Medicare Atypical Antipsychotic Drug Claims for Elderly Nursing Home Residents

For the period January 1 through June 30, 2007, we determined using medical record review that 51 percent of Medicare claims for atypical antipsychotic drugs were erroneous, amounting to $116 million.

A member of Congress requested that OIG evaluate the extent to which elderly nursing home residents receive atypical antipsychotic drugs and the associated cost to Medicare. Specifically, this member expressed concern with atypical antipsychotic drugs prescribed to elderly nursing home residents for off-label conditions (i.e., conditions other than schizophrenia and/or bipolar disorder) and/or in the presence of the condition specified in the Food and Drug Administration's (FDA) boxed warning (i.e., dementia). Medicare requires that drugs be prescribed for "medically accepted indications" for reimbursement. Further, CMS sets standards to ensure that nursing home residents' drug therapy regimens are free from unnecessary drugs.

We also found that 14 percent of the 2.1 million elderly (i.e., age 65 and older) nursing home residents had at least 1 claim for these drugs. We determined using medical record review that 83 percent of Medicare claims for atypical antipsychotic drugs for elderly nursing home residents were associated with off-label conditions and that 88 percent were associated with the condition specified in the FDA boxed warning. We further determined through medical record review that 22 percent of the atypical antipsychotic drugs associated with the claims were not administered in compliance with CMS standards regarding unnecessary drugs in nursing homes, amounting to $63 million. Nursing homes' failure to comply with these standards may affect their participation in Medicare. However, nursing homes' noncompliance with these standards does not cause Medicare payments for these drugs to be erroneous.

To ensure that Medicare correctly pays for atypical antipsychotic drugs and that elderly nursing home residents are free from unnecessary drugs, we recommend that CMS (1) facilitate access to information necessary to ensure accurate coverage and reimbursement determinations, (2) assess whether survey and certification processes offer adequate safeguards against unnecessary antipsychotic drug use in nursing homes, (3) explore alternative methods beyond survey and certification processes to promote compliance with Federal standards regarding unnecessary drug use in nursing homes, and (4) take appropriate action regarding the claims associated with erroneous payments identified in our sample.

In its written comments on the report, CMS shared our concern and that of Congress over whether atypical antipsychotics and other drugs are being appropriately prescribed for elderly nursing home residents. CMS concurred with the second, third, and fourth recommendations; however, CMS did not concur with the first recommendation and expressed several general concerns with the report.

CMS did not concur with the first recommendation, stating that diagnosis information is not a required data element of pharmacy billing transactions nor is it generally included on prescriptions. OIG recognizes that the industry has not developed a standardized way of collecting diagnosis information for prescription drugs. However, without access to diagnosis information, CMS cannot determine the indications for which drugs were used. For this reason, CMS is unable, absent a medical review, to determine whether claims meet payment requirements.

Although CMS concurred with the second recommendation, we further recommend that CMS use its authority through the survey and certification processes to hold nursing homes accountable when unnecessary drug use is detected.

Although CMS concurred with the third recommendation, it did not believe some of the examples of alternative methods to promote compliance provided in the report to be practicable. We suggest that CMS either use its existing authority or seek new statutory authority to prevent payment and hold nursing homes responsible for submitting claims for drugs that are not administered according to CMS's standards regarding unnecessary drug use in nursing homes.