Rising Denials and Payer Audits Intensify Financial Strain on Hospitals in 2025

Hospitals are facing rising financial pressure as denial amounts and payer audits continue to climb in 2025, signaling an unsustainable trend for many health systems, according to a new report from billing compliance and revenue integrity platform MDaudit.

The report shows that both inpatient and outpatient denial amounts have jumped by 12% and 14%, respectively, and that there has been a surge in external payer audits that threatens provider revenues.

Analyzing data from more than 1.2 million providers and 4500 facilities in its network, MDaudit found a 30% year-over-year increase in total at-risk audit amounts per customer during the first three quarters of 2025. The average at-risk amount per claim rose 18%, with commercial payers responsible for 45% of the exposure and Medicare and Medicaid together accounting for 28%.

Hospitals bore the brunt of these audits, facing an average at-risk amount of $17 000. The most common triggers included coding errors (25%), medical necessity disputes (5%), and billing errors (5%). Professional settings saw lower at-risk amounts but were more frequently flagged for missing documentation (10%), coding errors (10%), and billing issues (5%).

When denials materialized, the financial impact remained significant. Outpatient hospital denials averaged $5390, while inpatient denials averaged $565. Claims linked to Medicare Advantage were particularly costly, with the average denied amount rising 22.4% to roughly $1000.

Some denial categories grew at alarming rates. Denials tied to requests for information or medical necessity soared 70% to $450, and telehealth-related denials jumped 84%. Outpatient coding denials increased by 26% year over year, which is modest compared to the dramatic 126% spike seen between 2023 and 2024.

Industry surveys echo these findings. More than 41% of providers reported denial rates above 10% in 2025, and major health systems have repeatedly cited payer pushback as a financial headwind in quarterly filings. For-profit system Ardent Health recently attributed its earnings miss to denials “more durable than anticipated,” warning the trend is likely to persist through the end of 2025.

MDaudit CEO Ritesh Ramesh said the data makes clear that health systems must prioritize proactive revenue integrity efforts. “Reactively fixing denials after they occur or addressing compliance findings after the fact is costly and unsustainable,” he warned.

With denial volumes rising and payer scrutiny intensifying, providers may face continued revenue challenges unless systemic changes are made to billing, documentation, and compliance workflows.

Reference

Fierce Healthcare. Payer Audits. Denial Amounts Rise Again in 2025, Vendor Data Show. Published November 20, 2025. Accessed December 11, 2025. https://www.fiercehealthcare.com/finance/payer-audits-denial-amounts-rise-again-2025-vendor-data-show

MDaudit. 2025 Benchmark Report: Key Revenue Integrity and Compliance Trends Shaping Healthcare. Accessed December 11, 2025. https://mdaudit.com/resource/report/2025-benchmark-report/