Low-income patients experience greatest financial burden from health insurance claim denials

Low-income patients—and their healthcare providers—are less likely to challenge denials of their health insurance claims than those with household incomes above $50,000, according to University of Massachusetts Amherst research.  

In addition, when the low-income patients or their providers do fight these denials of payment for “free” preventive care or “shoppable” medical services, the outcomes are less successful than those of higher income patients. 

“People with higher income are more likely to have a denied claim reversed and consequently their cost sharing reduced,” says Michal Horný, assistant professor of health policy and management in the School of Public Health and Health Sciences. 

The findings, published in the journal Health Affairs, are the latest in Horný’s ongoing research into health insurance disparities across demographic and socioeconomic dimensions.  

In an earlier paper published in JAMA Network Open, Horný and co-authors found that low-income patients were 43% more likely than high-income patients to have their health insurance claims denied for such preventive care as cancer, diabetes, cholesterol and depression screenings, as well as contraception administration and wellness visits. And historically marginalized racial and ethnic groups were roughly twice as likely as non-Hispanic whites to incur denials.  

“Our new findings further exacerbate the disparity that we established initially,” Horný says. “We added the next step that not only are low-income people most likely to experience a denial, but they’re least likely to have it contested.” 

The new research also found that historically marginalized groups were generally less likely to contest denials. However, when they—or their healthcare providers—did, they were more likely than non-Hispanic whites to be successful in their challenges to get their denials reversed. Still, the mean reduction in cost-sharing was lower among Black and Hispanic people than among whites. 

“It is possible that minority patients were more likely to experience barriers to initiating a claim resubmission or reprocessing, including having access only to under-resourced healthcare providers, explicit or implicit bias, or structural racism,” the paper states. “It is also possible that some minority patients chose to contest only claim denials that were unequivocally wrong, and thus contesting them had a high chance of success.”  

Horný did not find any association between education level and the likelihood of contesting denied claims or being successful in those challenges. 

Horný and team—including Alex Hoagland, a health economist at the University of Toronto—reviewed data from 51,299 denied claims of medical services provided to U.S. adults with private health insurance between 2017 and 2019, most of which were linked to demographic information on the patients. About two in five denials result from incorrect billing by the healthcare provider or processing errors by health insurers. 

The researchers did not have access to who initiated the challenge of the claim denials. “When we launched this research, our mindset was that this is driven by the patient—that after receiving a letter from the insurer that the health plan is not going to pay for it, the patient would call the insurer and try to get the decision reversed,” Horný says. “But we realized that it actually can be driven by healthcare providers as well, because for healthcare providers it’s much easier to get money from a big company than from chasing many small amounts from many patients.” 

Horný says there’s a need for rules and regulations to combat the systemic inequities the research documents. He hypothesizes that low-income people don’t have the flexibility in their jobs and lives to spend hours on the phone contesting a denial. 

“We need regulators to demand health insurance companies be more user-friendly and allow people to contest a claim by filling out an online form 24/7, whenever they have the time to do it,” he says. 

To make it easier for under-resourced healthcare providers (often the ones low-income and marginalized groups visit), Horný recommends universal billing codes among payers to simplify the claims process and reduce errors by both the providers and insurers. 

“Our findings documented considerable administrative burden even for common, high-value health services, where unexpected bills continue to persist with an outsize effect on minoritized groups,” the paper notes.