Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

PRESCRIPTION DRUG USE 

IN NURSING HOMES 

Report 1 

An Introduction Based on Texas 

JUNE GIBBS BROWN 

Inspector General 

November 1997 

OEI-06-96-00080 
i 

EXECUTIVE SUMMARY 

PURPOSE 

To describe the extent and appropriateness of drug use by Medicare and Medicaid residents 

of Texas nursing homes. 

BACKGROUND 

Payments for prescription drugs represent a large portion of Medicaid’s expenditures for 

nursing homes. In fiscal year 1995, Medicaid payments for prescription drugs reached $9.8 

billion. Medicaid provided services for 1.7 million nursing home residents in the same year. 

Prescription drug costs are estimated to range from $600 to $1000 per resident. This implies 

that between $1 billion and $1.7 billion of those payments went for prescription drugs in 

nursing facilities. 

Several recent studies suggest that the use of inappropriate or contraindicated drugs is a 

contributing factor to the high health care costs in the elderly population. The primary goal 

of drug therapy for nursing home patients is to maintain and improve, to the extent possible, 

the patient’s functional capacity and quality of life. The Omnibus Budget Reconciliation Acts 

(OBRA) of 1987 and 1990, in recognition of this, require the regulation of certain drugs in 

nursing homes and the establishment of drug utilization review programs for nursing home 

residents. Provisions of the OBRA 1990, while not required for all nursing homes, also 

clearly establish Congress’ desire to involve pharmacists more actively in patient care. 

We undertook this inspection, using three different approaches, to provide insight into 

several issues related to prescription drug use in nursing homes. These issues are addressed 

in three reports, of which this is the first. To assess the extent of prescription drug use for 

Medicare and Medicaid nursing home residents, we obtained Medicaid data for Texas for 

calendar years 1992 through 1994 and the first six months of 1995.l We report total 

program expenditures by year and total expenditures by drug class, offering a more detailed 

understanding of precisely what types of drugs are being used in nursing homes and in what 

volume they are being used. We also consider expenditures on drugs regulated by the OBRA 

1987 or deemed inappropriate for use in elderly populations. 

The second report of this series, “An Inside View by Consultant Pharmacists,” presents the 

results of a national survey of consultant pharmacists who perform Federally-mandated 

monthly drug regimen reviews in nursing homes. The third report, “A Pharmaceutical 

Review and Inspection Recommendations” (OEI-06--96-00082), discusses results from an 

independent review of drugs and medical records for a sample of Texas nursing home 

patients. Recommendations addressing the issues and concerns raised collectively by all 

three reports are located in the third and final report of this inspection. 
FINDINGS 

from 60 percent to 94 percent, between 1992 and 1994. 

Taken together, the three reports of this inspection show that while progress has been 

made in improving pharmacy practices in nursing homes, some weaknesses and 

vulnerabilities still exist which warrant attention. Following are the findings from the 

first report: 

Prescription drug payments for Texas Medicare and Medicaid nursing home residents have 

increased rapidly, rising by 20 percent from 1992 to 1994. 

0 The average payment per beneficiary increased 20 percent from 1992 to 1994, much 

faster than the one percent increase in beneficiaries receiving drugs and substantially 

greater than the rate of inflation for this period. 

�  Drug payments for this population are a significant portion of State and Federal 

program expenditures; more than 17 percent ($91 million) of Texas’ total prescription 

drug payments of $535 million were for the Medicare and Medicaid nursing home 

population. 

Some nursing home residents are receiving drugs which are potentially inappropriate or not 

medically necessary, raising cost and quality of care concerns. 

It is important to understand that reports of possible “inappropriate” use of medications are 

somewhat a matter of opinion. Ultimately, for nursing home patients, it is either the 

patient’s attending physician or the facility’s medical director who determines what is 

appropriate care. 

�  In 1994 almost 20 percent, more than 16,600, of Texas’ Medicaid and Medicare 

beneficiaries received at least one of twenty drugs considered by medical experts to be 

inappropriate for elderly use due to side effects or other consequences. 

�  It does appear that a slight reduction has been achieved for the twenty most frequently 

discussed potentially inappropriate drugs. The percentage of beneficiaries receiving at 

least one of the drugs has shifted downward from 21.2 percent in 1992 to 17 percent 

for the first half of 1995. However, the rate of resident use of contraindicated drugs 

remains high enough to be a continuing serious concern. 

Five drug categories account for an expanding majority of total payments for prescription 

drugs. 

�  Gastrointestinal drugs, drugs for cardiovascular and cardiac care, psychotherapeutics, 

and antiinfective drugs combine to total more than half of Medicaid payments for 

prescription drugs in this population. 

�  Total payments for drugs in these categories increased at very high rates, ranging 
nursing home patients’ medication regimens. We felt that further examination of this area is 

iv 

Departmental Comments 

Within the Department, we received comments on the draft reports from the Health Care 

Financing Administration (HCFA) and the Assistant Secretary for Planning and Evaluation 

(ASPE). Both agencies concurred with the recommendations; HCFA emphasized the need 

for further studies to assess the extent of continued use of potentially inappropriate drugs, 

other avenues of possible cost savings related to drugs, and the need to determine and 

understand the potential sources of the escalating costs and claims for certain types of drugs 

used in nursing homes. The final reports reflect several clarifications or changes based on 

their suggestions. The full text of each agency’s comments is provided in the third and final 

report of this inspection, “A Pharmaceutical Review and Inspection Recommendations” (OEI06-96-00082). 

Comments from External Organizations 

We also received comments from the following external organizations: American Health 

Care Association; American Association of Homes and Services for the Aging; American 

Medical Directors Association; American Society of Consultant Pharmacists; and National 

Association of Boards of Pharmacy. Most of the associations concurred with one or more of 

the recommendations within each of the inspection reports. All commentors support the need 

for better communication and coordination between nursing home staff and other healthcare 

providers, training nurse aides, and understanding the implications of nursing home 

medication services and associated costs. 

Several organizations questioned the methodology used in this inspection, particularly for the 

consultant pharmacist survey. However, as with any evaluation, there are always some 

limitations in how data and information can be obtained, given time and other resource 

constraints. Further, while we acknowledge that a survey of this nature introduces some bias 

and subjectivity, we also believe that the survey of consultant pharmacists provides us with 

an up-close view of what is happening with prescription drug use in nursing homes. 

Moreover, the results of the consultant pharmacist survey are consistent with our results from 

our two other methodologies. 

Some comments expressed concerns about the use of the term, “inappropriate.” As 

explained previously, use of this term in reporting concerns with a patient’s medication 

regimen are somewhat a matter of opinion. The evidence provided in these three reports 

does not prove that any one prescription was improper, but that closer examination is 

warranted. Also, while the use of such a drug may be supported by physician orders in 

individual cases, use of the drug, in general, is likely to be considered inappropriate. 

Some comments addressed the implications of broadening Federal oversight. There is clear 

concern about the responsibility for medication issues being the responsibility of the 

physician, not the nursing home. Further, some organizations expressed concern that these 

particular issues did not result in direct recommendations about the physician’s role for 
V 

warranted before recommending changes which would impact so many entities involved in 

the process. 

In conclusion, we believe the three reports collectively, and each using a different approach, 

strongly indicate that the intent of the provisions of the OBRA Acts concerning prescription 

drug usage are not being clearly fulfilled. Further, HCFA has authority to correct and 

enhance quality of care for nursing home patients. The recommendations we present attempt 

to facilitate the initial steps of this effort, and to address some concerns evidenced in the 

reports and received comments. While we recognize that great strides have been made to 

meet the OBRA requirements, we believe further effort remains by all the players involved 

(HCFA, associations and their members, nursing homes, and residents and their families) to 

further improve quality of care for nursing home patients. 

The full text of each organization’s comments is provided in the third and final report of this 

inspection, “A Pharmaceutical Review and Inspection Recommendations” (OEI-06-96-

00082). 
... 

111 

�  More than 50 percent of Medicare and Medicaid beneficiaries received drugs from at 

least three of these top five categories in each of the years considered. 

Gastrointestinal preparations comprise an increasing proportion of the prescription drugs 

used in Texas nursing facilities. Closer scrutiny of the medical necessity of these very 

expensive drugs appears warranted. 

�  Almost 47 percent of the residents in our dataset received at least one gastrointestinal 

drug in 1994; their total cost to Medicaid was over $15 million. This single drug 

class accounted for almost 17 percent of all Medicaid prescription drug payments in 

that year, a substantial increase over the 1992 share of 12 percent. 

0 This class of drugs is one of the most expensive, with average payments per 

beneficiary of nearly $385 and an average cost per day of $1.05. 

0 A 1992 study suggests that at least 40 percent of nursing home residents who receive 

these drugs are receiving them for conditions other than those indicated in the medical 

literature. Therefore, curtailing unnecessary or inappropriate use of gastrointestinal 

drugs could result in sizeable program savings. 

Total prescription drug payments, average payments per day, and average payments per 

beneficiary vary quite widely by Texas nursing home. The reasons for and appropriateness 

of these variations are unclear. 

Average 1994 prescription drug payments, when arrayed by nursing home, range from a high 

of more than $8 per day to as little as 17 cents per day. Total payments per beneficiary 

begin at just over $5 and increase to more than $485. 

RECOMMENDATIONS 

Based on the concerns raised in this report, the Health Care Financing Administration 

(HCFA) should work with the States and other responsible entities to understand reasons for 

the rapid escalation in costs and claims for certain types of drugs used in nursing homes. 

Specific recommendations for HCFA to consider in this endeavor are provided in our third 

report, “A Pharmaceutical Review and Inspection Recommendations” (OEI-06-96-00082). 

COMMENTS ON THE DRAFT REPORT 

We solicited comments from agencies within the Department of Health and Human Services 

which have responsibilities for policies related to Medicare and Medicaid and long term care. 

We also requested input from several national organizations representing the interests of 

nursing homes, patients, or providers. We appreciate the time and efforts of those providing 

comments. 
TABLE OFCONTENTS 

General Classification of Prescription Drugs B-l 

EXECUTIVE SUMMARY 

INTRODUCTION 

FINDINGS 

Total prescription drug payments 

Some residents receive potentially inappropriate medications 

Five drug categories account for most payments 

Most beneficiaries receive at least one of five drug categories 

Total payments for the top five drug categories have increased significantly 

Gastrointestinal drugs warrant closer scrutiny 

Payments vary widely by nursing home 

RECOMMENDATIONS 

COMMENTS ABOUT DRAFT REPORTS 

ENDNOTES 

APPENDICES 

Twenty Drugs Generally Considered Inappropriate for the Elderly 

10 

11 

13 

A-l 
a drug-disease contraindication, 

1 

INTRODUCTION 

PURPOSE 

To describe the extent and appropriateness of drug use by Medicare and Medicaid residents 

of Texas nursing homes. 

BACKGROUND 

Medicaid and Long Term Care 

The Medicaid program, created in 1965 under Title XIX of the Social Security Act, 

represents the second largest health care expenditure for the Federal government. Funded 

jointly by Federal and State governments, it is designed to provide certain basic medical 

services, including inpatient hospital care, physician services, and nursing home care. More 

than 36 million people received $90.7 billion in Federal money and another $68.8 billion in 

State funds for Medicaid reimbursed services during fiscal year 1995.’ 

In 1995, Medicaid was the primary payment source for the personal health care for 4.4 

million Americans over 65. Long term care is one of the largest and fastest growing needs 

of the elderly. Medicaid is the primary public program for long term care assistance for the 

elderly and disabled. In fiscal year 1995, of $39 billion in program expenditures for care for 

this population, $29 billion went for nursing home stays.3 

Prescription Drug use in Nursing Homes 

Payments for prescription drugs represent a large portion of Medicaid’s expenditures for 

nursing homes. Estimates of the average cost per bed range from $600 to $1000 per year.4 

In fiscal year 1995, Medicaid payments for prescription drugs reached $9.8 billion. 

Medicaid provided services for 1.7 million nursing home residents in the same year. This 

suggests that Medicaid paid between $1 billion and $1.7 billion to provide prescription drugs 

to residents of long term care facilities. This could be as much as 16 percent of total 

Medicaid prescription drug expenditures. But, health care costs associated with inappropriate 

use of prescription drugs add to these estimates. 

Potential Problems and Costs 

Several recent studies suggest that inappropriate use of prescription drugs by the elderly is a 

potentially serious health problem and could be adding hundreds of millions of dollars each 

year in unnecessary drug and hospitalization costs. The inappropriate use of these drugs can 

take a number of the following forms: 

�  drug-age contraindication, 

0 drug-allergy contraindication, 
0 incorrect drug dosage, 

0 incorrect duration of drug therapy, and 

�  less effective drug therapy. 

While approximately 3 percent of all hospital admissions are caused by adverse drug 

reactions, the percentage is much higher for the elderly. One study estimated the percentage 

of hospitalizations of elderly patients due to adverse drug reactions to be as high as 17 

percent, almost six times greater than for the general population.’ The Food and Drug 

Administration (FDA) estimates that the annual cost of hospitalizations due to such 

inappropriate drug use is 20 billion dollars.6 Much of this cost is in the elderly population 

and a large portion of it is borne by government health care programs, including Medicare 

and Medicaid. 

Not only do the elderly use more prescription drugs than any other age population, they also 

tend to be taking several drugs at once, increasing the probability of adverse drug reactions. 

The elderly also tend to eliminate these drugs from their system less efficiently due to 

decreased bodily functions. Studies also suggest more subtle effects of inappropriate drug 

use, such as loss of cognitive or physical function and the potential for an increased risk of 

falls among the elderly. Researchers have concluded that a number of prescription drugs 

used for the general population should not be prescribed for elderly patients (See Appendix 

A). Frequently, other equally effective drugs which present fewer risks are 

recommended .7r8 

Regulation and Control of Prescription Drug Use in Nursing Homes 

As part of the Omnibus Budget Reconciliation Act of 1987 (OBRA 1987), Congress required 

regulation of the use of .certain drugs in nursing homes. On October 1, 1990, the Health 

Care Financing Administration (HCFA) implemented regulations which hold nursing homes 

accountable for monitoring drug use.’ 

Additionally, physicians must now justify the use of antipsychotic drugs based on specific 

diagnoses and observe specific parameters within which these drugs may be used. While 

recent studies indicate that the OBRA 1987 regulations may have had a positive effect on 

reducing antipsychotic drug use in this population, there is some evidence of continuing 

problems of inappropriate prescriptions, multiple presgriptions, and possible drug-drug 

interactions. For example, a July 1995 study of 21,884 nursing home residents found that 12 

percent of residents in the study were prescribed one or more of 10 nonpsychotropic 

medications that are considered inappropriate for use in the elderly. Thirty-one percent of 

those residents were receiving more than seven prescription drugs, and 19 percent of this 

group had prescriptions for at least one inappropriate medication.” 

METHODOLOGY 

This report documents prescription drug expenditures and identifies the types of drugs being 

used in Texas nursing homes. As part of preinspection, we reviewed 1) current literature 

related to prescription drug use by the elderly and 2) Medicare and Medicaid policies 

2 
associated with payment and monitoring drug use. To assess the extent of prescription drug 

use by Medicare and Medicaid residents, we obtained Medicaid data for Texas nursing home 

residents eligible for Medicare and Medicaid for calendar years 1992-94 and the first six 

months of 1995. The selection of Texas was purposive based on 1) the availability of 

Medicaid data and planned identification of the Medicare and Medicaid population in the 

State by HCFA and the Office of the Inspector General (OIG), 2) designation as a 

demonstration site for Operation Restore Trust (see description below), and 3) the large 

number of nursing facilities in Texas, approximately eight percent of long term care facilities 

in the nation. Texas also ranks third in the nation for total Medicaid spending. 

This inspection provides insight into several issues related to prescription drug use in nursing 

homes. First, we report total program expenditures by year and total expenditures by drug 

class, offering a more detailed understanding of precisely what types of drugs are being used 

in nursing homes and in what volume they are being used. We also consider expenditures on 

drugs regulated by OBRA or deemed inappropriate for use in elderly populations. 

For ease of analysis and understanding we have compressed the several thousand different 

drugs in our study into 32 general categories. Drugs are combined based on therapeutic 

function and pharmacological makeup. For example, the category for which Federal 

programs paid the most in 1994, gastrointestinal preparations, include such types of drugs as 

those intended to treat ulcers, limit the secretion of certain gastrointestinal fluids, or to treat 

gastrointestinal reflux. Some of the most common brand names in this category include 

Zuntuc and Pepcid. Other categories include: cardiac, psychotherapeutic, cardiovascular and 

antiinfective drugs. A complete list of the categories and the types of drugs each contains 

appears in Appendix B. Although we collected and analyzed Texas prescription drug data 

for the years 1992 through the first six months of 1995, much of the discussion in this report 

is focused on the most current year for which we have complete data, 1994, with 

comparisons to the other years where appropriate. Because of the difficulty in estimating the 

nursing home population for the full year of 1995, no attempt was made to project these 

figures beyond June 30, 1995. 

This is the first in a series of three reports detailing our inspection of issues related to 

prescription drug use in nursing facilities. The second report, “An Inside View by consultant 

Pharmacists” presents the results of a national survey of consultant pharmacists who perform 

Federally-mandated monthly drug regimen reviews &rnursing homes. The final report, “A 

Pharmaceutical Review and Inspection Recommendations” presents the findings from a 

pharmaceutical review of the records of a number of Texas nursing home residents and the 

collective recommendations of all three reports. 

This inspection was conducted as a part of Operation Restore Trust (ORT). The initiative, 

focused in five States (California, Florida, Illinois, New York, and Texas), involves multidisciplinary teams of State and Federal personnel seeking to reduce fraud, waste, and abuse 

in nursing homes and home health agencies, and by durable medical equipment suppliers. 

This inspection was conducted in accordance with the Quality Standards for Inspections 

issued by the President’s Council on Integrity and Efficiency. 

3 
FINDINGS 

Prescription drag payments for Texas Medicare and Medicaid nursing home residents have 

increased rapidly, rising by 20 percent between 1992 and 1994. 

II ,I 

Table 1: Increasing Prescription Drug Payments for Texas 

IL- Medicare and Medicaid Nursing home Residents 

I! 

TOTAL AVERAGE PAYMENT ,/ 

TOTAL BENEFICIARIES PER BENEFICIARY 8' 

YEAR PAYMENT RECEIVING 

DRUGS 

'II 

!I 

. 

1992 $75,501,900 83,891’ $900 I 

1993 $82,517,940 84,895 $972 

1994 $91,584,609 85,111 $1076 

Percent Change +21.3% +1.45% i-19.6% 

* 1992 figures projected using calculations based upon 1994 Medicare and Medicaid to 

total beneficiary ratio. 

From 1992 to 1994 total drug payments have increased each year, rising much faster than the 

rate of increase in the number of beneficiaries receiving drugs (+ 1.5 percent) and at a 

substantially greater rate than the rate of inflation during this period.” As a result, there 

was a significant increase (20 percent) in the average payment per beneficiary during this 

period. The 1994 total represents just over 17 percent of the total Texas drug claims. A 

portion of this growth may be attributable to changes in treatment and practice patterns over 

this period. Recognition that older patients may benefit from a more aggressive diagnosis and 

treatment of depression, combined with higher costs of newer and potentially safer 

antidepressants, as well as increased use of more expensive cardiovascular and cardiac drugs, 

may have contributed to the increase. 

In 1994, almost 20 percent, or more than 16,600, of Texas’ Medicare and Medicaid 

benejkiaries received at least one of the twenty dmgs experts consider potentially 

inappropriate for elderly use. 

This is 19.6 percent of all beneficiaries in our dataset. Note, however, that although there is 

an overall increase in beneficiaries receiving all drugs in the five major cost categories (see 

Table 4), there is a downward trend in the percentage of beneficiary claims for 

contraindicated drugs (see Table 2). The rate of potentially inappropriate claims has 

declined from 2 1.2 percent in 1992 to 20.8 percent in 1993 to 19.6 percent in 1994. The 

trend appears to continue in 1995, as only 17 percent of Medicare and Medicaid beneficiaries 

receiving drugs had claims for one or more items on the list of contraindicated drugs. While 

this is encouraging, it is important to remember that the 1995 figures represent only claims 

from the first six months of the year, and it is likely that the final figure will be somewhat 

4 
higher for the full year. Regardless, the rate of resident use of contraindicated drugs remains 

high enough to be a continuing, serious concern. 

/ Table 2: Beneficiaries with Claims for Contraindicated Drug (by Year) /

I 

Ii BENE WITH BENE WITH ~I 

Jo YEAR CONTRAINDICATED DRUG ANY DRUG % OF TOTAL I 

, I 

IIJo 1992 15,623 73,814 21.2% ~~ 

t 

1993 17,617 84,584 20.8% :~ 

,i 

1994 16,670 85,111 19.6% 

1995 

(first 6 

months) 12,460 73,328 17.0% 

We searched our 1994 dataset for Medicaid payments for several specific drugs experts 

indicating continued high usage of drugs in this category. 

5 

generally consider inappropriate for elderly use. The following discussion illustrates some of 

the concerns with these problematic drugs. 

Examples of contraindictied drags being used in Texas nursing facilities: 

Dipyridamole 

Just over ten percent of all the Medicare and Medicaid beneficiaries receiving any 

prescription drug in 1994 received dipyridamole. This drug falls into the cardiac category 

and is used to reduce blood clot formation. It is often prescribed in cases of cardiac valve 

replacement or to help prevent recurrence of myocardial infarction, or heart attack. 

Dipyridamole is also prescribed as treatment for transient ischemic attacks (TIAs) which can 

lead to blindness, paralysis, speech disturbance, or coma. Some experts express concern that 

the effectiveness of this drug at low doses is in doubt and that higher doses may lead to 

toxicity. They suggest that other, safer drugs are available.12 Our data show Medicaid 

programs paid $346,639 for this drug in Texas nursing facilities in 1994. 

Psychotherapeutic Drugs 

Of particular concern to medical experts and to Congress and the HCFA are drugs that fall 

into the psychotherapeutic class. Despite regulatory changes in the late 1980s mandating the 

reduction of the use of psychoactive drugs in nursing home patients, several recent studies 

indicate that about half of all residents were still being given one or more of these drugs as 

late as the mid 1990s.13 Consistent with this literature, in Texas nursing facilities 55.8 

percent of Medicare and Medicaid residents received at least one of the drugs in 1994. 

During the first half of 1995 48.3 percent of beneficiaries received psychotherapeutics, 
common brand names in this category include Zanfac and Pepcid. 

6 

One of these psychotherapeutic drugs is diazepam, better known by its brand name, Valium. 

It is a long-acting benzodiazepine often used to treat dementia, anxiety disorders, and 

insomnia. A number of studies cite expert claims that there are other, shorter acting drugs in 

the same class that are more appropriate for use in the elderly”. One concern about the use 

of diazepam in this population is the tendency, because it remains in the system for quite a 

long time, for older folks to become oversedated and uncoordinated when given regular adult 

doses. Such effects are likely to result in injuries associated with falls. The HCFA 

guidelines, as well as the experts, recommend that physicians attempt to reduce the dosage of 

these drugs in elderly people until a minimal effective dose is reached. In 1994, Medicaid 

programs paid $8 1,890 for Diazepam for a total of 2,911 Medicaid and Medicare Texas 

nursing home beneficiaries. 

In the same year, Medicaid programs also paid $159,630 for amitriptyline for 6,459 

residents. Also within the psychotherapeutic classification, amitriptyline is used to treat 

depression. While there is some concern about the possible underuse of antidepressants in 

elderly individuals, experts worry about the number and severity of side effects associated 

with this particular drug. Moreover, some of these side effects can be misinterpreted as 

symptoms whose treatment might require additional psychoactive drugs. Finally, another 

long-acting benzodiazepine in the psychotherapeutic class, flurazepam, was the object of 953 

claims for a total of $19,317 in 1994. 

Five drag categories account for an expanding majority of total payments for prescription 

drags. 

These drug categories consistently rank in the top five in terms of total payment for all of the 

years for which we have complete data. Also, their share of total payments has grown 

significantly from 1992 through the first half of 1995. 

Table 3: Five Drug Categories Account for the Majority of Total Prescription Drug Payments 

GENERAL CLASSIFICATION 

1992 1993 1994 d 

GASTROINTESTINAL PREPARATIONS 11.9% 15.3% 16.7% +40.3% 

CARDIAC DRUGS 10.4 11.5 12.1 + 16.3 

PSYCHOTHERAPEUTIC DRUGS 8.9 10.4 11.4 

El 

+28.1 

CARDIOVASCULAR DRUGS 6.5 7.8 7.6 + 16.9 

ANTIINFECTIVES 4.6 5.7 5.5 + 19.5 

TOTAL 42.3 50.7 53.3 //I 

Gastrointestinal preparations include drugs which are intended to treat ulcers, limit the 

secretion of certain gastrointestinal fluids, or to treat gastrointestinal reflux. Some of the most 
1992 through 1994. 

7 

Cardiac drugs include recognizable brand names such as Procardia. This class of drugs is used 

in treatment of chronic angina pectoris and hypertension and in prevention of angina symptoms, 

such as chest pain and shortness of breath, as well as reduction of blood pressure. 

Psychotherapeutic drugs, including Prozac, Zolof, and Paxil, are used to treat a number of 

problems ranging from anxiety and depression to insomnia and agitation associated with dementia. 

Cardiovascular drugs such as Capoten and Vasotec are used to treat blood pressure related 

ailments and congestive heart failure. 

Finally, antiinfective drugs are used to treat a wide range of problems including urinary tract 

infections, bone and joint infections, pneumonia, infectious diarrhea, and skin and soft tissue 

infections, such as bed sores. 

Additionally, more than 50 percent of all beneficiaries received drags from at least three of 

the top five classifications in each year for which we have data. 

From 1992 through 1994 over 50 percent of all Texas Medicare and Medicaid nursing home 

residents were reimbursed for at least one prescription from the cardiac, psychotherapeutic, 

and antiinfective drug categories. 

Table 4: Percent of Total Beneficiaries Receiving Prescription Drugs I 

I 

GENERAL CLASSIFICATION 1992 1993 1994 

ANTIINFECTIVES 58.8% 63.9% 63.5% ’ 

I 

PSYCHOTHERAPEUTIC DRUGS 50.8 53.2 55.8 / 

/ 

CARDIAC DRUGS 50.2 51.4 51.5 I 

GASTROINTESTINAL PREPARATIONS 40.5 44.9 46.8 I 

1 

CARDIOVASCULAR DRUGS 27.7 28.2 28.9 

Total payments for the top five categories of drags increased very rapidly from 1992 

through 1994. The proportion of total beneficiaries who receive them also grew. 

From 1992 to the end of 1994 the proportion of total beneficiaries receiving gastrointestinal 

drugs rose more than 15 percent. With this increase in use came a major increase (94 

percent) in the total payments for these drugs. Similarly, total payments for 

psychotherapeutic drugs rose nearly 92 percent, while the percent of total beneficiaries 

receiving these drugs increased by about 10 percent. Though not as high, the other three top 

categories also saw an increases of 60 percent or more in payments, coupled with moderate 

growth in the percent of total beneficiaries receiving them. To place this change in 

perspective, recall from Table 1 that total drug payments increased just over 21 percent from 
8 

__-

!! Table 5: Percent Change 1992-1994, Percent of Total Beneficiaries Receiving Prescription Drugs and ~ 

11 Total Payment for Five Drug Classifications 

GENERAL CLASSIFICATION Percent Total Beneficiaries Total Payment 

(% change) (X change) 

, GASTROINTESTINAL PREPARATIONS +15.5% + 93.6% 

1 

~ PSYCHOTHERAPEUTIC DRUGS + 9.8 + 91.8 Ii 

~ CARDIOVASCULAR 

I 

+ 4.3 + 60.2 

I’ , i 

ANTIINFECTIVES + 8.0 + 63.8 ,~ 

/ CARDIAC DRUGS 

in 

+ 2.5 + 59.6 II 

Gastrointestinal preparations comprise an increasing proportion of the prescription drugs 

used in Texas nursing facilities. Closer scrutiny of the medical necessity of these very 

expensive drugs appears warranted. 

Some experts in elderly health care are concerned about the increasing use of certain 

gastrointestinal drugs. Within this classification, Histamine-2 receptor antagonists have 

become a very popular treatment for many acid related gastrointestinal disorders including 

peptic ulcers and gastroesophegeal reflux. Two of the most common of these drugs are 

cemetidine and ranitidene, better known as Tagamet and Zantac, respectively. A 1992 study 

conducted in a large long term care facility indicated that more than 40 percent of patients 

receiving these drugs were receiving them for reasons unsubstantiated by the medical 

literature. l5 

Because there are relatively few side effects associated with these drugs when prescribed in 

proper doses the concern about their use is not a major quality of care issue. However, it 

can become a significant cost issue. These particular drugs are very expensive. In fact, in 

1994 Federal programs paid $15,325,877 for gastrointestinal drugs. A total of 33,575 or 

almost 47 percent of all Texas nursing home beneficiaries received at least one 

gastrointestinal drug. Zuntuc accounted for $5,921,810 of those payments while $751,588 

was for Tugamet. At more than $380 per year per beneficiary, gastrointestinal drugs are 

also among the most expensive types of drugs covered by Federal programs. Thus, if 40 

percent or more of these claims are not medically necessary, there should certainly be an 

economic benefit from reducing their inappropriate use. 

Total prescription drug payments, average payments per day, and average payments per 

beneficiary vary quite widely by Texas nursing home. The reasons for, and 

appropriateness of, these variations are unclear. 

Average 1994 prescription drug payments, when arrayed by nursing home, range from a high 

of more than $8 per day per facility to as little as 17 cents per day. Payments per 

beneficiary in a particular facility begin at just over $5 and increase to more than $485. The 
1994 data also reveal that the average total payment aggregated at the nursing home level is 

just over $82,000. Total payments per facility range from under $10 to more than $335,000 

for that year. Almost 10 percent of facilities had total resident reimbursements under 

$10,000, while 30 percent of facilities had total reimbursements of more than $100,000. 

Table 6 illustrates the variation in prescription drug payments when considered at the facility 

level. 

Ii 7 

~~ Table 6: 1994 Average Prescription Drug Payments; 

pi 

Totals, Per Beneficiary, and Per Day 

(by Nursing Home) 

7 

MINIMUM MAXIMUM 

I 

TOTAL PAYMENT 9.89 336,539 

(per facility) 

,I 

I’ 

MEAN ‘1 

82,939 ~ 

AVERAGE PAYMENT PER BENEFICIARY 5.26 487.23 158.95 

/ (per facility) 

I 

1 

/ AVERAGE PAYMENT PER DAY 0.17 8.82 

1 (per facility) 

0.73 1 

1 I 

*For this analysis, facilities with fewer than 5 beneficiaries were excluded. Also, one 

extreme case, whose average payment per day value is 60 percent higher than the next 

lowest value, was omitted. 

While some of these differences are certainly attributable to the number of beneficiaries 

residing in a particular facility, it is likely that other factors also contribute to the variation. 

However, our existing data does not reveal a relationship that explains these differences. 

When claims data for a particular class of drugs are arrayed by nursing home, no 

characteristics consistently differentiate those with high costs per beneficiary or per day from 

those with lower costs. Following the compilation of additional data, we plan further 

analysis to determine what other variables, such as facility type, severity of resident illness, 

and types and numbers of other services, contribute to these wide differences in payments at 

the nursing home level. 

9 
RECOMMENDATIONS 

Based on the concerns raised in this report, more work is necessary to understand reasons for 

the rapid escalation in costs and claims for certain types of drugs used in nursing homes. 

Specific recommendations for HCFA to consider in this endeavor are provided in our third 

report of this inspection, “A Pharmaceutical Review and Inspection Recommendations” (OEI06-96-00082). 

10 
COMMENTS ABOUT DRAFT REPORTS 

does not prove that any one prescription was improper, but that closer examination is 

11 

We solicited comments from agencies within the Department of Health and Human Services 

which have responsibilities for policies related to Medicare and Medicaid and long term care. 

We also requested input from several national organizations representing the interests of 

nursing homes, patients, or providers. We appreciate the time and efforts of those providing 

comments. 

Departmental Comments 

Within the Department, we received comments on the draft reports from the Health Care 

Financing Administration (HCFA) and the Assistant Secretary for Planning and Evaluation 

(ASPE). Both agencies concurred with the recommendations; HCFA emphasized the need 

for further studies to assess the extent of continued use of potentially inappropriate drugs, 

other avenues of possible cost savings related to drugs, and the need to determine and 

understand the potential sources of the escalating costs and claims for certain types of drugs 

used in nursing homes. The final reports reflect several clarifications or changes based on 

their suggestions. The full text of each agency’s comments is provided in the third and final 

report of this inspection, “A Pharmaceutical Review and Inspection Recommendations” (OEI06-96-00082). 

Comments from External Organizations 

We also received comments from the following external organizations: American Health 

Care Association; American Association of Homes and Services for the Aging; American 

Medical Directors Association; American Society of Consultant Pharmacists; and National 

Association of Boards of Pharmacy. Most of the associations concurred with one or more of 

the recommendations within each of the inspection reports. All commentors support the need 

for better communication and coordination between nursing home staff and other healthcare 

providers, training nurse aides, and understanding the implications of nursing home 

medication services and associated costs. 

Several organizations questioned the methodology used in this inspection, particularly for the 

consultant pharmacist survey. However, as with any evaluation, there are always some 

limitations in how data and information can be obtained, given time and other resource 

constraints. Further, while we acknowledge that a survey of this nature introduces some bias 

and subjectivity, we also believe that the survey of consultant pharmacists provides us with 

an up-close view of what is happening with prescription drug use in nursing homes. 

Moreover, the results of the consultant pharmacist survey are consistent with our results from 

our two other methodologies. 

Some comments expressed concerns about the use of the term, “inappropriate. ” As 

explained previously, use of this term in reporting concerns with a patient’s medication 

regimen are somewhat a matter of opinion. The evidence provided in these three reports 
warranted. Also, while the use of such a drug may be supported by physician orders in 

individual cases, use of the drug, in general, is likely to be considered inappropriate. 

Some comments addressed the implications of broadening Federal oversight. There is clear 

concern about the responsibility for medication issues being the responsibility of the 

physician, not the nursing home. Further, some organizations expressed concern that these 

particular issues did not result in direct recommendations about the physician’s role for 

nursing home patients’ medication regimens. We felt that further examination of this area is 

warranted before recommending changes which would impact so many entities involved in 

the process. 

In conclusion, we believe the three reports collectively, and each using a different approach, 

strongly indicate that the intent of the provisions of the OBRA Acts concerning prescription 

drug usage are not being clearly fulfilled. Further, HCFA has authority to correct and 

enhance quality of care for nursing home patients. The recommendations we present attempt 

to facilitate the initial steps of this effort, and to address some concerns evidenced in the 

reports and received comments. While we recognize that great strides have been made to 

meet the OBRA requirements, we believe further effort remains by all the players involved 

(HCFA, associations and their members, nursing homes, and residents and their families) to 

further improve quality of care for nursing home patients. 

The full text of each organization’s comments is provided in the third and final report of this 

inspection, “A Pharmaceutical Review and Inspection Recommendations” (OEI-06-96-

00082). 

12 
ENDNOTES 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

8. 

9. 

10. 

11. 

12. 

13. 

Once we identified the dually-eligible population, we extracted Medicaid payments 

for drugs provided during a nursing home stay from data currently maintained by 

HCFA or the OIG. Only the first six months of claims data were available for 

1995. These figures are included in our analysis where appropriate. Due to the 

difficulty in estimating the nursing facility population for the full year, no attempt 

was made to project these figures beyond June 30, 1995. 

Health Care Financing Administration, BDMS Division of Medicaid Statistics, 

1996. 

HCFA, BDMS, OSM, Division of Program Systems, 12/19/1996. 

Keitz, Todd. “10 Things You Should Know About the Long Term Care Market.” 

Medical Marketing and Media. 30(5):42-46. May 1995. 

Beard, Keith. “Adverse Reactions as a Cause of Hospital Admission in the Aged,” 

Drugs & Aging, Vol. 2, No. 4 (July/Aug. 1992), pp. 356-67. 

General Accounting Office. “Prescription Drugs and the Elderly: Many Still 

Receive Potentially Harmful Drugs Despite Improvements. ” Letter Report 

GAO/HHES-95-152. July 24, 1995. 

Spore DL, Mor V, Larrat P, Hawes C, Hiris J, “Inappropriate Drug Prescriptions 

for Elderly Residents of Board and Care Facilities. ” American Journal of Public 

Health, Vo1.87, No. 3 (March 1997), pp. 404-409. 

Beers, Mark, Joseph G. Ouslander, Irving Rollingher, et al. “Explicit Criteria for 

Determining Inappropriate Medication Use in Nursing Home Residents. ” Archives 

oflnternal Medicine, Vol. lSl(Sept. 1991), pp. 1825-32. 

42 CFR Set 483.60. 

Ukens, Carol. “Warning Sign. ” Drug Topics. 139 (13); 56 July 10, 1995. 

The inflation rate based on the Consumer Price Index was just over 6 percent for 

this period and 6.7 percent based upon the CPI: Medical Index for Prescription 

Drugs. Thus, the adjusted growth rate for average payments per beneficiary 

remains approximately 13 percent based upon either index. 

Source: Bureau of Labor Statistics, U.S. Department of Labor 

Beers, et al. 1991; Avom and Gurwitz, 1995. 

Avom and Gurwitz, 1995., Beers, Ouslander, et ai.,1992. 

13 
14. GAO, July 24, 1995; Beers, et al, 1991; Avom, Jerry and Jerry H. Gurwitz. 

“Drug Use in the Nursing Home. ” Annals of Internal Medicine, Vol 123 (August, 

1995), pp. 195-204. 

15. Gurwitz, JH, JP Noonan, and SB Soumerai. “Reducing the Use of H2-Receptor 

Antagonists in the Long-Term-Care Setting, ” Journal of the American Geriatric 

Society 1992; Vol 40 pp.359-64. 

14 
APPENDIX A 

20 Drugs Generally Considered 

Inappropriate for the Elderly 

The 20 drugs listed below were judged generally inappropriate for elderly patients by a panel of 

experts. The panel’s results and methodology, published in 1991, indicate that these drugs should 

normally not be used with elderly patients. However, they stress that there could be some medical 

situations in which use of these drugs would be appropriate. 

Medication 

Amitriptyline 

Use 

To treat 

depression 

Carisoprodol To relieve severe 

pain caused by 

sprains and back 

pain 

Chlordiazepoxide 

Chlorpropamide 

Cyclandelate 

As a (minor) tranquilizer Shorter-acting 

or antianxiety benzodiazepines are 

medication safer alternatives 

To treat diabetes 

(a hypoglycemic agent) 

Other oral medications 

have shorter half-lives 

and do not cause 

inappropriate 

antidiuretic hormone 

secretion 

To improve blood 

circulation 

Comment 

Other antidepressant 

medications cause 

fewer side effects 

Minimally effective 

while causing 

toxicity; potential 

for toxic reaction 

is greater than 

potential benefit 

Effectiveness is in 

doubt; no longer available 

in the U.S. 

A -1 
Medication Use 

Cyclobenzaprine To relieve severe 

pain caused by 

sprains and back 

pain 

Diazepam 

Dipyridamole 

Flurazepam 

Indomethacin 

Isoxsuprine 

Meprobamate 

Methocarbamol 

Comment 

Minimally effective 

while causing 

toxicity; potential 

for toxic reaction 

is greater than 

potential benefit 

As a (minor) tranquilizer 

or antianxiety 

medication 

Shorter-acting 

benzodiazepines are 

safer alternatives 

To reduce bloodclot formation Effectiveness at low 

dosage is in doubt; 

toxic reaction is 

high at higher 

dosages; safer 

alternatives exist 

As a sleeping pill 

(a hypnotic) 

To relieve the 

pain and 

inflammation of 

rheumatoid 

arthritis 

To improve blood 

circulation 

A (major) tranquilizer 

(used for anxiety) 

To relieve severe 

pain caused by 

sprains and back 

pain 

Shorter-acting 

benzodiazepines are 

safer alternatives 

Other nonsteroidal 

anti-inflammatory 

agents cause less 

toxic reactions 

Effectiveness is in 

doubt 

Shorter-acting 

benzodiazepines are 

safer alternatives 

Minimally effective 

while causing 

toxicity; potential 

for toxic reaction 

is greater than 

potential benefit 

A -2 
lSl(Sept. 1991), pp. 182532. 

A -3 

Medication Use Comment

Orphenadrine 

Pentazocine 

Pentobarbital 

Phenylbutazone 

Propoxyphene 

Secobarbital 

Trimethobenzamide 

To relieve severe 

pain caused by 

sprains and back 

pain 

To relieve 

moderate to severe 

pain 

As a sleeping pill 

and to reduce 

anxiety (hypnotic) 

To relieve the 

pain and 

inflammation of 

rheumatoid 

arthritis 

To relieve mild to 

moderate pain 

As a sleeping pill 

and to reduce 

anxiety (hypnotic) 

To relieve nausea 

and vomiting 

Minimally effective 

while causing 

toxicity; potential 

for toxic reaction 

is greater than 

potential benefit 

Other narcotic 

medications are 

safer and more 

effective 

Safer sedativehypnotics are 

available 

Other nonsteroidal 

anti-inflammatory 

agents cause less 

toxic reactions 

Other analgesic 

medications are more 

effective and safer 

Safer sedativehypnotics are 

available 

Least effective of 

available 

antiemetics 

Source: 

Beers, Mark, Joseph G. Ouslander, Irving Rollingher, et al. “Explicit Criteria for Determining 

Inappropriate Medication Use in Nursing Home Residents. ” Archives of Internal Medicine, Vol. 
APPENDIX B 

General Classification of Prescription Drugs 

Analgesics 

Analgesics, narcotic 

Analgesics, non-narcotic general 

Antidotes 

Anesthetics 

Anesthetic local/topical 

Antiarthritics 

Antiasthmatics 

Bronchial dialators 

Xanthine derivatives 

Antihistamines 

Antihistamines 

Antipruritics 

Antiinfectives 

Tetracyclines 

Penicillins 

Streptomycins 

Sulfonamides 

Erytrhomycins 

Cephalosporins 

Antibacterials, urinary 

Chloramphenicol 

TB preparations 

Antiinfectives, miscellaneous 

Antimalarials 

Trimethoprim 

Vaginal cleaners 

Antineoplastics (anti-tumor) 

Antiparkinson drugs 

Autonomic drugs 

Cardiovascular preparations, other 

Parasympathetic agents 

Blood 

Antigoagulants 

Hemostatics 

B-l 
Cardiac drugs 

Vasodilators, coronary 

Digitalis preparations 

Cardiovascular 

Aldosterone antagonists 

Lipotropics 

Cholesterol reducers 

Rauwolfias 

Hypotensives, other 

Vasodilators, peripheral 

CNS drugs (central nervous system) 

Anticonvulsants 

Contraceptives 

Cough and cold preparations 

Antitussives-expectorants 

Cough and cold preparations 

Adrenergics 

Diuretics 

Electrolyte, caloric and fluid replacement 

Iodine therapy 

Protein lysates 

Electrolytes & miscellaneous nutrients 

Hematinics 

EENT preparations-(eye, ear, nose, and throat) 

Nasal and otic preparations, topical 

Ophthalmic preparations 

Gastrointestinal preparations 

Anti-ulcer/other gastrointestinal preps 

Antidiarrheals 

Antispasmodic-anticholinergics 

Bile therapy 

Laxatives 

Antinauseants 

Digestants 

Hemorrhoidal preparations 

Hormones 

Corticotropins 

Mineralocorticoids 

Anabolics 

Androgens 

Estrogens 

Progesterone 

Other hormones 

Oxytocics 

B-2 
Hypoglycemics 

Misc. Med. Supplies, devices & other non drug 

Medical supplies, devices and other non-drug products 

Muscle relaxants 

Psychotherapeutic drugs 

Ataractics-tranquilizers 

CNS (central nervous system) stimulants 

Psychostimulants-antidepressants 

Sedative and hypnotics 

Sedative, barbiturate 

Sedative, non-barbiturate 

Skin preparations 

Antibiotics, other 

Antiparasitics 

Antivirals 

Antibacterials and antiseptics, general 

Glucocorticoids 

Enzymes 

Emollients, protectives 

Fungicides 

Dermatologicals, all other 

Thyroid preps 

Thyroid preparations 

Antithyroid preparations 

Biologicals 

Pre-natal vitamins 

Multivitamins 

Vitamins, all others 

Vitamins, fat soluble 

Folic acid preparations 

B complex with vitamin c preparations 

Vitamin k preparations 

Unclassified drug products 

B-3