What You Need to Know About CMS Regulations and Compliance

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History of CMS

In the late 1900s, a large number of psychiatric hospitals were being shut down through a nationwide process of deinstitutionalization. However, with the hospitals shut down, the residents needed somewhere to go. This began the steady increase of patients and residents in nursing homes. And with this increase came the need for a new method of care for these patients. Antipsychotics were introduced to nursing homes to satisfy this need.

While the initial intent for these medications was to help those with mental illnesses such as schizophrenia or bipolar disorders, caretakers swiftly found other uses for them. These substances could quiet and control dementia patients who cried out at all hours, or Alzheimer’s patients who wandered when they should not be wandering.

Antipsychotics became a catch-all treatment. Patients treated in such a way were typically “snowed” or left in a continuously drugged state where they were barely aware of their surroundings. They could be found left in wheelchairs, drooling, unable to communicate, and barely functional.

In 1987, however, the Omnibus Budget Reconciliation Act, or OBRA, was signed into law. This was the first time that federal regulation addressed chemical restraints. OBRA was set up as a system of minimum health and care requirements for nursing homes.

On March 29th, 2012, the CMS—the Center for Medicare and Medicaid Services—wanted to improve on these minimum requirements. They put together the National Partnership to Improve Dementia Care and Reduce Unnecessary Antipsychotic Drug use in Nursing Homes (National Partnership). This is now known as the Partnership to Improve Dementia Care in Nursing Homes. It was organized to optimize function and quality of life in nursing homes as well as expanding the breadth of care. There was now a focus on not just health, but also psychosocial and behavioral health needs.

At its core, this took care from a ‘one size fits all’ care system to more personalized solutions. Full workups were done for each patient to ensure that diagnoses were correct and that psychotropics, including antipsychotics, were truly needed. Surveys were implemented to track state and nationwide use of these medications, and facilities became more rigorous about monitoring their medical checks and attempting medical reductions.

The Mega Rule Phases are implementing CMS Regulations over three years. Phase One began on November 28th, 2016, Phase 2 on November 28th, 2017, and Phase Three will take effect on November 28th, 2019. Each phase implements new steps, techniques, knowledge, and rules to help facilities and homes to better care for their patients.

Rules to Know

As you are working in your facility to ensure your residents are receiving the best care, CMS has many rules to consider. First, your facility must have some form of behavioral health service involved. However, it is very open to interpretation. Some homes consider their Behavioral Care Plan their behavioral health service. Others believe that they must have a psychiatric service available to their patients. Whichever side of the scale your facility is on, there must be an approach to help patients with significant mental illness or substance abuse disorder in place before the need arises.

Another consideration is your facilities pharmacy services. Every month, the pharmacy must complete a review of medications, uses, and any potential inconsistencies on the side of the prescribers. The pharmacists also produce Gradual Dose Reductions, or GDRs, twice a year in two different quarters for the first year and annually after that. These are reminders to the facilities that a patient has been on antipsychotics or high-risk medications for an extended period, and it is time to see if the patient may not need the medicine anymore. From there, the facility will attempt to lower the dosage of the medication—or even eliminate it. If the patient still needs the medication, the facility must document accordingly.

A facility’s rating–up to five stars–is based on CMS regulations. Patients and hospitals both use these ratings as a judge of the facility’s effectiveness. Hospitals may see a low rating as a risk of a returned patient (which is a cost to the hospital, as they only get paid the first time they admit a patient, and not for any return visits the patient makes through a facility). A caretaker or family member may worry about the level of care given to their loved one.

Ratings can also drop based on F-tags. F-tags are markers of citations the facility has. These citations lead to fines, which lead to the potential loss of patient intake.


In Phase One of the Mega Rule, the focus of the GDRs and other reviews were primarily antipsychotics such as Seroquel and Risperidone. It set the standard for medication handling and care, as well as the quality of care in a long-term care facility.

Phase Two brought psychotropics to the forefront. The rules applied even to off-label brands because they still affect brain activity in the same way. Phase Two also introduced the 14 Day Rule for PRN (as needed) medications.

Phase Three, starting this November, has a focus around trauma-informed care, in addition to the facility modernizations that have come with each new step.

What to Know:

Proper Diagnosis

Some facilities will mass-diagnose schizophrenia among their patients. Schizophrenia is a condition for antipsychotics are FDA approved for use. This loophole is used to make the patients docile without triggering any citations.

Prioritizing Patients

Another potential issue is that, occasionally, even proper use of certain medications such as antipsychotics will count against a facility’s rating. State and national statistics set the standard for the ratings, and a facility should not have more than the state or national average’s use of these medications, even if being used properly. For example, Parkinson’s Psychosis has only one FDA approved drug as treatment. However, that medication is an antipsychotic. As it is still new on the market, the government has not registered that as a just cause for prescribing an antipsychotic, and it can make antipsychotic prescription rates appear elevated within a facility, even if they are all legitimate. Then, when facilities see where their rates stand, they are startled by how high they appear and start rushing to lower the rates when they may not necessarily need to be reduced.

Medication and Paperwork

Something else to consider is how to approach a pharmacological solution. Sometimes, there may be another option to try first before reaching for the medication. Or, if you do need the prescription, there must be an appropriate diagnosis–with the respective medical documentation–that corresponds with the medicine. Or, rather, vice versa. For example, if a facility treats a patient with Dementia with antipsychotics, it will contribute to their number of antipsychotic use on the CMS Casper report. However, if a state surveyor were to investigate, there would not be any penalty, provided the documentation was all in place showing that the patient showed reasons receiving the medication, other failed trials of safer medications, no side effects noted, demonstrated a response to it, and had attempted GDRs. Medical use must be fully documented and justified by both the facility staff as well as the Prescriber.

14 Day Rule

The Fourteen Day Rule can lead to confusion. It applies to different types of medications in different ways. Firstly, a facility cannot prescribe antipsychotics PRN, or as needed, for any more than 14 days. If the medicine is to continue in this manner, the Prescriber must evaluate the resident and write another 14-day prescription with the proper documentation proving it is necessary. Other medications such as anxiolytics and benzodiazepines do not have the same restrictions. They can last longer than two weeks, so long as they have a documented time plan, including san end date (typically 3-6 months), as well as a proper diagnosis warranting the drug when it is first prescribed.


Psych360 assists with meeting CMS regulations and maintaining compliance in your long-term care facilities. By providing 24/7 on-call emergency services, Psych360 can help reduce hospital visits and overmedication. They assist in documentation and record-keeping as well as recommending and working alongside staff for GDRs. Furthermore, the Psych360 team will help keep your facility’s team at the top of their game with inservices, courses, and interventions. With Psych360’s interdisciplinary approach, we are ready to cover all bases, reviewing and providing additional documentation, and ensure your facility is entirely in compliance with regulations that are in our control.

Located in Ohio and serving Ohio and Maryland, Psych360 is ready to offer psychiatric service to your long-term facility and help you provide the best care to your patients.

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