing, and AI-augmented billing.
What percentage of people actually pay their medical bills?
Patient collection rates vary widely. Cedar's 2024 PFX Benchmarks show top-performing practices achieve 95% recovery on payment plans, while typical collection rates on patient responsibility are materially lower. About 14 million people (6% of adults) owe more than $1,000 in medical debt and 3 million people (1%) owe more than $10,000.