Medical billing is entering a new era. Claims are no longer being evaluated only through traditional payer edits and manual reviews. Artificial intelligence, machine learning, increased Medicare Advantage participation, tighter documentation requirements, and specialty-specific reimbursement rules are changing how healthcare organizations get paid.
The State of Medical Billing 2026 Benchmark Report from AMS Solutions, recently highlighted by HIT Consultant, provides an important warning for physicians, medical billers, coders, auditors, and revenue cycle management professionals: getting a claim submitted is no longer enough. Getting it right the first time is becoming critical.
According to the report, the industry-wide claim denial rate has increased to approximately 9%, compared with 7.5% in 2023. Average days in accounts receivable have also increased from 38 days to 42 days. (HIT Consultant)
These numbers represent more than administrative inconvenience. They represent delayed cash flow, additional staff work, appeals, rework, and potentially lost revenue.
Why Are Medical Billing Denials Increasing?
The report points to several important forces affecting revenue cycle performance, including increasing Medicare Advantage penetration and automated machine-learning claim reviews by commercial payers. These developments are contributing to greater documentation scrutiny and longer accounts-receivable cycles. (HIT Consultant)
This represents a fundamental shift.
In the traditional billing environment, organizations often concentrated heavily on back-end denial management. A claim was denied, the billing team identified the reason, corrected the problem, submitted an appeal, and attempted to recover payment.
That approach is becoming increasingly expensive.
The future of RCM must emphasize denial prevention before claim submission.
Neurology: 14% Denial Rate
One of the most striking findings involves neurology.
According to the benchmark report, neurology has an approximately 14% initial denial rate, the highest among the major specialties analyzed. Professional and technical component errors involving modifiers such as -26 and -TC, particularly for EMG/NCS and EEG services, were identified as significant denial drivers. (HIT Consultant)
For medical coders, this demonstrates why simply knowing a CPT code is insufficient.
A skilled coder must understand the service performed, professional versus technical components, modifier requirements, payer policies, documentation, and reimbursement implications.
The difference between knowing a code and understanding the entire claim is becoming increasingly important.
Home Health: 13% Denials and 52 Days in A/R
Home health organizations face another major challenge.
The report identifies an approximately 13% denial rate and an average 52 days in accounts receivable for home health. Problems include OASIS-E scoring inaccuracies, missing face-to-face encounter information, and missed Notice of Admission filing requirements. (HIT Consultant)
This illustrates an important RCM principle:
Revenue cycle problems frequently begin before the claim reaches the billing department.
Documentation, eligibility, authorization, coding, assessment accuracy, timely filing, and clinical workflows can all influence whether a claim ultimately gets paid.
Physical Therapy: Small Errors Can Create Big Revenue Problems
Physical therapy reportedly faces an 11% denial rate and approximately 45 days in A/R.
The report highlights problems involving the 8-minute rule, KX modifier requirements, Medicare thresholds, and unsigned plans of care. (HIT Consultant)
These are excellent examples of how technical billing knowledge directly affects reimbursement.
A seemingly small error involving units, modifiers, signatures, or documentation can delay payment for weeks.
Medical billing professionals must therefore move beyond basic claim submission and understand why the payer pays, denies, reduces, or recoups a claim.
Modifier -25 Is Under the Microscope
Another significant development is the increasing use of automated reviews involving modifier -25.
The report states that payers have introduced automated retrospective reviews that can result in payment pull-backs 30 to 90 days after payment when documentation does not adequately demonstrate a separately identifiable E/M service. (HIT Consultant)
This is particularly important because a paid claim should never automatically be considered a permanently successful claim.
Post-payment auditing can reopen the reimbursement question.
Correct coding must therefore be defensible coding.
The medical record should support the codes, modifiers, medical necessity, and services reported.
AI Is Now on Both Sides of the Claim
Healthcare organizations are increasingly discussing how AI can help coding and billing teams.
But there is another side to this transformation:
Payers are using sophisticated technology too.
According to the report, machine-learning models are increasingly reviewing documentation precision. Broad or nonspecific ICD-10-CM coding may contribute to automated claim holds and revenue leakage in certain circumstances. (HIT Consultant)
This means the future will not simply be:
Human coder versus payer.
Increasingly, it may become:
AI-assisted provider documentation → AI-assisted coding → automated claim submission → payer algorithm → human review or appeal.
The quality of the information entering this ecosystem becomes extremely important.
Stop Managing Denials. Start Preventing Them.
Perhaps the most important lesson from the 2026 benchmark is the need to move RCM expertise toward the front end of the revenue cycle.
Organizations should strengthen:
- Patient registration and insurance verification
- Prior authorization workflows
- Physician documentation
- Medical necessity validation
- ICD-10-CM and CPT coding accuracy
- Modifier selection
- Charge capture
- Claim edits and scrubbing
- Denial analytics
- Payer-specific knowledge
- Documentation and coding education
The goal should not simply be to employ excellent denial specialists.
The goal should be to produce fewer preventable denials in the first place.
The Medical Biller of 2026 Is Becoming a Revenue Cycle Specialist
The traditional perception of medical billing as data entry is outdated.
Today’s high-performing medical billing professional must understand coding, claims, payer policies, denials, appeals, accounts receivable, reimbursement, compliance, documentation, analytics, and increasingly, artificial intelligence.
At PMBAUSA LLC, we believe professional education must evolve with the healthcare industry.
The next generation of medical billing and RCM professionals should be able to look beyond the claim form and understand the entire journey from patient encounter to final reimbursement.
The PMBAUSA Message
The 2026 medical billing environment sends a clear message:
Denials are increasing. Payers are becoming more sophisticated. AI is entering claim review. Documentation is under greater scrutiny. Revenue cycles are becoming more complex.
The answer cannot be simply to work more denied claims.
Healthcare organizations need smarter front-end processes, better documentation, accurate coding, stronger billing knowledge, meaningful analytics, and professionals trained to understand the complete revenue cycle.
The future belongs to the medical biller who understands not just how to submit a claim—but how to protect the revenue behind it.
PMBAUSA LLC
Advancing Professional Excellence in Medical Coding, Medical Billing, Revenue Cycle Management, Compliance, and Healthcare AI.
Source: HIT Consultant — AMS Solutions Releases 2026 Benchmark Report on the State of Medical Billing
Disclaimer: This article is intended for educational and professional awareness purposes only. Statistics and findings attributed to the 2026 benchmark report are based on the cited source. PMBAUSA LLC is not affiliated with or endorsed by AMS Solutions or HIT Consultant.
