Healthcare Leaders Unite to Fix the $25 Billion Claim Denial Crisis

CHICAGO, IL – February 03, 2026 – In a significant move to address a deepening crisis in U.S. healthcare, the Healthcare Financial Management Association (HFMA) has announced that its Vitalic Health initiative will convene more than 50 key stakeholders from across the industry. On February 11, representatives from insurance companies, hospital systems, and technology firms will gather virtually for a “clean claim study,” a summit aimed at tackling the relentless and costly problem of insurance claim denials.

The issue has reached a critical boiling point. Claim denials, which occur when an insurer refuses to pay for a service, have become a major source of financial waste and patient suffering. The administrative burden of managing and appealing these denials now adds an estimated $25 billion in unnecessary spending to the healthcare system annually, a figure that continues to climb each year.

“The relentless rise of claim denials is pushing healthcare further from affordability and sustainability, and it’s a drag on health outcomes,” said HFMA President and CEO C. Ann Jordan, J.D., in a statement announcing the initiative. “Through Vitalic Health, we’re convening all stakeholders to chart a better path forward.”

The primary goal of the upcoming session is to begin work toward a universally accepted definition of a “clean claim”—a submission that is flawless and can be processed and paid without manual intervention. By standardizing the process, the group hopes to eliminate the friction and ambiguity that currently plague the system.

The Staggering Cost of 'No'

The financial toll of claim denials extends far beyond a single unpaid bill. For healthcare providers, it represents a direct assault on their financial stability. Recent industry data paints a grim picture, with some surveys showing initial denial rates climbing to nearly 15% for claims submitted to private payers in 2024. This is a significant increase from just a few years prior, confirming a trend that hospital administrators have been sounding the alarm about.

The cost to fight these denials is substantial. Hospitals and health systems are estimated to spend nearly $20 billion per year simply appealing decisions made by insurers. This figure doesn't even account for the clinical labor diverted from patient care to assist with documentation and appeals. The cost of claims adjudication soared by 23% in 2023, with an estimated $18 billion of that being potentially avoidable, as a majority of appealed denials are eventually overturned—but only after a costly and time-consuming battle.

Reasons for the denials are varied and complex, ranging from simple clerical errors like missing patient data to disputes over medical necessity and prior authorizations. Providers report that frequent and often opaque changes to payer policies make it a moving target to submit a successful claim. Compounding the issue is the increasing use of automated algorithms by some insurers to issue rapid-fire denials, sometimes without a human ever reviewing the patient's medical chart.

A Fractured System's Human Toll

Beyond the billions of dollars in administrative waste, the claim denial crisis inflicts a profound human cost. When an insurer denies a claim, the financial burden often falls directly onto the patient, who may receive an unexpected and unmanageable bill for care they believed was covered. This phenomenon is a primary driver of medical debt, which now affects nearly a third of all working-age adults in the United States.

The consequences are not just financial. Denials can lead to dangerous delays in care. A recent study found that nearly half of patients who experienced a delay in care due to a denial reported that their health problem worsened as a result. For patients with chronic conditions or those needing urgent procedures, these delays can have devastating health consequences.

The process of appealing a denial is a bureaucratic maze that leaves many patients feeling powerless and overwhelmed. The worry and anxiety are immense, and many simply give up, either paying the bill or forgoing necessary follow-up care. Research from the Kaiser Family Foundation (KFF) on ACA plans found that insurers denied an average of 17% of in-network claims in 2021, yet patients appeal only a tiny fraction of these decisions. When they do appeal, insurers often uphold their original denials.

This burden falls disproportionately on the most vulnerable, including lower-income families and racial minorities, exacerbating existing inequities in a system that is already difficult to navigate.

Forging a Path Toward a 'Clean Claim'

The Vitalic Health initiative represents a crucial attempt to find common ground. By bringing historically adversarial parties—payers and providers—to the same table alongside technology innovators, HFMA hopes to broker a truce. These “Swarm Studies,” as Vitalic Health calls them, are designed specifically to tackle the industry's most intractable problems.

While standards for electronic claims have existed for years under regulations like HIPAA, they have proven insufficient to solve the problem. Inconsistencies in how different payers interpret rules and apply medical necessity criteria have allowed ambiguity to persist. The Vitalic Health study aims to move beyond existing rules by establishing a clear, actionable, and universally adopted framework for what constitutes a complete and payable claim.

A successful definition could drastically reduce the number of claims that are flagged for manual review or denied outright. For providers, this would mean faster payments, reduced administrative costs, and more predictable revenue. For payers, it could lower their own administrative costs associated with processing appeals and disputes. For technology companies, it provides a clear target for developing AI and automation tools that can ensure compliance from the very start of the billing process.

The February 11 meeting is just the first step in what will likely be a long and complex process. However, the commitment of over 50 organizations signals a widespread recognition that the current system is unsustainable. The challenge will be translating this shared frustration into a consensus that balances cost control with the fundamental need to pay for legitimate medical care. The outcome of this collaborative effort could have a profound impact on the financial health of the entire U.S. healthcare system and the well-being of the patients it serves.