Adjudication Costs Hit $25.7B: 6 Strategies for Controlling Claims Expenses

For providers, claims adjudication is no longer a routine back‑office task; it’s a major drain on staff time and cash flow. In 2023 providers spent an estimated $25.7B contesting denials and managing appeals, and that burden is worsening in 2025.¹ If you still rely on outdated claims adjudication processes or generic software, you’re likely overpaying sometimes by millions yearly. 

This blog post will explore what’s driving these skyrocketing costs and, more importantly, what healthcare providers can do to regain control. 

Why Are Claims Adjudication Costs Spiraling to $25.7B?

Every year, the claims adjudication process grows more complex and more expensive. What was a straightforward administrative function has become a high-stakes, resource-intensive battleground for providers. 

Today’s claims environment is shaped by a perfect storm: evolving payer requirements, mounting regulatory pressures, and a surge in both the volume and complexity of claims. As healthcare delivery becomes more specialized and fragmented, each claim now demands more documentation, more scrutiny, and more back-and-forth than ever before.  

Labor shortages are compounding the problem. With experienced billing and coding professionals in short supply, organizations are forced to do more with less, often relying on manual workarounds that slow down the process and increase the risk of errors. Meanwhile, payers are tightening their review processes, leading to more denials and longer resolution times.  

The result? Providers are spending more time and money just to get paid for the care they deliver. As administrative costs climb, so does the pressure on margins, cash flow, and, ultimately, patient care.  

What's Driving Your Claims Adjudication Software Expenses?

Understanding the true cost drivers behind claims adjudication is essential for developing effective control strategies. The main culprits are:  

• Manual processes: Despite technological advances, claims submission and follow-up remain heavily manual for providers. Labor accounts for 90% of claims processing expenses.  

• Denials and appeals: Nearly 50 million prior authorization requests were sent to Medicare Advantage insurers in 2023, with denial rates varying significantly by insurer and plan.² Each denied claim triggers an average of three rounds of review for providers, with each cycle taking 45–60 days. 

• Prior authorization headaches: While some improvement has been seen, prior authorization remains a major administrative burden for providers with significant variation across different plans and insurers.   

• Fragmented payer rules: Every payer has its requirements, codes, and documentation standards, making compliance a moving target for provider billing teams. 

• Staffing shortages: 100% of surveyed providers say staffing shortages hurt their ability to submit accurate claims and follow up on late payments.   

You can also read our blog post on Strategic Claims Adjudication Guide for Health Plan Executives   

How Are Industry Trends Making the Claims Adjudication Process More Complex?

The claims adjudication landscape is only getting tougher in 2025. Administrative costs per claim continue to rise significantly year over year, putting increasing pressure on healthcare organizations' bottom lines. 

Despite these rising costs, a substantial majority of denials are ultimately overturned and paid but only after lengthy, resource-draining appeals that consume valuable staff time and delay cash flow. 

Healthcare premiums are climbing in parallel with administrative expenses, creating a compounding effect on organizational budgets. Medicare Advantage plans are also tightening requirements, significantly increasing prior authorization demands compared to previous years.    

Which Claims Adjudication Strategies Actually Deliver ROI?

Leading organizations are taking control of claims adjudication costs through automation, analytics, and purpose-built claims adjudication software. Here's what works:   

Automated Claims Processing

• Real-time validation: Catch errors before submission, reducing providers rework. 

• Provider‑focused: Smarter processing that prevents denials. By automating checks and validating data before submission, modern systems help providers file cleaner claims, avoid costly denials, and shorten the time to payment. 

• Bulk processing: Handle high-volume submissions efficiently   

AI-Powered Denial Management

• Predictive analytics: Identify high-risk claims before submission  

• Automated appeals: Generate and submit appeals with supporting documentation  

• Pattern recognition: Learn from denials to prevent future issues   

Integrated Workflow Management

• Unified dashboards: Monitor all claims from a single interface  

• Real-time payer updates: Stay current with changing requirements automatically  

• Performance analytics: Track key metrics and identify improvement opportunities   

Mirra's Claims Adjudication Solution combines all these strategies into a comprehensive platform designed for modern healthcare organizations:  

• Automated claims intake and validation against real-time payer rules  

• AI-powered denial management that learns from every interaction   

• Integrated prior authorization workflows with automated documentation collection  

• Real-time analytics and reporting for actionable insights  

• Seamless EHR and clearinghouse integration to eliminate data silos  

The result? Mirra clients routinely see a 20–30% reduction in claims adjudication costs within the first year.    

Explore how our end‑to‑end Medicare Advantage-in-a-Box platform unifies claims, prior authorization, and compliance workflows to cut adjudication costs at scale.  

To examine the primary limitations of using off-the shelf claims management read the blog post on Why Custom Claims Adjudication Software Works Better 

Case Study: Turning the Tide on Claims Costs

The Challenge: As it expanded, a regional Medicare Advantage plan serving multiple counties struggled with rising administrative costs and compliance demands. Manual processes consumed significant portions of their administrative budget, and denial rates were well above industry averages.   

The Solution: By partnering with Mirra Healthcare, the organization implemented a comprehensive claims adjudication transformation:  

• Streamlined processing: Unified claims processing, enrollment, billing, and provider management into a single, compliant platform   

• Rapid deployment: Achieved full implementation and go-live, meeting all Medicare and Medicaid requirements on schedule   

• Automated workflows: Reduced manual intervention through intelligent automation and proactive case management   

• Continuous compliance: Maintained seamless compliance as regulations changed, thanks to real-time system updates   

• Expanded capabilities: Added appeals, grievances, and campaign management to the digital infrastructure   

The Results:  

The plan saw a significant reduction in operational inefficiencies, improved compliance, and greater agility in responding to regulatory changes, freeing up resources to focus on member care and organizational growth.  

The leadership team reported successful implementation, ongoing support, and measurable improvements in operational efficiency that allowed them to reinvest in strategic initiatives.    

Measuring Success in Cost Reduction

What does true success in claims adjudication look like? It's about moving beyond simply processing claims to strategically optimizing your revenue cycle. Success for leading healthcare organizations means dramatically reducing the hidden costs and inefficiencies plaguing traditional systems.   

A critical benchmark for top performers is achieving an adjudication cost per claim significantly below the national average of $57.23.³ This isn't just about cutting corners; it's about leveraging intelligent automation and streamlined workflows to ensure claims are clean, compliant, and paid right the first time. Beyond this core metric, success means achieving high first-pass resolution rates, minimizing costly appeals, and accelerating cash flow.   

With Mirra, these aren't just aspirational goals; they're tangible outcomes organizations can measure, report, and build upon to secure your financial future.    

For deeper dives on claims trends, denials, and workflow optimization, browse our latest insights and practical guides. 

Time to Transform Your Claims Process

The $25.7 billion price tag on claims adjudication is a clear signal: the status quo is unsustainable. It's time to leverage innovative strategies and advanced technology to take decisive control of your claim's expenses. Imagine improved cash flow, streamlined operations, and the freedom to reinvest resources directly into enhancing patient care.  

Ready to transform your claims adjudication process? Connect with Mirra’s expert to discuss your specific challenges and opportunities.  

References:  

• Premier Inc., 2025: Claims Adjudication Costs Providers $25.7 Billion  

• https://www.kff.org/medicare/nearly-50-million-prior-authorization-requests-were-sent-to-medicare-advantage-insurers-in-2023/  

•  Premier Inc., 2025: Claims Adjudication Costs Providers $25.7 Billion