Federal regulators are tightening how nursing homes report and justify antipsychotic use, clarifying exclusions for certain diagnoses while escalating audits that have already cited most facilities reviewed. The changes are poised to reshape public star ratings and compliance priorities over the next year.
Whats changing
Starting Oct. 1, 2025, updates to the Nursing Home Care Compare quality measures refine how antipsychotic use is counted in the Five-Star Quality Rating System. Residents with qualifying psychotic disorders, including schizophrenia or Tourettes syndrome, will be excluded from the publicly reported antipsychotic quality measure, according to federal guidance. However, providers must continue to document clinical necessity, attempt gradual dose reductions, and meet all requirements under federal rules governing unnecessary drugs (F758).
The recalculation of Care Compare scores reflecting these changes is set for January 2026, a delay federal officials said was intended to ensure accuracy around schizophrenia documentation. Were delaying Care Compare recalculations to January 2026 to ensure accurate schizophrenia documentation, protecting vulnerable residents from unnecessary drugs while refining public transparency, CMS Administrator Chiquita Brooks-LaSure said in a September memo.
Audit pressure rises
The policy shift follows years of scrutiny over antipsychotic use in dementia care and the surge in schizophrenia diagnoses in nursing homes. An analysis by national media and watchdogs previously found schizophrenia labels rose roughly 70% from 2012 to 2021, while about one in five residents received antipsychotics overall often without a diagnosis that would justify the prescription under federal standards.
In heightened audits conducted in 2024 and 2025, more than 80% of facilities reviewed were cited for inadequate documentation supporting schizophrenia diagnoses, according to federal memos and industry reports. Regulators have warned that mislabeling or weak records could lead to serious deficiencies, fines, and potential star rating impacts when public reporting updates in 2026.
Experts stress that the new measure details are not a loophole. These changes arent a free pass exclusions for schizophrenia must be backed by thorough psychosocial assessments. Without proper Minimum Data Set coding and documentation, facilities risk immediate jeopardy citations and downstream star rating hits, said Elizabeth (Liz) Galik, PhD, CRNP, a professor at the University of Maryland School of Nursing and a quality measure advisor.
Clinical risks and documentation pitfalls
Antipsychotics carry an FDA black-box warning for increased mortality among older adults with dementia, raising death risk by about 1.6 to 1.7 times in this population. Regulators continue to push for nonpharmacologic approaches first and require regular attempts at gradual dose reduction unless clinically contraindicated.
Common survey pitfalls include mismatches between mood assessments (such as the PHQ-9), physician notes, and MDS coding, as well as missing evidence of non-drug interventions. Industry guidance recommends interdisciplinary reviews every six months and routine chart audits to catch discrepancies early. A national nursing survey cited by industry sources found gradual dose reduction succeeds in roughly 40% to 50% of cases when combined with staff training and behavioral strategies like music therapy and environmental modifications.
Provider groups say documentation has become the choke point. Documentation is the sticking point; a large majority of audited members faced deficiencies. This isnt about reducing meds at any cost its about proving medical necessity amid staffing strain, said David Gifford, MD, chief medical officer for a national nursing home association.
Critics push for broader reform
Advocacy coalitions argue the antipsychotic quality measure itself can incentivize misdiagnoses and mask sedation practices. The antipsychotic measure in the Five-Star system is fundamentally flawed, incentivizing misdiagnosis rather than true quality improvement, said Robyn Grant, who leads a national coalition focused on psychotropic reduction, in an April letter to federal officials. The group is urging regulators to rethink how antipsychotic use is publicly reported and to expand funding for non-drug dementia care.
What providers should do now
Operators are being urged to verify that any schizophrenia or other psychotic disorder diagnoses meet DSM-5 criteria, align MDS coding with the medical record, and document nonpharmacologic interventions and contraindications to dose reductions. Tools such as standardized behavioral assessments can help support clinical decisions and withstand survey scrutiny.
Federal officials have posted updated psychotropic medication guidance and surveyor instructions, with additional training resources available through professional associations. With January 2026 recalculations on deck, experts say the next few months are critical for tightening documentation and reinforcing person-centered, non-drug approaches to behavior and mood.
