Payment delays and denials aren’t new, but the forces driving them are more complex and harder to detect than ever. Many industry analyses use data voluntarily provided by hospitals to track denial trends and payment patterns, but this method often misses the nuances of payer behavior. This is largely because there is no standardized way to track and report denials across the industry, making normalized comparisons difficult.
Ensemble takes a different approach, synthesizing comprehensive insights from one of the largest healthcare data footprints in the U.S. to uncover patterns that traditional reporting can’t see. Managing 80 million transactions a year, Ensemble has unified more than two petabytes of provider, payer and clinical data into an AI-ready asset, unlocking predictive modeling, real-time insights and agentic AI workflows that help protect providers against payment delays and denials.
These insights support over 30 health systems in improving financial outcomes and outperforming industry benchmarks. Across its clients in 2025, Ensemble achieved an initial denial rate of 8.0% and a denial write-off rate of 2.8%, below the industry benchmarks of 11.8% and 3%–5%, respectively.
Here are three payment trends reshaping hospital reimbursement nationwide.
Trend 1: Medicare Advantage Inpatient Denials Are Up 42%
Ensemble’s data shows Medicare Advantage (MA) plans increased inpatient denials by 42% over the past 12 months, while commercial and traditional Medicare denial rates remained relatively flat. These denials often cite authorization, medical necessity or reduced level of care and the financial impact is significant: each time the payer denies inpatient status for a patient, they avoid paying around $9,000.
Since the Two-Midnight Rule clarification in January 2024, MA plans have also failed to close the gap on inpatient admission ratios compared to Medicare, admitting 4% fewer patients. Since the Medicare patient population is nearly identical to the Medicare Advantage patient population, MA inpatient admission rates should be nearly identical to Medicare’s. Without adequate resources to monitor, flag and challenge MA decisions that don’t comply with the Two-Midnight Rule, many hospitals face a much more significant variance.
“We’re continuously tracking and monitoring Medicare Advantage inpatient admission rates against traditional Medicare benchmarks to identify emerging risk patterns early,” says Ensemble’s vice president of revenue protection, Nichol Cobaugh.
“When level of care denials occur, we challenge them through a robust peer-to-peer review process, ensuring clinical decisions are defended with solid evidence. But we don’t stop at intervention. We’re equally focused on prevention by educating clinicians about payer-specific policies and providing practical guidance to help them strengthen documentation, so inpatient status is always clearly justified and defensible.”
Trend 2: The RFI Process Adds 117 Days to Payment
When payers request additional information (RFI) to process a claim, the clock slows dramatically. Our analysis shows:
- Claims stuck in the RFI process take 158 days to pay, compared to 41 days for standard claims across the same insurers.
- 90% of these claims are ultimately paid exactly as initially billed, meaning the delay rarely changes the payment outcome.
This process drains cash reserves and forces providers to spend heavily on administrative follow-up. These requests can be very broad and vague, like: We need additional information from you before we can complete our review. Please submit all medical records for this claim and any inpatient admission up to 30 days prior to the admission date of the referenced claim.
“When vague requests for information stall claims for months and ultimately result in payments exactly as billed, it’s clear the process is broken,” says Brad Gingerich, vice president of payer strategy at Ensemble. “We leverage these insights in payer contract negotiations, advocating for clauses that minimize unnecessary RFIs. By presenting data-driven evidence of recurring issues directly to payers, we help drive improvements in their procedures.”
Trend 3: Downgrades and Medical Necessity Denials Are Driven by Payer-Specific Rules
Perhaps the most concerning trend: preventing DRG downgrades and medical necessity denials is nearly impossible for most providers because the rules vary widely by payer. Payers are increasingly denying payment due to “insufficient evidence” to justify the care provided, but what they deem sufficient is driven by an obscure combination of proprietary rules, clinical guidelines from MCG and InterQual, CMS policies and disparate medical journal publications.
Ensemble analyzed more than 60,000 detailed denial audit letters using a fine-tuned large language model and pattern analysis to find the exact reasons payers cited for downgrades and medical necessity denials. Revenue cycle experts worked with data scientists to logically consolidate the reasons across payers and DRGs, resulting in nearly 600 highly specific recurring denial reasons.
“By using AI and LLM to study denials, we now know exactly what evidence payers require,” explains Pieter Schouten, Ensemble’s senior vice president of innovation. “For example, CMS still uses SEP-2 for sepsis diagnosis while many other payers use SOFA (sequential organ failure assessment) scoring. Some payers use KDIGO as their definition of Acute Kidney Injury, which requires an increase in creatinine by ≥0.3 mg/dL within 48 hours, or an increase in creatinine ≥1.5 times baseline or urine volume ≤0.5 ml/kg/h for 6 hours. Another payer may use a completely different set of criteria for Acute Kidney Injury.”
That’s where Schouten sees AI changing the game. “We’re incorporating these insights into clinician query workflows to ensure documentation accuracy based on the level of detail payers require for specific diagnoses and procedures. It’s a level of precision unavailable through any other means.”
Why This Matters Now
Ensemble’s advanced data intelligence reveals not only the prevalence of unnecessary RFIs and denials based on hidden payer rules, but also highlights the critical need for integrated revenue cycle solutions that address both visible and hidden issues.
To tackle payment delays and denials in 2026, providers most leverage predictive models, real-time workflow integration and collaborative payer engagement to mitigate revenue loss, improve compliance and ultimately streamline the path to payment. As the complexity of payer practices grows, these strategic approaches will be essential for sustaining financial health and ensuring providers can maintain their focus on delivering quality patient care.
