HHS OIG: Nursing Homes Misdiagnosed Residents to Mask Antipsychotic Drug Misuse

HHS OIG Reports & Publications

Published March 16th, 2026

Detected March 19th, 2026

Summary

The HHS Office of Inspector General (OIG) issued a report finding that nursing homes inappropriately diagnosed residents with schizophrenia to mask the misuse of antipsychotic drugs and artificially inflate their star ratings. The OIG recommends that CMS expand its use of data to monitor these diagnoses and increase efforts to inform residents and families about antipsychotic drug use.

View original document View source feed page

What changed

The HHS OIG has released a report detailing findings that nursing homes are inappropriately diagnosing residents with schizophrenia. This practice is reportedly used to mask the misuse of antipsychotic drugs, which can have serious side effects and are particularly risky for elderly patients with dementia. The report indicates that these misdiagnoses also serve to artificially inflate nursing home star ratings, as residents diagnosed with schizophrenia are not counted towards a key CMS quality measure for antipsychotic drug use.

The OIG recommends that CMS build on its efforts to reduce inappropriate schizophrenia diagnoses, expand data monitoring for these diagnoses, and increase efforts to inform residents and families about antipsychotic drug prescriptions. While CMS did not explicitly concur or nonconcur with the recommendations, the OIG encourages CMS to re-examine its position. This report highlights a critical quality of care issue within nursing homes and suggests a need for enhanced oversight and transparency regarding medication management and resident diagnoses.

What to do next

Review internal policies and procedures related to resident diagnoses and antipsychotic drug prescriptions.
Ensure accurate and appropriate diagnosis of residents, particularly for conditions like schizophrenia.
Verify that resident care plans and medication management align with regulatory requirements and best practices.

Source document (simplified)

Nursing Homes Inappropriately Diagnosed Residents with Schizophrenia to Mask the Misuse of Antipsychotic Drugs

Issued on

03/16/2026

| Posted on

03/19/2026

| Report number: OEI-02-23-00201

Report Materials

Why OIG Did This Review

The misuse of antipsychotic drugs in nursing homes has been a longstanding concern, particularly because these drugs can have a sedative effect and might be used as chemical restraints to control residents’ behavior. In addition, antipsychotic drugs pose an increased risk of death for elderly patients with dementia.
In response to concerns about misuse, CMS developed a quality measure—the percentage of residents given antipsychotic drugs—to track use of antipsychotic drugs in nursing homes. This quality measure factors into a nursing home’s star rating.
Residents who have been diagnosed with schizophrenia are not counted toward the quality measure. As a result, nursing homes have an incentive to inappropriately diagnose residents with schizophrenia.
This is the second in a two-part series assessing antipsychotic drug use in nursing homes.

What OIG Found

OIG’s comprehensive review of 40 nursing home inspections completed by CMS found instances of nursing homes inappropriately diagnosing residents with schizophrenia. Specifically, our review of these inspections found instances in which:

Nursing homes inappropriately diagnosed residents with schizophrenia to mask the nursing homes’ misuse of antipsychotic drugs and to artificially inflate their star ratings.

Medical directors made inappropriate schizophrenia diagnoses to justify prescribing antipsychotic drugs.

Nursing homes also used inappropriate schizophrenia diagnoses to skirt Medicare safeguards intended to protect residents.

By inappropriately diagnosing schizophrenia, nursing homes compromised residents’ care.

What OIG Recommends

OIG recommends that CMS:

Build on its efforts to reduce inappropriate schizophrenia diagnoses in nursing homes.
Expand its use of data to monitor nursing homes’ use of schizophrenia diagnoses and target oversight.
Increase efforts to ensure that nursing home residents and their families are fully informed when antipsychotic drugs are given. CMS did not explicitly concur or nonconcur with our three recommendations. We encourage CMS to re-examine its position on concurrence in its Final Management Decision.

Report Type Evaluation HHS Agencies Centers for Medicare and Medicaid Services Issue Areas Quality of Care Target Groups Elderly Financial Groups Medicare A