Introduction Nepalese society is divided across hierarchical strata of gender, ethnicity and economic class, with women, ascribed “lower caste” and poor people placed at the bottom of society. Since 2007, the ministry of health and population removed user fees in primary health services in an attempt to increase use of the services, particularly among underserved population.

Methods Records of 1850 health services users were selected randomly from peripheral facilities—district hospital, primary healthcare centre, and 4 (of 8) health posts—of Jumla—a rural mountain district. Proportions of health services use by privileged and underprivileged ethnicities, men and women, and rich and poor people; before and after user fee removal, were calculated. Semi-structured interviews were conducted among health services users, management staff, and representatives of donors and NGOs working in the district.

Results After fee removal, use of health services by women, underprivileged ethnicities, and poor people increased by 2.4%, 6.8% and 9.2% respectively. However, users and providers had conflicting opinions over the delivery of free health services. There was no evidence to establish the role of health system related confounders, however, it was suspected that ongoing process of state democratisation may have influenced the observed changes.

Conclusion Removal of user fees and subsequent increase in health services use by marginalised people as compared to their privileged counterparts is encouraging. However, some impediments still remain, which can be overcome by improving the delivery system with a focus on smoothening user-provider interactions.