The denial rate represents the percentage of claims denied by payers during a given period and quantifies the effectiveness of your revenue cycle management process. A low denial rate indicates a healthy cash flow. The industry average for denial rate is 5% to 10%, but the desirable rate would be below 5%.
To calculate your practice’s denial rate, add the total dollar amount of claims denied by payers within a given period and divide by the total dollar amount of claims submitted within the given period.
Sample Calculation
- (Total of Claims Denied/Total of Claims Submitted)
- Total claims denied: $10,000
- Total claims submitted: $100,000
- Time period: 3 months
- $10,000/$100,000
- 10
- Denial rate for the quarter: 10%
