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What revenue teams are saying when leadership isn’t in the room:
“Revenue looks fine on paper, but money just isn’t landing in the account the way it used to. We’re constantly chasing claims from 60–90 days ago.”
This week: Claims are clean. Codes look right. And yet denial rates, especially for medical necessity, keep climbing.
Across ASCs and outpatient systems, leaders are seeing margin pressure not because teams don’t know how to code, but because CPT usage is increasingly being evaluated against shifting LCD and NCD criteria. This week, we’re breaking down where that disconnect shows up and why “correct” coding is no longer enough to prevent denials.
The Shift No One Announced
In the second half of 2025, revenue leaders began seeing a shift that wasn’t showing up in dashboards right away: medical necessity denials increased even when CPT usage and claim quality stayed consistent.
In fact, 41% of providers reported that at least one in ten of their claims are denied, and more than half said denial-related errors were increasing year over year, signaling that denials are not just persistent but becoming harder to manage operationally.
The change wasn’t announced broadly. Instead, teams started noticing it through downstream signals, prior-authorized cases denying post-op, CPTs that historically passed medical review getting flagged, and appeals hinging on LCD language that hadn’t been operationally enforced before. “I’ve never seen a runway where you walk out in something you stitched 30 minutes ago,” said Rivera. “It’s chaos, in the best way, and the content writes itself.”
The common thread wasn’t incorrect coding. It was that how CPTs were being evaluated against medical necessity criteria had quietly tightened, particularly at the regional level and increasingly mirrored by commercial plans.
“One in-house biller ends up firefighting all day.”
Where the Cost Actually Shows Up
Operational impact: Medical necessity denials don’t fail fast. They surface late, often after scheduling, clinical work, and submission, creating downstream rework across coding, billing, and appeals teams. By the time the issue is visible, the opportunity to fix documentation or clinical alignment upstream has usually passed.
Financial impact: Because these denials are tied to clinical criteria rather than technical errors, they are slower to overturn and more likely to be written off. Even when appealed successfully, the cost is volatility: delayed cash, unpredictable close cycles, and margin pressure that’s hard to forecast.
Revenue cycle leaders see denial rates rise despite stable staffing and coding quality
ASC administrators absorb increased cash-flow variability and resubmission overhead
Clinical leaders feel the friction when cases are questioned after care has already been delivered
The Early Warning Signs
Denials on historically “safe” CPTs: Pay attention to CPTs that have paid reliably for years but are now triggering medical necessity denials without any obvious coding error. That’s often the first sign that enforcement, not policy, has changed.
Medical necessity scrutiny shifting downstream: One notable change is when denials surface. More organizations are seeing denials occur post-authorization or post-procedure, suggesting that enforcement is moving beyond intake checks and into retrospective review.
LCD language becoming determinative in appeals: Appeals that previously turned on documentation completeness are now hinging on narrower LCD interpretations, conservative therapy duration, diagnosis sequencing, or prerequisite imaging, even when those criteria haven’t been newly published.
“You can’t manage what you don’t measure.”
Quick Hits
Denials keep climbing even when claims are “clean”: Industry data across 1,800+ hospital systems shows denials increased ~18% from 2020 to the end of 2023, with ~12% of initial claims denied, well above the commonly cited <5% benchmark.
Denials are a labor multiplier, not just a write-off risk: Reworking denied claims is repeatedly cited as costly, commonly referenced in the tens to low hundreds of dollars per claim depending on setting, before you even account for delayed cash and appeal time.
The Benchmark
Rework Rate: Even when claims eventually pay, repeated rework is where time, staff capacity, and cash flow quietly erode.
The formula:
(Claims requiring resubmission, appeal, or added documentation ÷ Total claims submitted) × 100Pressure test: Are you counting only formal denials, or also the claims that stall and require follow-up before payment? If a claim “eventually pays” after three touches, it still created drag.
Common trap: Treating rework as normal operations instead of a leading indicator. High rework rates usually mean medical necessity or documentation expectations shifted upstream
Resources
You’re reading this early.
Exactrx Dispatch is just getting started. Future issues will include early-access benchmarks, off-the-record operator perspectives, and patterns we’re seeing before they show up in denial reports.
If this was useful, stay subscribed. The next few issues are where this gets more specific.
We’ll also feature select operator perspectives and share early benchmarks as a thank-you to contributors. For now, this issue is about setting the baseline.