Testimony before the United States Senate  
 
Special Committee on Aging 
   
     
 
 
 
 
 
 
 
   
 Overprescribed:  The Human and Taxpayers' Costs of 
 
Antipsychotics in Nursing Homes 
 
 
 
 
Testimony of:  
 
Daniel R. Levinson 
 
  Inspector General 
 
Department of Health & Human Services 
 
 
 
 
 
 
 
November 30, 2011 
2:00PM 
562 Dirksen Senate Office Building 
 
 
 
  Testimony of:  
Daniel R. Levinson 
Inspector General 
U.S. Department of Health and Human Services 
______________________________________________________________________________ 
Good afternoon, Chairman Kohl, Ranking Member Corker, and other distinguished Members of 
the Committee.  I am Daniel Levinson, Inspector General of the U.S. Department of Health and 
Human Services (HHS or the Department).  Thank you for the opportunity to testify about the 
HHS Office of Inspector Generals (OIG) work relating to the use of antipsychotic drugs in 
nursing homes.   
 
Two recent OIG reports raise concerns about the use of atypical antipsychotic drugs1 by elderly 
nursing home residents, particularly those with dementia.2  We hired psychiatrists expert in 
treating elderly patients to review a sample of medical records.  Their review revealed the 
following: 
 
  14 percent of nursing home residents, or nearly 305,000 patients, had Medicare claims for 
atypical antipsychotic drugs.  
  Half of these drug claims should not have been paid for by Medicare because the drugs 
were not used for medically accepted indications.  
  For one in five drug claims, nursing homes dispensed these drugs in a way that violated 
the Governments standards for their use.  For example, the prescribed dose was too high, 
or residents were on the medication for too long.  
  Part D prescription drug plan (PDP) sponsors lack access to the information necessary to 
ensure appropriate reimbursement of Part D drugs, including antipsychotics. 
 
These findings indicate that Medicare is paying for drugs that it should not and Part D 
prescription drug plans are not able to adequately prevent inappropriate payments for drugs, 
including antipsychotics, for uses that do not meet coverage requirements.  In addition, nursing 
homes often fail to comply with regulations designed to prevent overmedication of these 
powerful and at times dangerous drugs.  
 
OIGs reports also found that atypical antipsychotics are frequently prescribed off-label, that 
is, for uses that are not approved by the Food and Drug Administration (FDA).  FDA has 
imposed a strong safety warning on atypical antipsychotics, emphasizing an increased risk of 
death when used by elderly patients with dementia.  Yet we found that the large majority of 
claims for atypical antipsychotics were for elderly patients with dementia.  These findings are 
also troubling given that there is ample evidence that some drug manufacturers have illegally 
marketed these drugs for off-label use. 
 
                                                 
1 Atypical antipsychotic drugs refers to second-generation antipsychotic drugs developed to treat psychoses and/or 
mood disorders. 
2 Medicare Atypical Antipsychotic Drug Claims for Elderly Nursing Home Residents (OEI-07-08-00150), issued 
May 2011.  Available online at http://oig.hhs.gov/oei/reports/oei-07-08-00150.pdf.     Taken collectively, our findings raise concerns about whether atypical antipsychotic drugs are 
being prescribed and monitored appropriately.  The Federal Government, health care providers, 
and families of nursing home residents all have roles to play in addressing these issues. 
 
Half of Medicare Atypical Antipsychotic Drug Claims for Nursing Home Residents Did Not 
Meet Reimbursement Criteria 
 
Atypical antipsychotic drugs that are provided to Medicare beneficiaries, including residents in 
nursing homes, are generally covered by the Medicare Part D program.  Although physicians can 
prescribe drugs for any indications, to qualify for Medicare Part D reimbursement, the drugs 
must be used for medically accepted indications.  These indications include both the uses 
approved by FDA and those uses (including off-label uses) supported by one or more citations in 
the compendia specified in the Social Security Act or designated by the Secretary.   
 
Claims amounting to almost $116 million did not meet Medicare coverage requirements for 
medically accepted indications 
 
Based on review of a sample of medical records by expert psychiatrists, OIG determined that 
almost 723,000 of the 1.4 million atypical antipsychotic drug claims for elderly nursing home 
residents in the first half of 2007 did not comply with Medicare reimbursement criteria because 
they were not used for medically accepted indications.  This high payment error rate may be 
partly due to PDP sponsors lack of access to information necessary for appropriate 
reimbursement of Part D drugs. 
 
PDP sponsors lack the information necessary to ensure that Part D drugs claims, including 
those for antipsychotics, meet coverage requirements 
 
The Centers for Medicare & Medicaid Services (CMS) requires PDP sponsors to ensure that 
Medicare reimbursement for Part D drugs is limited to medically accepted indications.  PDP 
sponsors employ a number of strategies to prevent inappropriate payments for drugs, including 
prepayment edits, prior authorization, and post-payment review.  However, PDP sponsors often 
cannot determine whether a given drug claim was prescribed for a medically accepted indication, 
because: 
 
  Prescriptions and claims data lack diagnosis information.  Without medical record 
review, reviewers cannot routinely determine why drugs were prescribed. 
  FDA label and compendia listings at the time of the dispensing, not at the time of review, 
govern eligibility for coverage.  Compendia listings can change as frequently as every 
quarter.  For retrospective review, PDP sponsors lack archival information to all 
compendia to determine what indications were listed at the time a drug was dispensed. 
 
PDP sponsors have reported to OIG that they do not routinely collect diagnosis information 
because CMS does not require diagnoses as a data element for Part D claims.  PDP sponsors do 
not generally collect diagnoses for Part D claims from pharmacies because it is not standard 
practice for prescribers to provide them the diagnoses.  Without diagnosis information on a Part  D claim, determining whether a drug was provided for a medically accepted indication, and 
therefore was reimbursable by Medicare, is not possible using claims data alone.  
Sponsors reported to us that they do collect diagnosis information when using prior 
authorization, a utilization management tool that requires medical justification for covering a 
drug claim.  The PDP sponsors indicated that prior authorization is the best tool that they 
currently have to compare the diagnosis provided by the prescriber to the medically accepted 
indications contained in the compendia.  However, because antipsychotics are one of the six 
protected drug classes under Part D, the PDP sponsors indicated that they use prior authorization 
for antipsychotics only in limited circumstances.   
 
PDP sponsors also reported using post-payment review as a general safeguard to prevent fraud 
and abuse.  However, these reviews do not commonly focus on medically accepted indications.  
PDP sponsors reported that they have real-time access to all compendia, but do not have access 
to historical data.  Because one of the compendia is published quarterly, it is possible that 
information about a particular drug may be updated between the time a drug is provided and the 
time payment review is conducted.   
 
OIG has recommended that CMS facilitate PDP sponsors access to information necessary to 
ensure accurate reimbursement of Part D claims.  For example, expansion of the required data 
elements for Part D claims to include diagnosis codes could help both drug plan sponsors and 
CMS ensure that a drug is used for an FDA-approved indication or a medically accepted 
indication supported by the compendia.  CMS did not concur with this recommendation, and in 
its comments on our report noted that Congress did not mandate diagnosis information on Part D 
claims.  CMS has also stated that it does not have statutory authority to require physicians to 
include diagnosis information on prescriptions, which are generally governed by State law.   
 
Antipsychotics Are Prescribed in Violation of Nursing Home Quality and Safety Standards  
 
As a condition of participation in Medicare, nursing homes must comply with Federal nursing 
home quality and safety standards.  One standard requires that nursing home residents drug 
regimes be free from unnecessary drugs, which CMS defines as those that are used:  (1) in 
excessive dose; (2) for excessive duration; (3) without adequate monitoring; (4) without adequate 
indications for use; or (5) in the presence of adverse consequences that indicate that the dosage 
should be reduced or discontinued. 
 
Nursing homes failure to comply with Federal standards regarding unnecessary drugs may 
affect their participation in Medicare because they would no longer be meeting their conditions 
of participation. However, nursing homes noncompliance with these standards does not cause 
Medicare payments for the individual drug claims to be erroneous. 
 
Twenty-two percent of the atypical antipsychotic drugs claimed were not administered in 
accordance with CMS standards regarding unnecessary drug use in nursing homes  
 
For the 6-month review period, OIG determined that for more than 1 in 5 claims (or 317,971 of 
the 1.4 million Medicare claims), atypical antipsychotic drugs were administered in ways that 
did not meet CMS standards for drug regimens in nursing homes.  Forty-two percent of these  claimed drugs did not comply with CMS standards for more than one reason (e.g., the drug was 
in an excessive dose and for an excessive duration).   
 
Failure to comply with CMS standards regarding unnecessary drugs may indicate that nursing 
homes are not adequately ensuring residents health and safety.  Our medical experts noted 
instances where nursing home beneficiaries were given antipsychotics to control symptoms like 
agitation without first receiving a workup to assess whether the symptom might be a sign of 
another treatable condition.  For example, in one case, a workup of an agitated patient would 
have detected a urinary tract infection.  Instead of properly diagnosing the urinary tract infection 
and treating it with antibiotics, the patient was given antipsychotic drugs to control the agitation. 
 
The Vast Majority of Antipsychotic Drug Use in Nursing Homes Was Off-Label or Against 
Black Box Warning 
 
FDA approves drugs based on scientific proof of safety and effectiveness for specific uses.  If 
FDA determines that a drugs health benefits for its intended use outweigh its known risks, then 
it approves the drug for marketing for that use.  After FDA approves a drug to be marketed for a 
specific use, then physicians are permitted to prescribe the drug for other uses.  This practice is 
not uncommon and is referred to as off-label use.  Medicare pays drug claims for off-label use, 
provided that the use is an accepted medical indication (i.e., supported by one or more citations 
in a designated compendia).  However, although physicians may prescribe off-label, drug 
manufacturers are not permitted to promote off-label uses of their drugs. 
 
FDA also reviews scientific evidence to determine what warnings a drug must carry.  If a drug 
manufacturer or FDA determines that an approved drug may produce severe or life-threatening 
risks, then FDA requires that the manufacturer include a boxed warning (also referred to as a 
black-box warning) on the products labeling to warn prescribers and consumers of these risks.  
Nevertheless, physicians are permitted to prescribe a drug for a patient with a condition specified 
in a boxed warning if such a treatment therapy is warranted in their clinical judgment.  Atypical 
antipsychotic drugs carry a black-box warning emphasizing an increased risk of death when used 
in elderly people with dementia.  
 
Some manufacturers have illegally marketed antipsychotics for patients with dementia 
 
Despite the fact that elderly dementia patients who are treated with atypical antipsychotics face 
an increased risk of death, ample evidence exists that some drug companies have illegally 
marketed their products toward this vulnerable population for off-label uses.  For example, with 
the sales slogan 5 at 5, Eli Lilly promoted its atypical antipsychotic, Zyprexa, for the treatment 
of elderly patients with sleep problems, behavioral issues, and dementia.  The company directed 
its sales representatives to tell doctors that giving 5 milligrams of the drug at 5 pm would help 
their patients sleep.  In January 2009, Eli Lilly agreed to plead guilty and paid $1.4 billion for the 
illegal promotion of Zyprexa.  Several other pharmaceutical companies have settled Government 
allegations that they improperly promoted their antipsychotic drugs for unapproved uses and/or 
have paid kickbacks to influence prescribing.  Drug companies have paid more than a billion 
dollars to resolve civil and criminal liability for illegally marketing these drugs.  Even after  government action stops these illegal marketing campaigns, their effect on prescribing patterns 
may be long-lasting and difficult to undo. 
 
Off-label use and use of atypical antipsychotics for patients with dementia were prevalent among 
nursing home residents  
 
Based on a review of a sample of medical records by medical experts, OIG determined that 
83 percent of Medicare claims for atypical antipsychotic drugs for elderly nursing home 
residents were prescribed for off-label uses.  Eighty-eight percent of atypical antipsychotic drugs 
claims were for residents with dementia, the condition specified in the boxed warning.   
 
Physicians are permitted to prescribe drugs for off-label conditions or in the presence of the 
condition(s) specified in the FDA boxed warning.  Such prescribing may be medically 
appropriate despite the risks  in fact, off-label prescribing is common for many classes of drugs.   
 
However, our findings raise concerns.  Through our enforcement and compliance monitoring 
activities, OIG has identified inappropriate use of psychotropic medications for nursing home 
residents as a risk area in at least two waysinappropriate uses such as those identified through 
OIGs work may violate the prohibition against inappropriate use of chemical restraints and the 
requirement to avoid unnecessary drug usage.  OIG has issued guidance to nursing facilities on 
risks related to psychotropic medications (a category which includes antipsychotics).3  These 
risks include: 
 
  use for staff convenience rather than providing appropriate non-pharmacological 
interventions; 
  use without first determining the causal and contributing factors of the behavior;  
  lack of specific and individualized care plans; 
  lack of continued monitoring of the need for or the amount of the medication; and 
  inappropriate admission of residents with mental health diagnoses that the facility is not 
prepared to treat.  
 
In light of these risks, we recommended that nursing facilities ensure there is an adequate 
indication for the use of the medication and should carefully monitor, document, and review the 
use of each residents psychotropic drugs. 
Recommendations to Protect Nursing Home Patients From Unnecessary Drug Use 
 
Medication therapy for nursing home residents is often complex.  Many residents have multiple 
conditions that require management with multiple medications, as well as non-pharmacological 
interventions.  Most physicians and nursing homes dispense antipsychotic drugs with the best 
interests of patients in mind.  Physicians are permitted to prescribe drugs for unapproved 
indications, even in light of a black-box warning, but should use their best clinical judgment to 
determine that the benefits outweigh the risks.  
 
                                                 
3 OIGs Supplemental Compliance Program Guidance for Nursing Facilities is available online at:  
http://oig.hhs.gov/compliance/compliance-guidance/docs/complianceguidance/nhg_fr.pdf.   However, OIG has found that all too often, nursing home patients receive antipsychotic drugs in 
ways that violate Federal standards designed to prevent overmedication and inappropriate use.        
 
To ensure the safety of this vulnerable population, CMS should:  
 
  Consider enhancing claims data to ensure accurate coverage and reimbursement 
determinations.  For example, adding diagnosis codes to drug claims would help determine 
whether the prescription is for a medically accepted indication and the claim is payable.   
  Hold nursing homes accountable for unnecessary drug use through the survey and 
certification process.   
  Explore other options, such as incentive programs and provider education, to promote 
compliance with quality and safety standards.  For example, CMS could require nursing 
homes to reimburse the Part D program when claimed drugs violate these standards.   
 
The Government must also continue to monitor the marketing of antipsychotics.  Some drug 
manufacturers have promoted these drugs for off-label use by the elderly with dementia.  These 
practices can violate the law and even if the drug company is fined, the pernicious influence of 
such marketing campaigns can be difficult to undo. 
 
Doctors, pharmacists, and nursing homes must carefully analyze the patients best interests when 
prescribing or dispensing antipsychotics.  Families, in partnership with these medical 
professionals, can serve as a crucial support by learning about appropriate use, proper dosages, 
and possible side effects of these drugs. 
 
My office continues to examine protections and quality of care for patients who are receiving 
antipsychotic drugs.  The extensive prescribing of these drugs and the concerning case examples 
we have encountered in the course of this work raise serious questions about whether nursing 
home residents are receiving high-quality, coordinated care.  To further explore this issue, we are 
currently conducting a new review that will determine whether nursing facility patients taking 
atypical antipsychotic drugs have received the required patient assessments and thorough care 
planning that Federal standards require.   
 
 
CONCLUSION 
 
Over the next 18 years, 10,000 Americans will become newly eligible for Medicare each day.  
As the baby boomer population ages, it is imperative to address the overuse and misuse of 
antipsychotic drugs among nursing home patients.  Thank you for your interest in this issue and 
for your support of OIGs mission.