News & Info for NYS Council Members, 9/5/23

September 5, 2023

City’s use of $286M opioid settlement threatened by lax oversight and limited funds

Amanda D’Ambrosio | Crain’s Health Pulse, 9/5 

New York state in the next 18 years will distribute up to $2.6 billion in settlements from lawsuits against opioid manufacturers and distributors including Johnson & Johnson, CVS and Walgreens over their role in the opioid epidemic that has claimed the lives of at least 30,000 New Yorkers. Meantime, New York City will distribute its own, separate settlement of $286 million.

Despite the influx of settlement money, the opioid epidemic has persisted in the city, with overdose deaths rising almost every year since 2010. While no one expected an overnight fix, watchdog groups say efforts to reduce overdose deaths have been further threatened by a lack of transparency in the city’s spending of settlement fundsand the reality that the money simply is not enough to make a dent in the nation’s most pressing public health crisis.

The city’s approach to managing its funds stands in contrast to the state’s, because it secured separate settlement agreements in the past few years that give the city more leeway. While the state has appointed an advisory board and reported on its spending, the city has kept conversations about how to spend the funds behind closed doors. Watchdogs say that’s a problem.

“There’s a lot of wiggle room in there [on what] to spend the money on,” said John Kaehny, executive director of the state watchdog organization Reinvent Albany. “I would think the most likely thing here, by far, is this money, given how small it is, is just going to be sopped up by the massive substance-use crisis and poverty alleviation.”

New York City has so far allocated its funds to the public hospital system, the city health department and the office of the chief medical examiner, saying the money will strengthen existing substance-use treatment programs, boost the behavioral health workforce and provide relief to families who lost loved ones to the crisis. Rachel Vick, a spokeswoman from the health department who spoke on behalf of city agencies, said the city has consulted a “variety” of experts and providers to determine how it should use the funds, but she did not answer questions about which experts it consulted, nor whether it had appointed an advisory board.

Both the city’s and state’s settlement agreements fall under a state law that calls for the funds to help mitigate a staggering overdose crisis and includes requirements that ensure the money is allocated to things like medications for opioid use disorder, harm reduction services and housing.

The law prevents settlement funds from being dumped into a general government bank account to cover other municipal expenses—a lesson the state learned after the majority of the $16 billion it received in tobacco settlement money was spent on initiatives that had nothing to do with smoking.

‘Issue No. 1’

Some public health officials say that more resources are needed to tackle a pressing public health crisis that took a backseat during the pandemic. Dr. Ashwin Vasan, commissioner of the city health department, has said that if not for the other public health emergencies in recent years, the overdose crisis would be “issue No.1, on A1 of every paper every day,” adding that the city needs “more, more, more” funding to face the “formidable opponent.”

The Covid-19 pandemic may have drawn attention away from the overdose crisis, but it also exacerbated it. People who use drugs were not able to get addiction care because of treatment center closures and the risk of infection during the early days of the pandemic. Social isolation and worsening mental health conditions compounded the crisis, with overdose deaths rising 60% between 2019 and 2021.

Nearly 6,000 people in the state died from a drug overdose in 2021, a number expected to rise when final data is released for 2022, according to Dr. Chinazo Cunningham, head of the Office of Addiction Services and Supports. In the city, 2,668 people died from a drug overdose in 2021. Fentanyl—a synthetic opioid that’s 50 to 100 times stronger than heroin—has become ubiquitous in the drug supply and driven the rise in deaths, according to the health department.

New York state appointed an advisory board made up of public health experts, clinicians and people directly affected by the opioid crisis to guide its spending. The state held 14 hours-long advisory meetings in the past year, developing reports and hearing public comments about how the money should be spent. It’s also made $127 million available to nonprofit organizations, treatment providers and local health officials that are tackling the overdose crisis.

New York City officials, in contrast, decided to directly allocate more than half of its $286 million to three city agencies: New York City Health + Hospitals, the Department of Health and Mental Hygiene and the Office of Chief Medical Examiner. The city has funneled money into agencies to bolster hospital emergency room overdose responses, support mobile clinics and build up services surrounding overdose-prevention centers, supervised drug-use sites that prevent overdose deaths, Mayor Eric Adams announced in June 2022.

The Adams administration did not present this plan to an advisory committee or appoint a task force before deciding where to allocate settlement funds. It has not released a plan on how the remaining rounds of funding will be spent, nor has it released reports about how much money has been spent to date—although a City Council law enacted last December required it to start reporting by June of this year.

Nonprofits ‘the backbone’

Daniel Sparrow, a spokesman for City Councilwoman Linda Lee, who sponsored the bill, said the council is waiting on the report from the Office of Mayor’s Management and Budget. He did not respond to additional questions about when the report would be released, or whether it would be shared with the public.

At an opioid settlement fund advisory board meeting in July in Albany, leaders from local governments presented on their community’s investment of opioid settlement funds. Deepa Avula, executive deputy commissioner of mental hygiene at the city health department, was scheduled to present on New York City’s spending. However, the city never presented, and the Mid-Hudson region was given double the time, where representatives from each county shared details about settlement fund initiatives that were reducing overdose deaths. A representative from Avula’s office said the presentation was postponed, and did not share additional information on city spending.

Spokespeople from the city health department have not responded to specific questions about how much settlement money city agencies have spent to date, or plans to report use of the funds. When Crain’s approached Avula at a press conference in July to ask about the funds, she directed questions to the press office.

Nonprofit leaders and treatment providers like Ann-Marie Foster, president and CEO of Phoenix House, say the city’s funding choices leave gaps in the treatment system that they have been tasked to fill, without giving them funding to fill it.

The nonprofits have been the backbone of this crisis,” Foster said, adding that more money is needed to build a substance-use workforce, provide residential treatment and offer access to medications for opioid use disorders to address chronic and acute illnesses.

The city has not made any settlement funds available via contracts. City organizations can apply for funding from the state, which is spread across a spectrum of substance-use disorder services.

Dr. Bradley Stein, director of the opioid policy center at the RAND Corp.’s Pittsburgh office, said transparency is just one piece of the concerted effort to ensure that all the settlement funds do not go to one entity, noting that so many people have been harmed by the opioid epidemic.

“The idea of transparency makes sense,” Stein said. Governments have held open meetings or public forums to get feedback on their opioid funds—a fairly simple oversight strategy, he added.

Cunningham, of OASAS, said the city’s money is not subject to recommendations by the state board, but officials are in discussions about whether or not it will be required to report spending to the state.

While regulators have stressed oversight and transparency to hold officials accountable for how they use opioid funds, there is one big difference between the opioid and tobacco settlements.

“The real-life issue here is that it’s just not that much money,” Kaehny said. The state has around $145 million a year to allocate from opioid settlement funds, less than half of the annual tobacco settlement payments, he added. Comparing annual settlement funds to an overall state budget of $230 billion, “that’s pretty dinky.”

The National Institutes of Health estimates that the annual cost of treating an individual with opioid-use disorder could reach up to $20,000. New York City’s $30 million a year is not enough to fund treatment for the number of people who died from substance use disorder in 2021—and that’s assuming that all money is spent on treatment.

“Opioids are just much more destructive per amount of private-sector revenue than tobacco is,” Kaehny said. “A hand grenade might cost hundreds of dollars, but if it’s thrown into a crowd of people—that’s going to cost millions of dollars in trauma.”

Cherita Simmons, a certified peer recovery advocate at Phoenix House’s Long Island City outpatient treatment clinic, knows more about the needs of people with substance use disorders than most—until five years ago, she struggled with drug use. Now, she helps people with substance use disorder get jobs, navigate medical appointments or reconnect with family members in recovery.

Simmons said her work is challenged by long waiting lists for residential services and few housing options for people in recovery. Sometimes a client will leave treatment after six to nine months, ready to make a change in their life. But because of a lack of stable housing options, many return back to neighborhoods and homes where they have opportunities to use—continuing a cycle of substance use that is hard to break.

“What the plan is after treatment can be a little bit stronger,” Simmons said. “But it takes resources.”


D.A. McMahon lashes out at NY Gov. Hochul over ‘farce’ of fentanyl task force

Staten Island Advance, 9/1


Time For The DEA To Implement A Special Registration Process For Telemedicine Prescribing Of Buprenorphine

Health Affairs Forefront, 9/1/2023


The DEA issued the proposed rules in March 2023, in an effort to clarify permanent policy on telemedicine as the public health emergency was coming to a close. The backlash against the proposed rules was fierce, prompting the DEA to reverse course and extend the full set of telemedicine flexibilities through November 2023. With that date fast approaching, the DEA needs to finish processing the large volume of comments and propose new policies. We believe they don’t need to look very far for potential solutions.

The proposed rules put forth in March—one on controlled substances and one specific to buprenorphine—addressed the use of telemedicine for writing prescriptions without an in-person medical evaluation. Clarification of permanent policy was needed because during the COVID-19 pandemic, the 2008 Ryan Haight Act requirement that an in-person visit occur prior to prescribing a controlled substance via telemedicine had been waived. The proposed rules said that once the public health emergency ended, the DEA would allow patients to be started on buprenorphine via a telemedicine visit; however, a patient would need to be seen in person within 30 days to get a refill.

Thousands of public comments argued that an in-person visit requirement to start or refill buprenorphine is burdensome and arbitrary. This aligns with the fact that for more than a decade now, Congress, clinicians, and policy makers have been requesting implementation of a special registration pathway that would allow registered clinicians to prescribe without an in-person visit requirement. It’s clear to us that the time to implement the pathway is now.

The Clinical-Regulatory Disconnect

Although medications such as buprenorphine are first-line treatments for opioid use disorder with established safety and effectiveness, most who could benefit from these medications do not get them. A variety of factors play a role, but possibly the most important has been limited access to clinicians who prescribe the medications. It is important to also acknowledge that buprenorphine does involve some risks, both to the patients to whom it is prescribed and other individuals to whom it may be diverted.

The challenge for regulators is to find the right balance between an overly restrictive system that limits patient access to a live-saving medication and an overly lax system that floods communities with diverted buprenorphine. The DEA is a law enforcement agency focused on the risks of inappropriate prescribing by bad actors and diversion (that is, the unauthorized rerouting or misappropriation of prescription medication to someone other than for whom it was intended). Clinicians and public health authorities, on the other hand, are more focused on increasing access to buprenorphine. They may not even interpret diversion as something that needs to be prevented given that the diversion that does occur has primarily been for the purpose for which it was intended—helping people with opioid use disorder (OUD) to reduce use of other opioids and to treat symptoms of withdrawal. Given the disconnect, it is no wonder that it has been challenging to make policy. The special registration pathway could serve the needs of all of these stakeholders.

A Brief History Of The Special Registration Pathway

The underlying idea behind the special registration pathway is that clinicians who want to prescribe a controlled substance via telemedicine without an in-person visit would register with the DEA. The DEA could ensure that these clinicians meet certain standards and track their activities for law enforcement purposes.

More than 10 years after its first mention in the Ryan Haight Act, Congress again required the DEA to establish such a pathway in the 2018 SUPPORT Act. The DEA still did not act. In January 2020, months before the start of the pandemic, Senator Mark Warner (D-VA) wrote to the DEA, “The DEA’s failure to promulgate the rule has meant that—despite Congress’ best efforts—many patients suffering from substance use disorders remain unable to access treatment via telehealth. These patients cannot afford to wait, and we are concerned the DEA is standing in the way of treatment for individuals that cannot access a provider in person—particularly those in rural and underserved areas.”

In the 2023 proposed rules, the DEA briefly discussed why they rejected the special registration idea. They argued that the process would be too “burdensome for both prospective telemedicine providers and patients.” This argument is weak for multiple reasons, including the fact that the DEA controls precisely how burdensome (or not) registration will be, and patients would have no role in their providers’ registration activities.

How The Special Registration Pathway Could Work

The COVID-19 pandemic has provided a wealth of information on the use of telemedicine, and our research supports the idea that telemedicine can be used to start patients on buprenorphine. Two in five clinicians who prescribe buprenorphine are comfortable with starting patients on buprenorphine via video, and they can decide when it is appropriate to use telemedicine for different patients. Telemedicine was used for 15 percent of all starts of buprenorphine in the early pandemic, and greater use of telemedicine has not resulted in inferior outcomes. In short, permitting telemedicine to start patients on buprenorphine can improve access without obvious negative impacts. Therefore, it was not surprising that thousands of comments argued that the flexibilities that have been in place since the start of the pandemic should remain permanent. Hundreds of comments, including those from telemedicine advocacy organizations, said that while they preferred to continue with the current flexibilities, a special registration was a viable alternative.

The DEA may be hesitant to set up the special registration process for several reasons. They may worry that they lack the resources to administer and monitor such a program. Perhaps there is limited consensus on which standards should be imposed on registrants, and whether those will be effective. Registration requirements that allow clinicians to practice in a certain manner are not common; they are indeed special. However, there are some lessons to be learned from similar programs that have given registered clinicians the right to prescribe medical marijuana or to administer COVID-19 vaccine. Up until a few months ago, prescribing buprenorphine required an X waiver, so the DEA is well-versed in a very relevant registration process. The good news is that in August 2023, the DEA announced that they might consider establishing a special registration process assuming that guardrails could be implemented to reduce diversion risk.

One option the DEA could consider is to require registration only for higher-volume clinicians (such as those clinicians who start more than five patients per year on buprenorphine) or organizations. This would limit administrative costs and focus the policy on the clinicians in a position to have the greatest public health impact. In terms of guardrails, the registration process could include training requirements, as well as detailed plans on how clinicians will verify the identity of patients and policies for preventing diversion. To support the DEA in identifying and building consensus around guardrails, we assembled a list of strategies that have been discussed in the broader literature and categorized them by their likely impact on access to care (see exhibit 1). The DEA can work with stakeholders to further describe and prioritize these strategies. When selecting guardrails, the DEA should try to avoid burdening patients who already face numerous barriers to care, interfering in clinical decisions, and requiring that clinicians play the role of police, which can have negative impacts on therapeutic alliance.

Exhibit 1: Potential guardrails to incorporate into special registration process to reduce diversion risk

Source: Authors’ analysis. Notes: We view these guardrails as a menu of options the DEA could consider. We would encourage the DEA to implement a select few after engaging stakeholders regarding feasibility and likely effectiveness. It should be noted that some of the guardrails in the exhibit are focused on larger organizations (for example, group practices with multiple prescribers, large telehealth companies) and may not be relevant to solo practitioners. Guardrails in this category may present significant barriers to patients and thus reduce access to care, negatively impact therapeutic alliance, or threaten established care models.

Once special registration is established, lists of registered prescribers should be available to pharmacists, or registrants could put their pathway IDs on all prescriptions. This would address the problem that pharmacists sometimes reject legitimate scripts for buprenorphine that appear to come from telemedicine providers. When a pharmacist encounters a prescription from a new, unknown clinician, the ability to verify that they are registered could help address certain important pharmacy-level barriers to widespread access to buprenorphine.

Whatever the requirements, the key is for the DEA to consider a special registration pathway. It has been discussed and dismissed for 15 years. Given the numerous advantages of telemedicine in increasing access and reducing stigma and the urgency of the opioid crisis, old ideas deserve a fresh look.


Deloitte, 9/5

Bipartisan Group of Senators Requests Investigation of Tax-Exempt Hospitals

In a letter dated August 7, 2023, United States Senators Elizabeth Warren (D-Mass), Chuck Grassley (R-Iowa), Raphael Warnock (D-Ga.), and Bill Cassidy (R-La.) requested that Treasury and the Internal Revenue Service (IRS) increase oversight of tax-exempt hospitals. Citing the increasing amount of medical debt held by individuals and families, the Senators note that the amount of community benefit provided by hospital organizations does not match the amount of tax benefits received by these hospitals. The challenge is that the criteria the IRS provides for determining what constitutes community benefit is not clear. Specifically, the Senators requested that the IRS and Treasury provide the following:

  1. Provide a list of the most commonly reported community benefit activities that qualified a nonprofit hospital for tax exemptions in FY2021 and FY2022. Please categorize by charity care, unreimbursed costs of Medicaid, community health improvement activities, professional development, other.
  2. Describe the updates the IRS has made since September 2020 to the instructions to Form 990 Schedule H to modify how community benefit information is identified and provided.
    1. Describe the rationale for these updates to Form 990 Schedule H.
    2. Describe how these updates to Form 990 Schedule H have improved clarity in reviewing community benefit information
    3. What additional updates did IRS consider in its review of Form 990?
  3. How many hospitals did IRS identify as “at risk” for noncompliance with the community benefit standard since Spring 2021 when IRS implemented several of GAO’s recommendations related to establishing a well-documented process to identify hospitals “at risk” for noncompliance?
    1. Describe how these changes impacted the effectiveness of reviewing hospitals’ community benefit activities.
  4. Provide a list of the nonprofit hospitals that the IRS referred to its audit division for potential Patient Protection and Affordable Care Act (ACA) violations from FY2019 to FY2022.
    1. How many of these hospitals were referred because of noncompliance issues related to the community benefit standard?
    2. How many nonprofit hospitals reported no spending on community benefits in 2022?
  5. Provide a list of nonprofit hospitals that lost their tax-exemption due to noncompliance with the community benefit standard since the full implementation of the ACA on January 1, 2014.
  6. Provide a list of nonprofit hospitals that had their IRS Form 990 rejected for failing to meet requirements related to community benefit reporting.
  7. Provide a list of nonprofit hospitals that failed to file an annual Form 990 with the IRS between FY2019 to FY2022.
    1. How many of these nonprofit hospitals were issued penalties for this failure?
    2. How many of these nonprofit hospitals had their tax-exempt status revoked?
  8. What other challenges does the IRS face in its ability to oversee tax- exempt hospitals?


Politico, 9/5 – Hospitals may be improperly billing Medicaid for inpatient services that should have been billed as outpatient care, a new audit by the office of New York state Comptroller Thomas P. DiNapoli suggests.

The audit, which was shared exclusively with POLITICO, identified nearly $361 million worth of fee-for-service inpatient claims for Medicaid enrollees discharged within 24 hours of hospital admission — suggesting a portion of those 34,000-plus claims were improperly billed as pricier inpatient claims instead of outpatient services, which are generally less expensive.

Inpatient care generally involves patients who, on the recommendation of a physician or licensed practitioner, stay at least overnight in a hospital and receive room, board and continuous nursing service.

Among a judgmental sample of 190 of those claims, representing six hospitals, auditors found 48 percent had been billed improperly.

“The state Department of Health needs to give clearer guidance so hospitals know whether to bill for services as outpatient, rather than more expensive inpatient care,” DiNapoli said in a statement. “Nearly half the bills we looked at got it wrong and that kind of error rate results in millions of dollars in Medicaid overpayments.”

In response to the audit, the Health Department said it will review its inpatient manual to see whether it clearly explains the criteria to submit an inpatient claim and make updates where appropriate.

The department said it would also explore processes to identify and review inpatient hospital claims for short stays, as recommended by the comptroller’s office.