The rate of payer audits accelerated in 2025, with hospital inpatient and outpatient average denial amounts that increased by 14% and 12%, respectively. Denial volumes were also up overall, led by a nearly fivefold increase in Request for Information (RFI) and medical necessity denials for Medicare Advantage plans.
The total at-risk amounts, number of claims and average amount per claim increased by 30% in payer audits. Denials related to outpatient coding increased by 26%. These trends send a clear signal to providers that successfully navigating today’s complex financial and regulatory landscape requires prioritizing billing compliance, coding integrity, robust denial prevention strategies, and redefining revenue integrity to ensure sustainability.
These were among the key findings of the 2025 MDaudit Annual Benchmark Report released today by MDaudit, an award-winning cloud-based continuous risk monitoring platform for RCM that enables the nation’s premier healthcare organizations to minimize billing risks and maximize revenues. The central theme of this year’s report is the evolution of revenue integrity from a defensive stance to a proactive discipline that unites charge capture, coding, billing compliance, and denials management within a connected, data-driven framework.
Ritesh Ramesh
“Reactively fixing denials after they occur or addressing compliance findings after the fact is costly and unsustainable,” said Ritesh Ramesh, CEO, MDaudit. “This year’s Benchmark Report clearly demonstrates the urgency behind adopting a unified approach to billing compliance, coding integrity, and denial prevention wherein data intelligence and automation are shared across revenue functions, allowing finance leaders to efficiently shift from managing crises to protecting revenue with foresight and confidence.”
Key Takeaways
The new Benchmark Report reveals several trends provider organizations should act on now, and identifies where to focus their attention, investments, and process improvements to safeguard income and manage risk as they enter 2026.
1. Rising Denial Rates
The upward trajectory of denial volumes and amounts signals the need for providers to sharpen denial prevention strategies. In 2025, the average denied amount for hospitals rose from $4,730 in 2024 to $5,390 (14%) in outpatient settings, and from $504 to $565 (12%) in inpatient settings. This includes a 70% increase in average denied amounts from RFI and medical necessity denials across all settings. Telehealth-related denials were up 84% in 2025, due primarily to missing information, errors in claim submission, non-covered charges, or duplicate claims
To reverse these trends, provider organizations need to take steps to monitor denial trends by payer, setting, and claim type and reinforce root-cause analysis of denials, such as coding, documentation, and charge capture. Investing in early-warning tools and audit workflows that catch high-risk claims before submission is also recommended.
2. Payer Audits Increase
External payer audits surged again in 2025, with total at-risk amounts and audit cases per customer rising by 30%, and the average amount at risk per claim growing 18%. Of the top payer types, 45% of the at-risk amount was driven by commercial payers, while Medicare and Medicaid accounted for 28%. The average at-risk amount for a payer audit in a hospital setting was approximately $17,000, whereas the average at-risk amount at a professional setting was $1,172.
Intensified payer scrutiny necessitates faster response times, stronger documentation, and proactive risk management. This can be accomplished by mapping current audit exposure by payer, audit type, and service line, and prioritizing the highest dollar-at-risk claims for review and remediation. Additionally, providers should build robust workflows to manage audit requests, capture documentation, and respond within deadlines to retain revenues.
3. Outpatient Coding Worsens
Outpatient coding-related denials increased in 2025, rising 26% after a 126% spike in 2024, signaling their critical vulnerability. To slow this escalation, providers must begin treating coding integrity as a foundational risk area rather than an afterthought. This includes conducting targeted risk-based coding audits in outpatient service lines, focusing on training, review, and oversight of outpatient coding workflows, and ensuring that coding tools, documentation support, and coder oversight align with the heightened scrutiny, governance, and human oversight requirements.
4. Technology Unlocks Outcomes
There was a silver lining in the 2025 Benchmark Report: technology- and data-driven approaches are gaining traction and delivering measurable improvements, and revenue integrity teams are increasingly adopting data- and AI-driven approaches to unlock revenue opportunities and mitigate risk. Risk-based audits within the MDaudit platform increased by 25%, and pre-bill audits increased by 30%.
“Provider organizations that leverage data-driven platforms and deploy real-time, continuous risk monitoring can stay ahead of payers by better understanding real-time billing, coding, and payment trends,” said Ramesh. “This allows them to take proactive action to educate providers and coders while addressing other issues.”
Looking Ahead
Technology-including the responsible integration of artificial intelligence (AI) and real-time performance data shared across multiple functions-will continue to play an outsized role in driving competitive advantage and assuring financial resiliency in the year ahead. Integration of autonomous coding, predictive audit sampling, and workflow automation is expected to expand across the industry. Meanwhile:
Continuous risk monitoring tools will reduce payer audit response times by half and maintain tighter oversight of at-risk revenue through automation and centralized audit tracking.
Pairing automation with intelligent human oversight will drive measurable gains in accuracy, compliance, and speed.
AI-powered revenue integrity platforms will result in exponential lifts in operational efficiency and denial overturn success rates.
“The 2025 benchmark data makes clear that the margin for error in billing, coding, and audits has shrunk, and technology is becoming a differentiator,” said Ramesh. “Organizations that adopt analytics, proactive audit/pre-bill workflows, and coding integrity will have a distinct advantage.”
About the Report
The MDaudit 2025 Annual Benchmark Report is a comprehensive examination of real-world data representing the first three quarters of 2025, from a network of more than 1.2 million providers and over 4,500 facilities across 40+ states.
Healthcare organizations are engulfed in an intensifying storm of audits and denials exacerbated by heightened regulatory and payer scrutiny. Individually, any of these trends can endanger a hospital’s or health system’s financial stability. Combined, they represent a crisis calling for immediate action.
Healthcare finance leaders who wish to successfully guide their organizations across this increasingly complex and challenging landscape must transform their revenue cycle management (RCM) strategies. Central to this transformation is proactive risk monitoring and the implementation of AI-driven compliance strategies.
Mounting Pressure
According to the 2024 MDaudit Annual Benchmark Report, audit volumes more than doubled over 2023 rates while total at-risk dollars increased fivefold to $11.2 million, straining provider organization cash flows. That analysis, encompassing more than $8 billion in audited professional and hospital claims and over $150 billion in denials collected from more than 650,000 providers and more than 2,200 facilities, also found that payer scrutiny is at an all-time high.
Medicare Advantage (MA) plans are a favorite target, with HCC and RADV audits—which help ensure health plans and providers are paid appropriately based on the actual health of their members—rising by 72% and total MA denials by 51%. Denials related to how providers code their claims increased by 126%, representing one of the most significant increases in the last three years. Denials surged across care settings; hospital inpatient-related denials were up nearly 220% to $10,000 per claim, hospital outpatient by 32.5% to $825, and professional by 24% to $140.
While the data clearly demonstrates that coding integrity is one of the biggest revenue optimization opportunities in healthcare, documentation around the medical necessity of care provided also urgently needs improvement. The MDaudit analysis revealed a 140% increase in total denial amounts for inpatients and a 75% increase in outpatient amounts related to the “Medical Necessity and Information Needed” category. Overall, more claims dollars were denied in 2024 by Medicare and commercial payers due to a lack of information submitted for the service and medical necessity, driving an increase in final denial dollars across professional (34%), hospital outpatient (84%), and hospital inpatient (148%).
Behind these increases was a doubling of external audit volumes, which included a sizable jump in pre-payment audits. These audits can interfere with cash flow and increase overall denial rates.
Fraud prevention is adding to the complexity of today’s healthcare financial landscape. According to the US Department of Health and Human Services (HHS) Office of the Inspector General (OIG) Health Care Fraud and Abuse Control Program Report for Fiscal Year (FY) 2023, released in December 2024, federal recovery efforts targeted $4.7 billion in projected overpayments within MA alone, a figure expected to rise as the Centers for Medicare and Medicaid Services (CMS) ramps up fraud prevention.
Fiscal year 2023 saw civil healthcare fraud settlements and judgments under the False Claims Act exceed $1.8 billion, bringing the total amount returned to the federal government or paid to private individuals to more than $3.4 billion. This figure includes $974 million returned to the Medicare Trust Funds and $257.2 million in federal Medicaid funds transferred separately to the CMS.
Transforming RCM Strategies
The shift toward more aggressive pre-payment audits, a greater focus on fraud, and tactics to prolong reimbursement delays underscore the need for a revenue strategy that prioritizes revenue optimization and risk mitigation. Built upon a foundation of AI, automation, and other technology tools that enable continuous monitoring of real-time financial risk based on payer trends and denial management, this transformative revenue cycle strategy delivers a significant return on investment (ROI). It also introduces automated workflows that drive operating margins.
Streamlining and improving audit response is essential for enhancing providers’ revenue capture, particularly as payer organizations increasingly rely on pre-payment audits to delay reimbursements and increase denial rates. Investing in AI, machine learning (ML), and automation tools that deliver intelligent functionality to automate and accelerate the management of external payer audits ensures the timely processing of additional documentation requests (ADRs), thereby improving audit defense outcomes and revenue retention.
Generative AI and natural language processing (NLP) solutions further optimize audit outcomes by unlocking insights and patterns from historical data while also increasing accessibility and democratizing information across the revenue cycle. For example, generative AI tools that take natural language questions and instantly compute complex formulas to return clear, concise, and actionable responses boost human productivity and deliver speed-to-value. They eliminate information silos between revenue integrity and executive teams, transforming how they interact with data to make more innovative and strategic decisions.
Transforming the Revenue Cycle
Strong internal compliance programs and a cross-functional operating model that connect the dots between billing, coding, CDI, and revenue integrity will advance a unified revenue retention and growth agenda. Leveraging data and insights as a storytelling mechanism enhances program value by removing bias and injecting objectivity into discussions and decision-making while establishing success metrics introduces accountability for tangible outcomes.
With the core strategy in place, finance executives can look to other targets for RCM transformation to enable healthy operating margins, such as high-value outpatient services like elective surgeries and some inpatient services. Along with scrutinizing complex services, other opportunities to improve revenue retention include implementing clinical documentation improvement (CDI) programs that drive outcomes tied to RCM and denial management metrics.
CDI, billing, coding, and RCM programs can also be tightly coupled to implement a closed feedback loop from the backend to the mid-cycle, driving efficiencies. Finally, automate coding operations and increase the utilization of AI-powered systems that amplify errors at scale while keeping humans in the loop.
Deploying technologies that bridge mid-cycle and back-end functions will drive more substantial margins and cash flow while mitigating risks tied to payer-driven policies and denials. An aggressive AI-enabled, data-driven, and people-led approach to the revenue cycle allows forward-looking finance leaders to position their organizations for financial survival in today’s high-risk landscape.
Maintaining an organization’s revenue integrity should be a constant activity for compliance and auditing staff. Consider that, despite falling claim volumes in Q3 compared to the first two quarters of 2022, the average denial per claim increased by as much as 9.6%, according to the 2022 MDaudit Annual Benchmark Report. Lag days between claims submission and initial payer response also rose by as many as 6.5 days during the same period.
For health information management (HIM) professionals, this should serve as a wakeup call to make every claim count. Increasingly, organizations are using “risk intelligent” auditing to continuously monitor risk, detect anomalies, and automate workflows to bring efficiencies to formerly manual processes. Organizations that make resolving accuracy issues in billing and coding operations a priority can help retain between 15% and 25% of overall revenue. Revenue retention is going to be as critical as revenue growth for healthcare organizations going into 2023.
Read on to learn how to help your organization keep more of its hard-earned dollars.
Leveraging data to drive outcomes
Not long ago, coding, billing, claims, and auditing processes often operated independently of one another and employed tedious and manual workflows. These processes slowed claims submissions, payments, and auditing functions that help organizations maintain compliance and monitor revenues.
These time-consuming and cumbersome processes became more problematic during the pandemic, when the very foundations of the traditional care experience were upended by a novel disease and the rise of the virtual patient visit. While providers continue to recover from these shocks to their organizations, federal payers have ramped up their efforts to ensure the accuracy of claims.
During FY 2023, the federal Health Care Fraud and Abuse Control (HCFAC) Program and the Medicaid Integrity Program will receive nearly $2.5 billion, an increase of $80 million from the previous year. Inclusive of medical review, Medicare program integrity activities had a return on investment (ROI) of $8 for each $1 spent. With such an attractive return, don’t be surprised that the breadth and depth of these activities continues to increase.
Organizations can support risk-based compliance and revenue integrity by utilizing risk intelligent auditing to mine their billing and remit data to identify billing compliance and revenue risks. The same tools can unearth key metrics focused on current risk areas to monitor provider billing patterns and even benchmark them against peers. Risk intelligent auditing helps prioritize efforts to develop corrective action plans, educate stakeholders, mitigate the need for audits, and prevent future revenue losses.
The rate of payer audits accelerated in 2025, with hospital inpatient and outpatient average denial amounts that increased by 14% and 12%, respectively. Denial volumes were also up overall, led by a nearly fivefold increase in Request for Information (RFI) and medical necessity denials for Medicare Advantage plans.
