Insurance Denials in Rare Disease Care: Systemic Flaws in Coverage
- The Rare360 Editorial Team
- Sep 24
- 9 min read
Accessing healthcare for rare diseases often feels like navigating a maze - complicated, time-consuming, and fraught with obstacles. A major barrier in this journey is the prior authorization (PA) process, where insurers require approval before covering medication, tests, or procedures. While originally intended to control costs, PA systems frequently delay care, create administrative burdens, and act as a gatekeeper that disproportionately affects those with rare conditions.
For instance, a 2025 American Medical Association (AMA) survey found that 94% of physicians report that prior authorization delays care, and 78% say it sometimes leads patients to abandon treatment completely. Alarmingly, delays or denials can result in serious adverse events, such as hospitalizations or life-threatening complications.
Those with rare diseases are particularly vulnerable. A study of patients with hereditary angioedema (HAE), a rare genetic disorder, found that insurance delays or denials led to:
Increased frequency of symptoms,
Missed work or school days,
Escalated anxiety, and
More frequent urgent care or emergency room visits.
Recognizing the harm, the U.S. government recently proposed new rules for prior authorization under Medicare and Medicaid, requiring insurers to respond to urgent requests within 72 hours, to clearly explain denials, and to publicly report denial metrics. These reforms take effect in 2026, though critics note that they do not address prior authorization for privately insured patients.
These mounting data points underscore a critical reality: insurance denials aren't just roadblocks; they can endanger health and well-being. In the rare disease community, where timely, specialized care is oftentimes essential, these systemic issues in insurance practices have deep and lasting consequences.
The Burden of Prior Authorization in Rare Disease Care
Prior authorization was originally designed to ensure appropriate, cost-effective use of therapies, but for rare disease patients, it often creates disproportionate barriers. Unlike common conditions with standardized treatment pathways, rare diseases usually lack established guidelines. As a result, patients requiring specialty drugs, gene therapies, or off-label treatments encounter frequent PA denials or delays, simply because their care falls outside conventional coverage norms.
Studies also show that prior authorization processes can postpone treatment significantly. A 2020 analysis in Health Services Research reported median delays of 12 to 31 days depending on specialty care. These risks are amplified in rare disease populations, where early intervention can be critical to slowing disease progression or preventing irreversible damage. Even a few weeks’ delay in starting a specialized therapy can dramatically worsen outcomes for conditions that advance quickly.
Moreover, the administrative burden is heavy on healthcare providers, who spend hours submitting clinical documentation, making phone calls, and filing appeals. According to a 2023 study in the Journal of Managed Care & Specialty Pharmacy, providers spend an average of 14 hours per week per physician navigating prior authorization paperwork. This is especially problematic for rare disease specialists, who may treat only a handful of patients with a given condition and therefore face additional scrutiny from insurers unfamiliar with these treatments. Care teams are left in the position of fighting insurers instead of focusing fully on patient care.
For patients and caregivers, the burden is not just bureaucratic; it’s emotional and physical. Uncertainty about whether treatment will be approved fuels anxiety, while delayed access to medications can worsen symptoms, leading to avoidable emergency visits or hospitalizations.
The Appeal Process: Complex and Exhausting
When an insurer denies the prior authorization requests for treatments, patients and caregivers are often forced into the appeal process. In practice, this mechanism is often a lengthy, opaque, and emotionally draining process. For families already overwhelmed by managing a rare condition, navigating this bureaucratic labyrinth can feel nearly impossible.
The appeal process typically involves multiple levels of review: an initial internal review by the insurance company, followed by secondary reviews, and in some cases, an external independent medical review. Each stage demands substantial documentation: medical records, physician letters of support, and peer-reviewed evidence of treatment efficacy, often consuming weeks or even months. For rare disease families, this becomes particularly challenging because peer-reviewed studies or clinical trial data may be limited, and insurers often use the absence of large-scale evidence as justification for continued denial. This reflects a systemic flaw; most rare diseases lack the broad clinical trial datasets insurers usually look for, putting patients at a structural disadvantage.
According to a report by the Kaiser Family Foundation (KFF), in 2023, fewer than 1% of denied claims were appealed in Affordable Care Act (ACA) marketplace plans. This astonishingly low rate underscores how complexity and fatigue discourage patients and providers from pursuing appeals, even when they might have a valid case. Even when appeals are pursued, success is not guaranteed. According to data, one in five denied claims remains unresolved even after appeal.
Moreover, the emotional toll is compounded by financial strain. Caregivers, who already juggle medical appointments, caregiving responsibilities, and financial strain, often describe the appeals process as “fighting a second battle”; this time against insurers rather than the disease itself. Caregivers often must take time off work to manage the appeal process, which involves hours on the phone and coordination between multiple providers. The uncertainty and repeated rejections erode trust in the healthcare system and amplify the psychological burden already associated with living with a rare disease.
Ultimately, while the appeal process is meant to serve as a safeguard against inappropriate denials, it frequently functions as an additional barrier that exacerbates inequities in rare disease care. While insurers have layers of bureaucracy and resources to uphold denials, patients and caregivers must rely on limited time, energy, and finances to challenge them. This imbalance creates a cycle where many rare disease patients never reach the treatments they need, despite having medical justification and provider support.
Systemic Flaws in Coverage Policies
Insurance denials in rare disease care are not solely the result of individual prior authorization requests; they reflect deeper systemic flaws in coverage policies. These flaws reveal how outdated frameworks and inconsistent practices across insurers fail to meet the unique needs of rare disease patients.
Limited Coverage for Off-Label Use
Off-label prescribing, i.e., using an FDA-approved drug for a condition other than the one it was initially approved for, is common in rare disease care. Since few rare diseases have FDA-approved treatments, clinicians often rely on existing drugs that show promise in smaller studies or anecdotal clinical evidence. However, insurers frequently deny coverage for off-label use, citing insufficient evidence or lack of inclusion in their medical policy guidelines. This puts physicians in a difficult position, forced to either appeal repeatedly or switch patients to less effective therapies simply because coverage is restricted.
Outdated Medical Policies
Another systemic issue is the failure of insurance policies to keep pace with emerging therapies, such as gene and cell-based treatments. These innovative therapies often enter the market with high upfront costs and limited long-term data. Insurers, prioritizing short-term cost control, may deny or severely restrict coverage, even when treatments have received regulatory approval. This mismatch creates a situation where patients are denied access to potentially transformative therapies because coverage policies have not caught up with regulatory approvals or clinical practice.
Inconsistent Coverage Criteria Across Insurers
Patients with rare diseases often face different outcomes depending on their insurer. Private insurers, Medicare, and Medicaid may apply different coverage criteria for the same therapy, creating a fragmented system where access depends heavily on a patient’s insurance type rather than medical need. These differences often result in a “postcode lottery” where patients’ outcomes are dictated by where they live rather than the severity of their condition.
Lack of Rare Disease Expertise in Review Processes
A critical but often overlooked issue is the lack of rare disease expertise among insurance reviewers. Reviews are sometimes conducted by medical directors who are generalists and unfamiliar with the nuances of rare conditions. This increases the likelihood of inappropriate denials by medical directors who are unfamiliar with the nuances of rare conditions, relying instead on generalized criteria that fail to reflect individual patient needs. This misalignment between insurer policies and rare disease realities not only delays treatment but also undermines trust between patients, providers, and the healthcare system.
Fragmentation and Lack of Transparency
Coverage policies are often opaque, with little explanation provided for denials. Families often receive denial letters that cite vague criteria or generic phrases such as “not medically necessary,” without clarity on what evidence could overturn the decision. This lack of transparency makes the appeals process even more daunting and contributes to patient frustration and mistrust.
Taken together, these systemic flaws reveal how insurance frameworks, built primarily for common conditions, are ill-equipped to meet the unique needs of rare disease patients. The result is a cycle of coverage denials, appeals, and financial strain that widens the gap between available medical innovation and actual patient access.
Financial and Health Consequences of Insurance Denials
Insurance denials in rare disease care are not simply bureaucratic setbacks, they carry profound consequences that ripple through patients’ health, financial stability, and overall quality of life. When treatments, diagnostics, or supportive services are delayed or denied, the cost is measured not only in dollars but also in deteriorating health outcomes and emotional strain for both patients and caregivers.
Financial Consequences
The economic toll of denials is staggering. Denied coverage often translates into devastating out-of-pocket costs. Rare disease therapies, particularly orphan drugs and gene therapies, can cost hundreds of thousands or even millions of dollars annually. For example, the EveryLife Foundation’s National Economic Burden of Rare Disease Study (2021) estimated that U.S. households affected by rare diseases face an average of $26,000 in annual out-of-pocket expenses, much of it due to non-covered services and treatments. When insurers deny coverage, families are left to shoulder these expenses on their own. Costs can include not just medications but also genetic testing, off-label prescriptions, mobility aids, and travel to specialty centers.
Health Consequences
The health impact of denials can be equally severe. Delays in accessing appropriate treatment can accelerate disease progression, leading to complications that could have been prevented with timely care. For example, in conditions like Spinal Muscular Atrophy (SMA) or Pompe disease, delayed treatment significantly reduces long-term outcomes and quality of life. Studies have shown that early intervention is critical for slowing disease progression, yet insurance denials often mean patients miss these crucial therapeutic windows.
Denials also increase reliance on emergency care. Patients unable to afford prescribed therapies may end up hospitalized more frequently, creating not only higher personal costs but also broader system inefficiencies. For insurers, these short-term cost savings may paradoxically lead to higher long-term expenditures as untreated conditions result in hospitalizations, surgeries, or permanent disability.
Impact on Caregivers
Caregivers also bear the brunt of these consequences. Financial stress caused by denials can force caregivers to reduce work hours or leave the workforce, compounding lost income and benefits. Moreover, the emotional toll of watching a loved one deteriorate due to lack of treatment often leads to caregiver burnout, depression, and social isolation. Research indicates that caregivers of rare disease patients are 2.5 times more likely to experience mental health challenges compared to the general population.
Taken together, these financial and health consequences illustrate how systemic flaws in insurance coverage deepen the already heavy burden of rare diseases. Denials are not isolated events; they set off cascading effects that undermine stability, worsen health outcomes, and erode trust in the healthcare system.
Policy Advances Addressing Coverage Barriers
Advocacy and policy reform have become critical tools in addressing the systemic flaws of insurance denials in rare disease care. Several key policies have been milestones in improving rare disease care:
The Orphan Drug Act (1983, U.S.): Created incentives like tax credits and market exclusivity to encourage the development of therapies for rare diseases. Since its passage, over 600 orphan drugs have been approved compared to fewer than 40 prior.
Affordable Care Act (ACA, 2010, U.S.): Expanded protections against discrimination based on pre-existing conditions, which directly benefited rare disease patients.
EU Regulation on Orphan Medicinal Products (2000): Encouraged investment in research and development across Europe, paving the way for broader access to innovative therapies.
More recently, advocacy has focused on streamlining prior authorization processes, increasing transparency in coverage decisions, and ensuring that insurers adopt evidence-based criteria tailored to rare conditions. The 21st Century Cures Act (2016) in the U.S. was another step forward, supporting innovation and patient-focused drug development, although gaps remain in coverage once therapies are approved.
Conclusion
Insurance denials in rare disease care highlight a fundamental mismatch between existing healthcare frameworks and the realities faced by patients and caregivers. For conditions where treatments are scarce, delays or outright denials can mean irreversible health decline, financial devastation, overwhelming emotional strain, and even premature death. The evidence is clear: rare disease patients face higher out-of-pocket costs, longer diagnostic delays, and greater risks of catastrophic spending compared to those with common illnesses. These burdens ripple outward, affecting caregivers, families, and society at large.
Yet, this is not simply a story of systemic failure; it is also one of resilience and advocacy. Patients, advocacy organizations, caregivers, and medical professionals continue to drive reforms aimed at making rare disease care more equitable and accessible. Policy milestones like the Orphan Drug Act and initiatives to improve prior authorization transparency show that change is possible when patient voices are amplified. However, persistent gaps in coverage, especially around orphan drugs, gene therapies, and mental health services, make it clear that more work lies ahead.
To truly support the rare disease community, healthcare systems must adopt patient-centred, value-based approaches that prioritize long-term outcomes over short-term cost savings. Expanding insurance coverage, integrating mental health into rare disease care, and harmonizing policies across regions are essential next steps.
Ultimately, rare diseases may be individually uncommon, but together they affect millions worldwide. Addressing insurance denials is not just about financial fairness; it is about ensuring dignity, timely care, and a better quality of life for patients and caregivers who already carry extraordinary burdens.
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