WASHINGTON, D.C. — The U.S. Department of Health and Human Services Office of Inspector General has released two damning reports revealing that nursing homes across the country are falsely diagnosing dementia patients with schizophrenia in order to conceal the widespread misuse of antipsychotic medications and artificially inflate their Medicare quality ratings, according to findings published on March 19, 2026.
The federal investigation, which examined 40 nursing home inspections conducted by state surveyors between 2018 and 2021, uncovered a disturbing pattern in which facilities prescribed powerful antipsychotic drugs to control residents exhibiting harmless behaviors associated with dementia — then manipulated medical records to avoid regulatory scrutiny, as reported by multiple national news outlets including The Washington Post, STAT News, and Skilled Nursing News.
According to the OIG reports (OEI-02-23-00200 and OEI-02-23-00201), investigators found that nursing home staff members received electronic health record alerts identifying residents who were taking antipsychotic medications without corresponding schizophrenia diagnoses. Rather than discontinuing the drugs, nurses responded by adding false schizophrenia diagnoses to patients' charts, as reported by STAT News. At one facility, a single nurse practitioner entered schizophrenia diagnoses into dozens of residents' medical records in a single day, according to The Spokesman-Review.
The cases documented in the reports paint a harrowing picture. According to The Spokesman-Review, a Pennsylvania nursing home administered antipsychotic drugs to a woman over 100 years old because she enjoyed playing with baby dolls — a common and harmless comfort behavior among dementia patients. In Virginia, a male resident was medicated because he preferred staying in his bed rather than sitting in a wheelchair, while another Virginia woman was given antipsychotic drugs because she became upset when staff did not respond promptly to her call light. According to Skilled Nursing News, other residents were medicated for expressing frustration or repeatedly asking for help — behaviors that are typical manifestations of dementia, not indicators of psychotic disorders.
Staff at some facilities admitted to investigators that the drugs were used to "lighten workload" by sedating patients rather than attempting non-pharmacological interventions first, according to reporting by Yahoo News. Federal regulations require that nursing homes attempt behavioral and environmental approaches before resorting to psychotropic medications.
Most antipsychotic drugs lack FDA approval for use in patients with Alzheimer's disease and other forms of dementia. These medications carry black-box warnings because they significantly increase the risk of falls, strokes, and death in elderly dementia patients.
CMS Inspection History
The false diagnosis scheme is directly tied to the Centers for Medicare and Medicaid Services star rating system, which nursing homes depend on to attract residents and their families. CMS tracks antipsychotic drug usage as a quality measure, and facilities with high rates of antipsychotic prescribing receive lower quality scores. By fraudulently diagnosing residents with schizophrenia — a condition for which antipsychotic use is considered clinically appropriate — nursing homes effectively excluded those residents from the quality measure calculation, making their antipsychotic usage rates appear lower and their star ratings artificially higher, according to the OIG findings.
This is not a newly discovered problem. A 2020 Congressional investigation and a separate 2022 OIG report had previously documented the same pattern of false diagnoses and antipsychotic misuse, according to STAT News. The new reports were specifically designed to document the lived experiences of residents and caregivers affected by these practices and to increase pressure on regulators to take enforcement action.
The OIG has recommended that CMS expand the use of civil monetary penalties against facilities that misuse antipsychotic drugs and move more quickly to impose serious sanctions, according to Skilled Nursing News. However, CMS is reportedly facing industry lobbying pressure from the American Health Care Association to relax antipsychotic reporting standards rather than strengthen them, as reported by Yahoo News.
Ownership & Operations
The investigation has drawn sharply divided reactions from industry stakeholders. Toby Edelman, an attorney with the Center for Medicare Advocacy, called the findings "devastating, confirming that nursing homes continue the decades-long problem of misusing antipsychotic drugs," as quoted in The Spokesman-Review.
Jodi Eyigor, vice president at LeadingAge, a nonprofit association representing aging services providers, described the documented practices as "inexcusable," according to Skilled Nursing News. Rani Snyder, president of the Hartford Foundation, emphasized that addressing the problem will require improved staffing levels and better workforce training in nonpharmacological dementia care approaches, as reported by Skilled Nursing News.
The American Health Care Association and National Center for Assisted Living pushed back on the reports. Holly Harmon, the organization's senior vice president, stated that medication decisions are based on "clinical conditions and shared decision-making" and dismissed the OIG findings as "based on a very small subset of specifically selected nursing homes," according to Skilled Nursing News and The Spokesman-Review.
The American Society of Consultant Pharmacists issued a statement supporting reform of the CMS quality measure, which has remained unchanged for 14 years. According to PharmiWeb, ASCP stated that "a more robust measure that differentiates appropriate and inappropriate use would benefit residents, caregivers, providers, facilities and surveyors." The organization also encouraged Quality Improvement Organizations to expand educational programs for pharmacists, medical directors, and care teams.
Resources for Families
Families who suspect a loved one in a nursing home may be receiving unnecessary antipsychotic medications or has been improperly diagnosed should take the following steps:
- Request a full medication review — Federal law gives residents and their families the right to access complete medical records, including all current prescriptions and diagnoses. - Contact the Long-Term Care Ombudsman — The National Long-Term Care Ombudsman Resource Center can be reached at 1-800-677-1116 or online at [ltcombudsman.org](https://ltcombudsman.org). Ombudsmen advocate for residents and can investigate complaints confidentially. - File a complaint with your state survey agency — Each state has a health department division responsible for inspecting and regulating nursing homes. Complaints can trigger unannounced inspections. - Ask about non-drug alternatives — Evidence-based approaches to managing dementia-related behaviors include music therapy, structured activities, environmental modifications, and consistent daily routines. Federal regulations require facilities to attempt these interventions before prescribing psychotropic drugs.
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