Op-ed: Why are hospitals paying for an overdose response system that’s designed to stall?

Hospitals are quietly financing the nation’s overdose response—but it doesn’t have to be this way.

Federal policy guarantees payment for emergency and inpatient care, including emergency post-overdose treatment, yet public health prevention infrastructure still depends on short-term grants that can disappear overnight. When the Department of Health and Human Services (HHS) abruptly terminated and then reinstated $1.9 billion in addiction and mental health funding this January, it did more than create administrative confusion. Letters sent to 2,000+ providers alleged non-alignment with Substance Abuse and Mental Health Services Administration (SAMHSA) priorities and instructed programs to begin winding down services.

Chaos ensued. Outrage erupted almost instantly.

The prompt reversal prevented immediate collapse, but it also exposed a deeper structural problem: Prevention remains subject to annual appropriations and administrative shifts, and largely relies on Medicare and Medicaid dollars. Medicaid alone spends an estimated $29 billion annually on opioid use disorder treatment and pays for nearly half of opioid-related emergency department visits, according to a recent Brookings Institution report. In short, crisis care (i.e., life-saving treatment during an overdose) is guaranteed. Prevention—which includes naloxone distribution, medication initiation, peer recovery follow-up, and post-overdose outreach—is not.

The Trump administration’s inaction to stabilize funding for prevention continues to leave hospitals shouldering billions in avoidable medical expenses. It’s time for the industry to demand an end to this.

Prevention stalls, hospitals pay

The funding episode was disruptive, but the larger story is more concerning. Overdose deaths have declined nationally, falling from an estimated 110,037 deaths in 2023 to roughly 80,000 deaths in 2024, according to federal data, and the evidence supporting naloxone distribution, medication treatment, and post-overdose follow-up care continues to grow. Yet while prevention strategies have evolved, downstream medical care continues to flow largely through Medicaid and Medicare. Medicaid has quietly become the largest payer for addiction treatment in the US. A recent Brookings analysis estimates that nearly 1.8 million people receive treatment for opioid use disorder through Medicaid, with over half qualifying through Medicaid expansion and, in some states, 70+% relying on expansion eligibility.

The shift is visible inside hospitals, according to the Brookings analysis. From 2012 to 2021, the share of opioid-related emergency department visits paid for by Medicaid increased from 31% to 48%, even as the uninsured share declined. During that same period, opioid-related emergency department visits rose 64%, intensifying financial and operational pressure on hospitals.

Much of this burden falls on safety-net hospitals. America’s Essential Hospitals reports hospitals faced $22 billion in uncompensated and under-reimbursed care in 2023. Meanwhile, the White House Council of Economic Advisers estimates that opioid use disorder drives approximately $107 billion annually in additional healthcare system costs, including substantial hospital-based and uncompensated care. The financing mismatch is clear: The hospitals most exposed to overdose admissions are also those least likely to be fully reimbursed for the care they provide, forcing safety-net institutions to absorb the enormous financial shock of a crisis that federal policy continues to fund reactively.

What alignment would mean for hospitals

Hospitals don’t need Washington to create a new overdose strategy; they need overdose prevention financed as core healthcare infrastructure.

HHS has tools it can use more assertively within existing law to give hospitals relief:

• The Centers for Medicare and Medicaid Services (CMS) can enforce the Mental Health Parity and Addiction Equity Act to ensure substance use disorder treatment is covered on equal terms with medical and surgical care, including tighter oversight of prior authorization and network design.
• CMS can also use Medicaid Section 1115 waivers to prioritize post-overdose care coordination and recovery services, plus expand payment models [1] that reward longitudinal addiction treatment rather than episodic stabilization.
• On the data side, HHS could use tools it already deploys elsewhere to modernize overdose surveillance, which would help hospitals identify high-utilization patients earlier.
• Congress could reinforce those shifts by authorizing multiyear prevention funding and preserving telehealth as well as existing SAMHSA peer recovery services to keep patients out of emergency departments.

Without rapid follow-up—meaning starting medication for opioid use disorder before discharge, connecting patients to outpatient care within days, and coordinating transitions—many return quickly. [2] With a follow-up care system, emergency departments spend less time stabilizing preventable crises and more time serving as effective entry points into sustained treatment. Breaking the readmission cycle has been proven to be one of the most effective ways to reduce high-cost utilization and long-term uncompensated care.

The fragility of community-based programs

The consequences of not making overdose prevention essential healthcare nationwide are visible in Philadelphia. Over the past decade, few large US cities have experienced the scale and intensity of overdose like Philadelphia, which has a per-capita overdose death rate that regularly exceeds that of many peer municipalities. Plans to open a supervised overdose prevention site stalled after years of legal and political conflict, and in 2023, the Philadelphia City Council ultimately banned new sites from moving forward. No durable community-based prevention infrastructure replaced it. While overdose deaths in Philadelphia have declined in recent years, [3] drug-related illness and injury have not disappeared, as clinicians report rising rates of severe wounds, infections, and prolonged hospital stays. 

Mortality improved, but hospital workload did not.

San Francisco, often viewed as one of the country’s most visible laboratories for overdose policy, has some of the highest overdose mortality rates in California. The city chose a different path from Philadelphia, investing early in medication treatment and contingency management within its healthcare system. But broader harm reduction efforts in the area have faced political pushback and funding instability. Proposed budget cuts this year would further reduce support for community-based prevention programs and weaken the infrastructure that helps keep higher-acuity cases out of hospitals, including those involving fentanyl and polysubstance use, which are leading to more complex hospitalizations and longer stays in the region. [4]

Different political strategies, similar operational results: Hospitals carried the downstream burden.

In Philadelphia, safety-net institutions such as Temple University Hospital expanded addiction consult services and wound-care capacity as injuries and infections requiring longer inpatient stays and complex discharge planning rose. In San Francisco, Zuckerberg San Francisco General Hospital and other safety-net providers expanded medication treatment programs and addiction medicine staffing to manage fentanyl-driven admissions due to increased demand for ICU beds, prolonged antibiotic courses, and rising care coordination needs. [5]

No hospital has closed solely because of overdose care. But in both cities, emergency departments restructured workflows, inpatient units absorbed longer stays, and safety-net margins tightened as preventable community burden moved inside hospital walls.

The bigger picture

Across Europe and Canada, supervised overdose prevention clinics operate as part of the healthcare system. Countries such as Switzerland, Germany, and the Netherlands moved past legitimacy debates decades ago and now focus on performance and integration upstream. [6]

US jurisdictions, on the other hand, continue to litigate existence and research continues to show how upstream events like health plan disenrollment are connected to 50+% higher overdose death rates in patients receiving medication treatment, underscoring how disruptions in coverage and care can quickly translate into preventable mortality.

The question is no longer whether overdose prevention works. The question is whether our federal government will wake up and begin treating prevention as essential healthcare infrastructure, or continue asking hospitals to keep absorbing billions in avoidable admissions, readmissions, and uncompensated costs.

The author has contributed this piece in his personal capacity. The views expressed are his own and do not necessarily reflect those of his current or former employers.