Addressing healthcare’s crippling crisis of medical debt

We must make changes to alleviate medical debt for patients and lower overall costs across the healthcare ecosystem.

Navigating the U.S healthcare system is incredibly challenging for patients, and with the rising cost of care—often paid by the consumer - pervasive lack of insurance coverage, and difficulty finding in-network physicians accepting new patients, it comes as no surprise that medical debt is an ongoing problem for many Americans. However, a new study published in JAMA found that the country’s medical debt challenge is much larger than commonly perceived. According to the researchers, nearly one in every five people in the U.S. (17.8%) has medical debt, and collection agencies held $140 billion in unpaid medical bills in 2020 – double the previously known amount.

Patients who need and receive unexpected medical care due to an emergency often face crippling bills when they return from the inpatient hospital stays. Imagine, a person falls during a hike and has a compound leg fracture. After calling 911, they’re rushed to an emergency room in an air ambulance for treatment. Although unknown to them at the time, the hospital they’re being brought to does not accept their insurance, and even if it did, the insurance does not cover air ambulance transport, which averages around $40,000. They’re left with a $75,000 bill they cannot afford to pay. These unexpected charges, or surprise billing, can result in bankruptcy for some families. Between 2013 and 2016, nearly 60% of bankruptcy filings were due to medical bills.

To alleviate medical debt for patients and lower overall costs across the healthcare ecosystem, there needs to be significant advances.

New Legislation to Restrict Surprise Medical Bills

Although the state of U.S. medical debt remains bleak, there are new policies in place that have a goal of ending surprise billing for patients. The No Surprises Act (NSA), which was signed into law on December 27, 2020, seeks to protect patients from receiving bills above and beyond normal cost sharing for out-of-network services the patients did not freely choose. The NSA prohibition on these surprise bills applies to:

  • Out-of-network emergency services
  • Out-of-network nonemergency services at in-network facilities
  • Out-of-network air ambulance services

Although the legislation has huge potential to benefit patients and protect them from large medical bills, there are significant implications for payers and providers as they race to comply by the 2022 deadlines. Healthcare payers, for example, will need to move quickly to establish appropriate processes for reimbursement, settlement, and independent dispute resolution, as well as implement numerous notices for patients. To manage this lift and meet requirements, health plans will need to re-evaluate their internal workflows and invest in updated technology to provide better and more cost-efficient care.

In addition to protection from unexpected medical payments, the NSA includes transparency requirements that will provide an advanced explanation of benefits with out-of-pocket cost estimates to patients before a scheduled appointment. As a result, patients know in advance what their service will cost and can evaluate whether the cost is within their budget before they step foot in their doctor’s office – no surprises in sight.

Technology to Improve Medical Payments Processes and Debt Crisis

Healthcare claims processing continues to lag bill processing and payments in other industries when it comes to technology. Many providers and payers still use archaic, paper-based systems rather than digital forms of payment. In addition to nationwide policy changes to address billing errors and consumer medical debt, the healthcare system needs to make the payments process more efficient, accurate, transparent, and understandable to achieve consistent and correct billing that doesn’t leave patients confused.

As an example, hundreds of billions in physical check payments still flow between healthcare payers and providers today. Not only do paper check payments contribute to unnecessary operational costs to the healthcare system, but they also create inefficiencies that slow down communication among all stakeholders, including patients, providers, and payers.

After healthcare is provided, patients generally receive a series of cryptic paper explanations of benefits and bills through the mail, often from multiple providers who may have been involved in providing a service. The language and codes on these bills are generally not understood by the average consumer, and payments may only be sent by mail or phone.Patients often must follow up with phone calls or letters to both providers and payers, resulting in a lengthy experience full of friction for patients, providers, and payers alike, while debt can continue to accumulate unnecessarily.

There’s no doubt the current healthcare system needs to change to provide patients with the care they need without crippling financial consequences. With medical debt higher than ever before, now is the time to embrace policy changes, such as the No Surprises Act, to address the longstanding issues of surprise billing. Coupled with digital innovation and providing more modern consumer experiences such as paperless payments, organizations can take the necessary first steps to creating a simpler and more affordable healthcare system for all.


Amanda Eisel is the CEO of Zelis, a leading payments company in healthcare. Amanda has focused the last 20 years of her career at the intersection of healthcare and technology. She has been deeply involved in creating and scaling multiple growth technology companies including Waystar, Applied Systems and Viewpoint. Amanda is a member of the Board of Directors of two non-profit organizations, Youth Villages of Massachusetts and New Hampshire and Make-A-Wish Foundation of Massachusetts and Rhode Island. She is also on the Board of Directors of Rocket Software.