Medical Claim Denial Disparities Across Payers and Safety-Net Providers

Key Takeaways:

• In a sample of 234.2 million medical claims, Medicare Advantage (MA) had the highest rate of initial denials for claims for inpatient and outpatient services and had the highest overturn rate for professional and outpatient services.
• Across professional, inpatient, and outpatient services, safety-net providers had more initial denials than non–safety-net providers, highlighting coverage disparities among socially disadvantaged groups.
• Future policy reforms should focus on the cause of these variations in medical claim denials to reduce gaps in coverage and provide more equitable care.

Although medical claim denials place high costs on providers and may limit patient access, they can also reduce health care spending and low-value care.

Knowledge of denial rates across providers, specifically safety-net providers, is limited. Since safety-net providers treat traditionally underserved populations, high rates of denials could widen health gaps.

Study Methods and Outcomes

Researchers used 2019 medical claims data from Inovalon to assess variations in denial rates and appeals across payers, providers, and services. The study compared patterns for MA, Medicaid, and commercial insurance and between safety-net and non–safety-net providers.

The study included 234.2 million claims representing $34.2 billion in spending. Within this sample, 60.2% ($20.6 billion) were professional claims, 13.8% ($4.7 billion) were inpatient claims, and 26.0% ($8.9 billion) were outpatient claims. In addition, 59.9% ($20.5 billion) was from commercial payers, 29.6% ($10.1 billion) was from Medicaid, and 10.2% ($3.5 billion) was from MA. Safety-net providers constituted 21.4% ($7.3 billion) of claims.

Denial Rate Patterns Across Payers

Medicaid had the highest rate of initial denials for professional services, 15.1% vs 10.5% for MA and 7.8% for commercial. MA had the lowest final denial rate, 4.1% vs 4.2% for commercial and 7.4% for Medicaid. MA also had the highest overturn rate, 60.8% vs 51.1% for Medicaid and 46.4% for commercial.

For inpatient services, MA had the highest initial denial rate (20.0%) and the highest final denial rate (8.3%). Furthermore, MA had the lowest overturn rate for this category of services, 58.5% vs 72.8% for commercial and 65.1% for Medicaid.

For outpatient services, MA once again had the highest initial denial rate (16.5%) compared to Medicaid and commercial insurance. However, MA also had the highest overturn rate (63.6%). In this category, Medicaid had a slightly higher rate of final denials than MA and commercial insurance, 6.5% vs 6% and 5.9%, respectively.

Variations Between Safety-Net and Non–Safety-Net Providers

Across all 3 service categories, safety-net providers had higher initial denial rates than non–safety-net providers. Only in outpatient services did safety-net providers have a lower final denial rate, 5.6% vs 6.3%, which is due to a higher overturn rate.

Initial denials for professional services were 13.6% and 9.2%, respectively. Safety-net providers also had fewer overturns, 46.2% vs 51.3%, and more final denials, 7.3% vs 4.5%, than non–safety-net providers.

For inpatient services, safety-net providers had a higher initial denial rate of 18.3% compared to the 14.7% rate for non–safety-net providers. Again, safety-net providers also had less overturns and more final denials.

Implications for Managed Care

These findings show how medical denial claims disproportionately affect safety-net providers, illustrating that denials are more common among disadvantaged patients. Future research should focus on these disparities to discover their cause as well as to determine equitable solutions.

The authors said, “As policymakers contemplate reforms to the denial and appeals process, they should consider how the burden of denials is distributed across the provider landscape.”

Reference

Weinreb GG, Landon BE. Variation in medical claim denials: safety-net providers are hardest hit. Health Aff Scholar. 2026;4(8):qxag206. doi:10.1093/haschl/qxag206