Insurance claims are the hardest to hit low-income patients

When health insurance companies reject their claims, low-income patients face a devastating double burden: not only are they rejected in the first place, but they are unlikely to successfully challenge these rejections.

Research by the University of Massachusetts Amherst University shows that patients who earn less than $50,000 per year struggle with complex, time-consuming denials, even allegedly “free” preventive care, such as cancer screening and health visits.

The study, published in Health Affairs, analyzed over 51,000 rejection claims since 2017-2019, exposing systemic inequality that has caused the most vulnerable patients in society to pay unexpected bills, while wealthier patients have successfully overturned similar rejections.

Inequality in insurance appeals

“People with higher incomes are more likely to be reversed by rejection claims, and therefore cost allocation is reduced,” explained Michal Horný, assistant professor of health policy and management at UMass Amherst.

The findings show an unsettling pattern: While simple billing errors or errors in handling errors result in a fifth of rejection, low-income patients lack the resources to effectively navigate the appeal process. Meanwhile, patients with household incomes of over $50,000 always achieve better results when challenged denial.

This led to an early study by Horný’s team that low-income patients are already 43% more likely to initially reject preventive care claims than high-income patients. Historically marginalized races and ethnic groups face twice the rate of denial among non-Hispanic whites.

Obstacles beyond income

The study found complex dynamics around who competed for denials and why. Although racial minority patients who initially challenged denials are usually less challenging to denials, they have a higher rate of reversal than non-Hispanic whites. However, their average cost-sharing reduction remains low.

Key differences identified in the study include:

• Low-income patients face the highest rejection rate, the least likely to file a claim for rejection
• Among high-income patients, the challenge of success is more common and creates more complex advantages
• Minorities face structural barriers to induce attractiveness, but achieve better results when better results
• Educational level indicates no correlation with appeal success, suggesting systemic, rather than knowledge-based barriers

The hidden role of healthcare provider

Research shows that in discussions about denial claims, an important dynamic is often overlooked: health care providers often appeal on behalf of patients. “When we started this study, our mindset was that it was patient-driven,” Horn noted. “But we realized that it could actually be driven by healthcare providers, too, because it’s much easier for healthcare providers to get money from big companies than chasing a lot of small numbers from many patients.”

This finding suggests that underresourced healthcare providers (usually those serving low-income and minority communities) may lack the administrative capacity to effectively deny denials, further detrimental to patients.

The study also found that education level was not associated with denial of success challenges, suggesting that barriers transcend personal knowledge or competence. Instead, structural factors such as work flexibility and access time seem crucial.

Solutions to solve system problems

Horný assumes that low-income people simply don’t have the flexibility to spend hours on their phone to deny it. His advice focuses on systemic changes rather than personal solutions.

“We need regulators to require health insurance companies to be more user-friendly and allow people to file claims when they fill out online forms on sometimes 24/7,” he stressed.

The research team also advocates a common billing code in all insurance payers to simplify the claim process and reduce mistakes among healthcare providers and insurers. Such standardization is particularly likely to benefit underresourced healthcare providers, providing services to vulnerable groups.

As the Institute notes, these “large administrative burdens are needed even for ordinary high-value health services” create unexpected bills that unexpectedly affect marginalized groups, which is within the scope of access to very health care that the calculation insurance should provide.

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