Health care coverage is supposed to help people pay for care. But in the United States, having health care coverage does not always mean a visit, test, treatment, hospital stay, or medication will be paid for by the coverage program.
When a health care provider, hospital, pharmacy, or patient asks an insurance plan to pay for care, that request is called a claim. If the insurance plan refuses to pay all or part of the claim, that is called a claim denial. A denial can also happen before someone receives care, through a process called pre-authorization or prior authorization.
Health insurance claim denials affect people across the U.S., including those with employer-sponsored coverage, Marketplace plans, Medicare and Medicare Advantage, Medicaid, and other types of coverage. The problem is hard to measure because the U.S. does not have a comprehensive system for tracking denials across all types of health plans.
That lack of accountability and transparency is part of the problem. People may experience denials for their own care, but the full scope of the issue is not easy for the public to see.
What Is a Health Insurance Claim Denial?
A health insurance claim denial means the plan is unwilling to pay for a service, either in full or in part. This can happen before or after a person has already received care.
A claim denial may be issued separately, or the information may be presented within an insurance document called the Explanation of Benefits (EOB) form. An EOB explains how the insurance plan handled the claim. An EOB typically describes what the provider charged, the allowable amount, what the plan paid, and what the patient owes. If a claim is denied, the EOB will provide a general explanation as to why, such as “failure to obtain pre-authorization,” “procedure deemed not medically necessary,” or “late filing by the provider.” This explanation may also be called a reason code.
A denial does not always mean the patient must pay the full amount. Sometimes a denial is caused by a billing error, missing information, or a claim that needs to be resubmitted. Once these problems are corrected, the claim may be paid. However, in other cases, a denial can leave a person responsible for a large bill or can delay necessary care.
Claim Denials Are Common in Private Insurance
Some people may think claim denials only occur with Marketplace plans because the Marketplace makes more data available to the public. But only about 7% of the U.S. population gets health coverage through the Marketplace.
A much larger share of Americans have job-based coverage. According to KFF’s 2025 Employer Health Benefits Survey, employer-sponsored insurance covered about 154 million people in the U.S. under age 65 in 2025. That makes job-based coverage the largest source of health insurance for people who are not yet eligible for Medicare.
Even though employer-sponsored coverage is so common, public data on claim denials by employer plans is limited. This is especially true for large employers that pay claims directly through self-funded plans. These plans often hire an insurance company to administer the plan, but the employer pays the claims.
Still, survey data show that denials are common in private insurance. The Commonwealth Fund’s 2025 Affordability Survey and Focus Groups found that 1 in 5 working-age adults with private insurance reported that they or a family member had care denied in the past year, even when the care was recommended by a provider. This includes people with coverage through an employer, a Marketplace plan, or another private plan.
A study published in JAMA Internal Medicine similarly noted that an estimated 18% of insured adults in the U.S. reported a health insurance denial in 2023. These denials can create stress, delay care, worsen health outcomes or quality of life, and leave people with costs they did not expect.
What Marketplace Data Show
Marketplace data do not reflect decisions by all commercial carriers, but the results help demonstrate the scope of the problem and may well reflect the experiences of those with job-based coverage, since the insurance companies are often the same.
A KFF analysis of HealthCare.gov plans found that of the just under 500 million claims produced in the U.S. in 2024, insurers denied 19% of in-network and 37% of out-of-network claims. While denial rates varied by plan, 26% of insurers had in-network denial rates exceeding 25%.
KFF also found that fewer than 1% of denied in-network claims were appealed. When people did appeal, insurers upheld their original denial 66% of the time.
This report does not represent what happens in every type of coverage situation, since the data do not include most employer plans, Medicare, Medicaid, or state-based Marketplace plans. But it makes clear that claim denials are common, even when people receive care from in-network providers.
Medicare Denials
Some Medicare-eligible individuals have Traditional Medicare, also called Original Medicare. Others have Medicare Advantage, which is a program made up of plans run by private insurance companies that are approved by Medicare.
Traditional Medicare can deny claims or refuse to pay for services. This may happen if Medicare says the service is not covered, is not medically necessary, was billed incorrectly, or does not meet Medicare’s rules. People with Traditional Medicare receive a Medicare Summary Notice that explains how Medicare handled their claims. If they disagree with a coverage or payment decision, they have the right to appeal.
Traditional Medicare uses prior authorization much less often than Medicare Advantage plans do. However, it does require prior authorization for some services, including certain outpatient hospital services, non-emergency ambulance transportation, and some durable medical equipment. A KFF analysis found that the Centers for Medicare and Medicaid Services (CMS) completed just over 625,000 prior authorization reviews for Traditional Medicare in 2024. CMS denied nearly 23% of those requests.
Medicare Advantage plans use prior authorization much more than Traditional Medicare. In 2024, Medicare Advantage plans made nearly 53 million prior authorization decisions, compared with just over 625,000 in Traditional Medicare. That means Medicare Advantage had about 85 times as many prior authorization decisions, even though enrollment in the two programs was much closer: about 35.2 million people in Medicare Advantage and about 29 million people in Traditional Medicare. Medicare Advantage insurers denied 4.1 million requests, or 7.7%. Most denials were not appealed, but when they were, more than 80% were partly or fully overturned.
The U.S. Department of Health and Human Services Office of Inspector General has also raised concerns about Medicare Advantage denials. In one review, HHS OIG found that some Medicare Advantage plans denied prior authorization requests and payment requests that met Medicare coverage rules. That means some services likely would have been approved under Traditional Medicare.
Medicaid Denials
Medicaid provides health care coverage for many people with low incomes, including children, pregnant people, people with disabilities, older adults, and many adults under Medicaid expansion. In most states, Medicaid coverage is provided through managed care plans run by private insurance companies.
Denials in Medicaid managed care can be especially harmful because many Medicaid enrollees are not able to pay out of pocket while they wait for an appeal. They may also have more trouble finding another provider or getting care somewhere else.
The most complete national estimate comes from a 2023 review by the HHS Office of Inspector General, which looked at 2019 data. That review found that Medicaid managed care plans denied 1 in 8 prior authorization requests, and 10% of plans had denial rates above 25%. In 2024, the Medicaid and CHIP Payment and Access Commission (MACPAC) reported that beneficiaries appeal few denials and that program operators do not collect comprehensive information about denials in Medicaid managed care.
Why Health Insurance Claim Denials Happen
Claims can be denied for many reasons. Some denials are due to paperwork or billing problems. Others are based on the insurance plan’s rules.
A claim may be denied because information is missing, the wrong billing code was used, the claim was filed late, or the plan says the service was already paid. A denial may also happen because the provider was out-of-network, the service was not covered, the person needed a referral, or the plan required prior authorization before the care was received.
Some denials are based on the insurer’s determination of “medical necessity.” This means the insurance plan says the care was not needed under its rules. This can be confusing and frustrating when the patient’s doctor recommended the care.
Prescription drugs may be denied if they are not on the plan’s formulary (covered drug list), if the plan requires the patient to try a different medication first, or if prior authorization is required.
Sometimes, the reason for the denial may not be clear or make sense. Denial letters and Explanation of Benefits (EOB) forms can be hard to understand. People may not know whether the denial is correct, whether the provider made a mistake, or whether the insurance company should have paid.
What to Do After a Claim Is Denied
A claim denial can be frustrating, but it does not necessarily mean the decision is final.
The first step is to read the denial notice or EOB carefully. The patient should note the reason for the denial, the claim number, the date of service, the amount denied, and the deadline and process to appeal. They should also keep the bill for services, denial letters, medical records, and any letters from the provider together in one place.
Next, the patient should contact both the insurance plan and the provider’s billing office. Sometimes the issue can be fixed without a formal appeal. The provider may need to correct a billing code, send more records, or resubmit the claim. The insurance plan may also be able to explain what information is missing. During each call, the patient should write down the date, time, name of the person they spoke with, what was said, and what to do or expect next.
Request the Claim File
Before filing an appeal, the patient may also want to request a copy of their claim file. A claim file request is different from an appeal. An appeal asks the insurance company to review its decision again. A claim file request asks the insurance company to share the information it used to make that decision. That information may help the patient, their provider, or an advocate identify errors, missing records, or other details to include in the appeal.
A claim file request should not replace an appeal or cause someone to miss an appeal deadline. But when there is time, it may help the person better understand why the claim was denied.
The claim file includes the information the insurance plan used when deciding whether to deny the claim or prior authorization request. This may include case notes, medical records, phone call recordings, internal messages, and other documents related to the decision.
ProPublica’s Claim File Helper is a free tool that helps people create a letter to request this information from their insurance company. The tool is part of ProPublica’s reporting on health insurance denials and is meant to help people better understand why their claim or prior authorization request was denied.
File an Internal Appeal
If the claim is still denied, the patient can file a formal appeal, known as an internal appeal. Deadlines typically apply. For many private insurance plans, an internal appeal must be filed within 180 days of receiving notice that the claim was denied.
An appeal should include the claim number, insurance ID number, denial letter, medical records, and any information that shows why the care should be covered. A letter from the doctor can also help explain why the care was needed.
If the situation is urgent, the patient may be able to ask for an external review at the same time as the internal appeal. This may be necessary when waiting for the normal appeal process could seriously harm the patient’s health.
Ask for an External Review
If the insurance plan still denies the claim after the internal appeal, the patient may be able to request an external review. This means an outside reviewer looks at the decision.
For many private plans, an external review request must be filed within four months of the patient receiving the final denial. The insurance company must accept the external reviewer’s decision.
Medicare and Medicaid Appeals
Medicare and Medicaid have different appeal rules. Someone with Traditional Medicare should start by reviewing their Medicare Summary Notice and following the appeal instructions listed there. The Medicare Summary Notice includes the deadline for filing an appeal.
For Medicare Advantage or a Medicare drug plan, the patient should follow the instructions in the plan’s denial notice. The plan must tell the patient in writing how to appeal.
Those with Medicaid should follow the instructions in the denial notice. This may include a plan appeal and, if needed, a state fair hearing. If an ongoing Medicaid service is being reduced or stopped, the patient should act quickly because there may be a short deadline to keep services in place during the appeal.
Why Claim Denials Matter
A denied claim represents more than a billing problem. Denials often create real financial and health consequences. Many people who experienced a denial told The Commonwealth Fund that it cost them or their household more money. Some said the denial led to medical debt they were still paying off. Others said a prior authorization denial delayed care or made their health problem worse.
Claims denials can be confusing and take a lot of time, which is particularly challenging when someone may also be dealing with serious health issues.
The burden can be quite heavy, especially for people who are sick, older, disabled, working multiple jobs, caring for family members, or who did not grow up under the U.S. health care system.
Denials can make people less likely to seek care in the future.
How the U.S. Compares with Peer Nations
This kind of claim-by-claim fight does not happen in other peer nations. These high-income countries still have coverage rules and decide which services are covered. But many provide universal coverage, more standard benefits, and fewer health plans, making the rules easier to understand.
A 2026 analysis from The Commonwealth Fund shows that the U.S. continues to perform poorly on administrative efficiency compared to other high-income countries. Administrative efficiency looks at how much time and effort patients and providers spend on paperwork, billing, insurance rules, and coverage issues.
The U.S. system is more fragmented. People may have coverage through an employer, the Marketplace, Medicare, Medicare Advantage, Medicaid, Medicaid managed care, VA benefits, TRICARE, or another source. Each type of coverage has different eligibility criteria, costs, benefit structures, networks, drug formularies, prior authorization rules, and appeal processes.
In countries with universal health care, patients are less likely to be confused about whether a needed service will be covered by one of many different plans. The system is not perfect in every country. But the U.S. places a much larger administrative and cost burden on patients, families, doctors, hospitals, and other providers. As a result, high-income countries with universal coverage have better outcomes across multiple measures compared to the U.S.