In the healthcare world, claims denials are a fact of life. For rural hospitals, they are particularly costly.
But they don't have to be.
With the right staffing, processes and tools in place, rural hospitals can achieve cleaner claims and significantly reduce the number of denials they face.
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What Is the Denial Rate at Rural Hospitals?
Rural hospitals had an average denial rate of 18%, compared with the 10% average observed at urban hospitals, according to an analysis of operational and financial data conducted as part of a 2025 study on utilization review and denials management published in the Journal of Medicine and Surgical Sciences (JMSI).
Even when denied claims are eventually paid, the appeal process comes at a cost. In 2023, the average administrative cost of fighting a denial from a private payor was $57.23, according to a 2025 study published by Premier Inc.
The same study found that government payors are generally more likely to deny claims than commercial insurers. In 2023, Medicaid denied 28.5% of claims, Managed Medicaid denied 16.2%, Managed Medicare plans denied 15% and Medicare denied 7.3%, while managed care and other commercial plans denied 13.2% of claims.
For rural hospitals already operating on razor-thin margins, any unnecessary cost threatens survival. More than 700 rural hospitals are at risk of closure across the country, according to an analysis of 2024 data published in May by the Center for Healthcare Quality and Payment Reform (CHQPR).
Why Are Claims Denied?
Claims are denied for a number of reasons, many of which occur long before the billing process even begins. Common culprits include:
- Inaccurate patient information
- Patient registration errors
- Eligibility issues
- Lack of prior authorization
- Insufficient documentation
- Code inaccuracies
- Incorrect modifiers
- Missing or inaccurate claims data
Why Are Rural Denial Rates Higher?
The higher denial rate is largely a function of challenges specific to rural facilities.
According to the JMSI study, denials are closely linked to the difficulty rural hospitals face in keeping pace with payor-specific policies, documentation requirements and medical necessity guidelines when staffing is limited. When claims fall out of compliance with these rules, denials follow.
Rural hospitals with limited resources also tend to rely more heavily on manual processes, which are more prone to error, or on outdated systems that fail to adequately flag claims issues before submission.
How Can Rural Hospitals Reduce Their Denials?
Commonly cited industry benchmarks put acceptable denial rates at 5%-10% of all claims submitted to payors. Top-performing hospitals keep that number at 5% or lower.
A high denial rate isn't inevitable for rural hospitals. Lowering it is a matter of implementing the right processes and technology. The following practices can help rural hospitals reduce denials and protect their margins.
Training
Coding staff should be educated on coding, billing and denial guidelines, with regular updates on payor requirements related to payment policy, documentation and medical necessity. Front-end staff working in eligibility verification, patient registration and pre-authorization should receive the same level of ongoing training to reduce errors at the source.
Monitoring
Revenue cycle performance should be reviewed on a regular basis to surface opportunities for improvement, including denial rate, days in 
accounts receivable and clean claim rate. A clean claim rate of at least 90% is a strong benchmark for reducing rejected and denied claims.
Tracking and analyzing
Denials should be broken down by percent, payor and reason to identify which payors drive the greatest share of denials, which denials are high-dollar and which are preventable. Analytics tools can perform this breakdown and pinpoint root causes by code, helping revenue cycle teams prioritize denials management efforts where they'll have the greatest impact.
Outsourcing
Finding qualified revenue cycle staff in rural markets can be difficult. Outsourcing specific functions, such as billing, can relieve internal workload while bringing in dedicated expertise for claims follow-up, appeals and account resolution. Training itself can also be outsourced to ensure staff fully understand registration, verification and pre-authorization processes.
Automating
Automated tools improve accuracy across revenue cycle processes that are traditionally handled manually. The most effective denials management tools work proactively, flagging inaccuracies in claims before they're ever submitted to a payor, rather than waiting to react once a denial has already hit accounts receivable. JTS Health Partners' nCREAS™ RCM Intelligence Engine applies this proactive approach, which helps identify and resolve denial risk before it affects cash flow.
Why Act Now?
Like any service organization, hospitals depend on timely payment for
services rendered. Payment that is delayed, reduced or denied outright creates cash flow problems that can quickly compound already weak financial performance at rural facilities. Left unaddressed, denials also add to the workload of revenue cycle teams that are often stretched thin to begin with.
At top-performing hospitals, financial leaders get ahead of the problem. Regular staff training, robust analytics and automated tools allow them to address root causes rather than chase down denials after the fact, protecting both cash flow and long-term financial stability.
Ready to See Where Your Denial Rate Stands?
Talk to JTS Health Partners about how nCREAS™ can help your team catch denials before they happen.
