OIG report evaluates claims for atypical antipsychotic drugs prescribed to nursing home residents

May 20, 2011

More than half of Medicare claims for atypical antipsychotic drugs are erroneous, amounting to $116 million, according to a 48-page report released May 4 by the Office of the Inspector General.

More than half of Medicare claims for atypical antipsychotic drugs are erroneous, amounting to $116 million, according to a 48-page report released May 4 by the Office of the Inspector General.

The report sought to evaluate the extent to which atypical antipsychotic drugs were provided to nursing home residents aged 65 and older who were diagnosed with conditions that were off-label and/or specified in the FDA boxed warning and whether Medicare erroneously paid for these drugs. Investigators used Medicare claims data from Part B and Part D and the 2007 Minimum Data Set to identify Medicare claims and payments from January 1 through June 30, 2007.

Based on a medical record review conducted by board-certified psychiatrists knowledgeable in the prescribing of atypical antipsychotic drugs for the elderly, OIG found that: 

  • 14% of elderly nursing home residents had Medicare claims for atypical antipsychotic drugs;

  • 83% of Medicare claims for such drugs for elderly nursing home residents were associated with off-label conditions and 88% were associated with dementia, a condition specified in an FDA boxed warning;

  • 51% of Medicare claims for atypical antipsychotic drugs for elderly nursing home residents were erroneous, amounting to $116 million; and

  • 22% of the atypical antipsychotic drugs claimed were not administered in accordance with CMS standards regarding unnecessary drug use in nursing homes, amounting to $63 million. 

To ensure that Medicare correctly pays for atypical antipsychotic drugs and that elderly nursing home residents are free from unnecessary drugs, OIG recommended that CMS:

  • Facilitate access to information necessary to ensure accurate coverage and reimbursement determinations.

  • Assess whether survey and certification processes offer adequate safeguards against unnecessary antipsychotic drug use in nursing homes.

  • Explore alternative methods beyond survey and certification processes to promote compliance with Federal standards regarding unnecessary drug use in nursing homes.

  • Take appropriate action regarding the claims associated with erroneous payments identified in our sample.

In general, CMS agreed with all but the first recommendation, stating that the diagnosis information is not required pharmacy billing information; nor is it generally included on prescriptions. CMS expressed several additional concerns with the report.

“Although we evaluated the extent to which atypical antipsychotic drugs were prescribed for off-label conditions and/or in the presence of the condition specified in the FDA boxed warning, we did not examine the medical decision making regarding why elderly nursing home residents were prescribed these drugs,” the report stated.