NATIONWIDE — Federal regulators have overhauled how nursing homes report antipsychotic medication use after discovering widespread misreporting of psychiatric diagnoses, according to a Centers for Medicare & Medicaid Services memo published in September 2025.
The revised Long-Stay Antipsychotic Quality Measure took effect January 1, 2026, and now incorporates Medicare and Medicaid claims data alongside existing Minimum Data Set assessments. According to CMS, the national percentage of nursing home residents receiving antipsychotic medications will increase from 14.64% under the previous methodology to 16.98% under the new measure due to the inclusion of additional data sources.
The methodology change comes in response to what CMS describes as "the overreporting of schizophrenia diagnoses on the MDS" as a means to justify antipsychotic prescribing. Under the new system, facilities claiming exclusions for schizophrenia, Tourette syndrome, or Huntington's disease will face validation through cross-referenced claims data, according to the regulatory memo.
Retroactive Application Catches Providers Off Guard
McKnight's Long-Term Care News reported that CMS applied the new measure to time periods before the initially announced July 1, 2025 start date, surprising many facility operators. Jennifer Napier of Engage Consulting warned in the publication that most providers remain unaware of the change or how significantly it impacts their reported rates.
Industry experts cautioned that facilities could experience star rating drops — from three stars to two, or two to one — purely due to the methodological shift rather than any actual change in clinical practice, according to McKnight's reporting.
The revised measure results will be incorporated into the Five-Star Quality Rating System and displayed on the Nursing Home Compare website, directly affecting how facilities are evaluated by potential residents and families.
Hundreds of Facilities Face Audits
According to McKnight's Long-Term Care News, CMS has audited hundreds of nursing facilities over concerns about inflated schizophrenia diagnoses. Since April 2025, surveyors have received instructions to investigate suspicious schizophrenia diagnoses through record review and staff interviews, the publication reported.
The new measure cross-references MDS-reported exclusion diagnoses with Medicare and Medicaid claims to identify discrepancies. Federal regulations under F605 require facilities to keep residents free from chemical restraints and prevent unnecessary use of psychotropic medications.
Compliance Requirements for Facilities
Federal guidance requires nursing homes to conduct comprehensive assessments and ensure diagnostic accuracy before prescribing antipsychotic medications. Facilities must meet all criteria for psychiatric diagnoses and cannot rely solely on MDS documentation.
Regulations mandate that nonpharmacological interventions be attempted before psychotropic medications are prescribed. When antipsychotic medications are deemed necessary, facilities must attempt gradual dose reduction and document findings and rationale for clinical decision-making, according to CMS guidance.
Comprehensive medication reviews must be conducted for each resident, with thorough documentation providing a complete record from initial assessment through ongoing interventions. Care teams should involve all disciplines in reviewing F605 guidance and ensuring compliance with federal standards.
Impact on Quality Ratings
GuideStar ElderCare, a provider of neurological care services to nursing facilities, noted in a December 2025 blog post that antipsychotic stewardship requires neurology-forward clinical protocols for dementia and behavioral care. The organization stated that diagnostic and pharmacological audits must be fully aligned with CMS Quality Measures to meet federal standards.
The revised quality measure represents a significant shift in federal oversight of antipsychotic prescribing in long-term care settings. By incorporating claims data, CMS aims to close loopholes that allowed facilities to exclude residents from antipsychotic usage calculations through questionable diagnostic coding.
Facilities that have relied on broad application of exclusion diagnoses may see the most significant increases in their reported antipsychotic rates. Those changes will be visible to the public through the Nursing Home Compare tool and could affect overall star ratings.
Documentation and Audit Readiness
Industry consultants recommend that facilities conduct structured audits of antipsychotic use and documentation to identify gaps and areas for improvement. These internal reviews should examine whether diagnostic criteria are properly met and documented in clinical records.
Facilities should verify that exclusion diagnoses for schizophrenia, Tourette syndrome, and Huntington's disease are supported by comprehensive clinical documentation and claims history. Discrepancies between MDS coding and Medicare or Medicaid claims could trigger survey scrutiny.
The revised measure emphasizes the importance of accurate diagnostic coding and comprehensive documentation of the clinical decision-making process when antipsychotic medications are prescribed. Facilities must be prepared to demonstrate that medications are clinically appropriate and not used as chemical restraints.
Resources for Families
Families concerned about the use of antipsychotic medications or other psychotropic drugs for their loved ones can contact their state's Long-Term Care Ombudsman program. The National Long-Term Care Ombudsman Resource Center operates a hotline at 1-800-677-1116 and provides information at ltcombudsman.org.
Residents and families have the right to question medication decisions and request medication reviews. Federal regulations protect residents from unnecessary chemical restraints and require that behavioral symptoms be addressed through person-centered approaches before medications are considered.
The ombudsman program provides free, confidential assistance to nursing home residents and their families, helping to resolve concerns about quality of care, residents' rights, and medication management.
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