Denials top the list of RCM challenges in 2026
ILLINOIS, UNITED STATES — Denials and appeals have emerged as the top revenue cycle management (RCM) challenge for United States health systems in 2026.
Payer denials top revenue cycle concerns
A survey of 102 U.S. healthcare finance and revenue cycle professionals found denials and appeals ranked as the most pressing RCM challenge in 2026.
The average denied amount rose 14% in hospital outpatient settings and 12% in inpatient, while the average health system is managing 110,000 unpaid claims.
According to a benchmark report from the Healthcare Financial Management Association (HFMA), Errors in diagnosis coding, modifier usage, and insufficient medical record documentation are the three most common drivers of coding-related denials.
More than half of revenue cycle leaders surveyed expect their operations to decline without immediate changes, citing rising denial volumes, claims inefficiencies, and aging accounts receivable.
According to the report, 90% of denials are avoidable. The finding underscores how much of the denial burden facing health systems stems from correctable process gaps rather than clinical necessity disputes.
Ninety percent of denials are classified as avoidable, yet the average health system is managing 110,000 unpaid claims.
Audit exposure and staffing gaps persist
Expanding audit activity is compounding the financial pressure, with benchmarking data showing risk-based audits increased 25% and pre-bill audits rose 30% in 2025.
A separate Guidehouse and HFMA survey found 88% of revenue cycle leaders rank payer challenges as a top concern. Twenty percent now report denial rates exceeding 5%, up from prior-year benchmarks.
Staffing shortages remain a persistent disruptor across RCM departments, with labor and skills gaps listed as one of the four primary barriers to improvement in the HFMA benchmark.
Health systems are responding with automation and artificial intelligence (AI)-enabled workflows alongside outsourcing partnerships to maintain operational continuity.
According to the HFMA report, leading providers are addressing the denials crisis through process improvement, audit readiness investment, and outsourcing partnerships. Automation is enabling health systems to reduce administrative burden and scale their capacity to manage denial volume.
Risk-based audits increased 25% and pre-bill audits rose 30% in 2025 benchmarking data, compounding the financial exposure health systems face from denial volume alone.
Health systems confronting high denial rates are increasingly outsourcing denials management, medical coding, and billing to business process outsourcing (BPO) firms with U.S. payer expertise. Offshore teams support appeals workflows, implement pre-bill audits, and identify coding error patterns that reduce denial rates before claims reach payers.
As audit volumes rise and workforce gaps persist, outsourcing and automation are the primary levers available to health systems under financial pressure. BPO providers with denial prevention, audit readiness, and AI-enabled workflow capabilities are positioned to close the revenue cycle gap the HFMA report identifies.
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Disclosure: Outsource Accelerator uses AI tools in the backend of its editorial workflow. Every article is reviewed and verified by a human editor before publication.
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