Janelle Zeihen worried she’d have to file for bankruptcy after learning she owed $250,000 for her Crohn’s disease treatment.

The Milwaukee nursing home worker thought her insurance was covering the infusions as part of a complex arrangement. Through a middleman, her benefit plan was trying to use a charity program to get her the medication for free. But only after months of treatment did Zeihen learn the maneuver backfired, leaving her on the hook for payments.

Zeihen, a cervical cancer survivor, went on to miss weeks of the medication that kept symptoms of her chronic digestive disease in check. She found herself caught in an escalating conflict among U.S. employers, drug companies and insurers over who should bear the skyrocketing costs of prescription drugs.

“This was more stressful than it was actually going through cancer treatment, when I had insurance that covered everything,” Zeihen said.

Zeihen’s plight stemmed from a strategy that some U.S. employers are embracing to offset prescription drug costs. Rather than covering expensive medicines on their health plans, they hire outside firms that promise to help patients get supplies of free or subsidized medications that pharmaceutical companies set aside for people who can’t pay.

Drugmakers are catching on to these companies, sometimes called “alternative funders,” and are tightening their rules for who can get assistance. That’s increasingly leaving patients contending with unexpected bills for treatments they thought were covered.

“This is a shell game,” said Chris Phillips, a Kentucky rheumatologist who described alternative funders as a “huge issue” for patients.

“You have insurance. You think it should pay for your biologic. Now you’re being told there’s no coverage,” he said. “There’s a lot of bumps in the road there and myriad opportunities for patients to drop off treatment.”

Alternative funders are one outgrowth of a complex and expensive American health-care system that strains employers who pay for coverage and patients who rely on it. Pharmaceutical companies set prices in the private market with few restrictions. Their charity programs help insulate uninsured patients from those prices. That creates an opportunity for middlemen to profit by helping employers try to get supplies of the discounted medications.

When it works, patients get their medicine, employers save money, the middleman gets a fee — and the drugmaker loses a sale. When it doesn’t, people like Zeihen suffer the consequences. It’s a chance many employers seem ready to take.

About 8% of health-benefit plans reported using alternative funding models in a 2024 survey of 157 benefit executives from Pharmaceutical Strategies Group. Another 13% were exploring the idea, according to the poll, which was sponsored by Roche Holding AG’s Genentech unit.

Zeihen’s plan administrator worked with an alternative funder called Payer Matrix, which has called itself a “third-party advocate for patients.”

In a statement, Payer Matrix said it helps patients apply for drugmaker assistance but those programs are “are just one of many solutions the company helps patients navigate” for treatment. The company said it doesn’t charge patients and exists to help them “explore alternative options for low-cost or free medications.”

Representatives for Zeihen’s employer, Bedrock Healthcare, and the administrator, Leading Edge Administrators, didn’t respond to repeated requests for comment.

Soaring Costs

Prescription costs have jumped as new, high-cost therapies reach the market and prices for some older drugs rise. U.S. per capita spending on retail prescription drugs increased 64% between 2013 and 2023 to more than $1,300, according to federal data that isn’t adjusted for inflation. Three-quarters of employers in a survey by the Business Group on Health said they were “very concerned” about pharmacy costs. Patients who need expensive treatments also often face deductibles or co-insurance that drive up their out-of-pocket payments.

Drugmakers have long offered subsidies for uninsured patients, and also help defray out-of-pocket costs for insured people with copay cards or other support. Health plans, in turn, develop elaborate programs to maximize how much of that funding they can capture.

That’s where alternative funders come in. If health-plan sponsors remove insurance coverage for certain medications, alternative funders make the case to drugmakers that patients should get the medicines for free or at a discount. Payer Matrix says coverage decisions are entirely up to the plan, and that it doesn’t decide which drugs are covered.

The maneuvers have come under fire. In April 2024, two members of Congress wrote to the Department of Labor, which oversees employer health plans, with concerns that alternative funders “may mislead employers, exacerbate barriers to patient access” and steer patient assistance funds toward people with insurance.

The representatives, Republican Rick Allen and Democrat Lucy McBath, both from Georgia, called the approach a “predatory practice” and urged the Labor Department to investigate. A department official wrote a letter to McBath in June saying that it was reviewing whether employer arrangements with alternative funders raised compliance issues. It’s unclear, however, whether the issue is being considered under the Trump administration. Representatives for the Labor Department didn’t respond to requests to comment.

‘Hitting Walls’

Zeihen, 45, encountered the strains first hand.

She was diagnosed in 2022 with Crohn’s disease, an inflammatory bowel disorder that can cause abdominal pain and chronic diarrhea. A drug called Entyvio, from Japanese giant Takeda Pharmaceutical Co., kept her symptoms in check. Out of pocket, without any subsidies, it costs $9,360 a dose, not counting the cost of infusing the medication, according to drug-price data reported by a Texas regulator.

Early in 2024, Zeihen’s health plan began working with Payer Matrix, and she soon found herself in a baffling maze of administrative obstacles. She missed her dose of Entyvio due in January. After weeks of trading phone calls, faxes and messages with Payer Matrix, her clinic, the Entyvio assistance program, and her insurance company, she was approved for treatment and got her dose in February, a month late.

She received her next three doses on time. In September, though, her doctor got a letter saying Zeihen’s pharmacy would no longer give her infusions. The appointment for her October treatment was canceled.

Soon, Zeihen got documents in the mail from the company that runs her health plan saying the doses she’d already received weren’t covered. They indicated that for each visit in April, June and August she owed more than $80,000. Her health plan’s account online showed the “amount not covered” as $251,131.73.

“I’m just hitting walls on everything,” she said in an October interview. “In one week, I went from being out of debt to over a quarter of a million in debt.”

She worked with Nilsa Cruz, a patient advocate at Milwaukee Rheumatology Center, to untangle the morass. It was a mess. Zeihen’s insurance card came from Anthem Blue Cross Blue Shield, a subsidiary of Elevance Health Inc. But coverage of the drug ultimately was determined by her employer-funded plan. Leading Edge, the plan’s administrator, had stopped covering Entyvio and relied on Payer Matrix, which was supposed to help get free medication from the manufacturer.

Payer Matrix, based in Media, Pennsylvania, “helps patients access available funding programs for their high-cost specialty drugs,” the company said in a 2023 legal filing. It was founded in 2016, and by 2020 had 100 clients and helped more than 5,000 members get medication, according to its website.

The company has been targeted by a lawsuit from AbbVie Inc. The maker of the blockbuster drug Humira sued Payer Matrix in 2023, alleging it ran “a fraudulent and deceptive scheme to enrich itself” by enrolling “insured patients into a charitable program not intended for them.”

When Payer Matrix gets a patient on the drugmaker assistance program, according to AbbVie’s lawsuit, it charges the employer about 30% of what it saves. “In effect, Payer Matrix is fraudulently obtaining Skyrizi, Rinvoq, and Humira for free from AbbVie and then charging the employers 30 percent of the drug price as its own gain,” the drug giant wrote in its pleading.

Payer Matrix has sought to dismiss the suit, which is pending in Illinois federal court. In a filing, the company said employers are free to choose whether to cover expensive drugs, and if they exclude them, members must either pay out of pocket or get them through patient assistance programs or other channels. Employers “partner with Payer Matrix to help members navigate what can be a daunting process and to advocate on their behalf,” the company wrote in the filing.

Payer Matrix said in its filing that AbbVie failed to state a claim under consumer protection laws and that a judgement for the drug company wouldn’t benefit consumers. Some of the statements AbbVie alleged were fraudulent were “puffery,” lawyers for Payer Matrix wrote, arguing that “Payer Matrix’s puffery is not fraudulent.”

Little Help

Still, relying on Payer Matrix didn’t work for Zeihen.

“They’re just there to help me sign up for programs I don’t qualify for,” Zeihen said.

The company, in its statement, said criteria are determined by the programs and they change frequently. It aims to match patients with programs that fit their circumstances.

In September, Cruz and Zeihen scrambled to get her treatment approved. At the suggestion of Payer Matrix, they applied again to Takeda's Entyvio assistance program, Cruz said. She didn't expect the application to be approved, but she hoped a denial would persuade Zeihen's employer plan to pay for the drug directly.

In its response, Takeda said that Zeihen was ineligible because she was enrolled in an alternative funding program. Takeda declined to comment.

Days before Zeihen’s infusion was due in October, she sent an appeal to Leading Edge and Payer Matrix asking for an exception to cover the drug. Still, she missed her dose. Cruz emailed the CEOs of Elevance, the company that issued Zeihen’s insurance card, and CVS Health Corp., whose infusion business had treated Zeihen until coverage for the drug was suddenly stopped, as well as Wisconsin Governor Tony Evers. Zeihen said they never heard back.

Cruz flagged what she called “predatory” billing practices in the Oct. 12 email, noting that the $81,000 billed for one dose of Entyvio was far higher than the $6,700 Medicare would pay. She pointed out that Zeihen paid more than $400 a month to be on her employer’s health plan. “And she cannot get care!” she wrote. “Can someone please help this patient?” The coverage remained denied.

Bloomberg News reached out to Elevance on Oct. 25 seeking comment about Zeihen’s story. Three days later, in a message to Cruz, an Elevance representative said the company shouldn’t have authorized Zeihen’s infusions, because coverage of the drug was “carved out” to Payer Matrix, meaning the benefit plan didn’t cover the drug but sent patients to the alternative funder to see if they could qualify for it through different channels.

Elevance apologized for its mistake and agreed to pay the claims, erasing her $250,000 obligation. Elevance also agreed to cover Zeihen’s October treatment, by then weeks late. A representative for the insurer declined to comment further this month.

The payments were a relief to Zeihen. But it didn’t solve her problem for more than a couple of months. She pressed her employer on whether it would offer a plan that covered Entyvio, but she said she couldn’t get one.

She said she asked instead if her employer would help her purchase a health plan on the Affordable Care Act marketplace that would cover the drug, but it wouldn’t. So she decided to buy access herself, paying more than $500 a month for a plan with a higher deductible. Her drugs are covered.

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