Absolutely it is possible. Studies show that about 40% or more of people with schizophrenia or depression with psychotic features report experiencing pain. The most common complaints are headaches or backaches or leg pain. Sometimes people with psychosis also experience tactile hallucinations — like the feeling of things crawling on their body or “pins and needles.”
Sometimes pain is a real symptom of an undiagnosed medical problem. Too often, especially in the past, reports of pain by people with chronic mental illness were written off as part of the mental illness. Sometimes yes. But sometimes there is a real and debilitating neurological issue or medical disorders that can contribute to symptoms of psychosis in the elderly. These include thyroid disease, diabetes. Vitamin B12 deficiency and dehydration, as only a few examples.
Complicating things further is that sleep deprivation and pain can become a vicious cycle. Pain keeps the person up, depriving them of sleep. Sleep deprivation reduces tolerance to pain, which makes it harder to sleep the next night and so on.
You didn’t mention if your family member is also suffering from dementia. If she hasn’t been evaluated for dementia, please get her assessed. There are medications that can be helpful when apparent psychotic symptoms are part of the clinical picture for someone with dementia.
If you haven’t already, I suggest you confer with a psychiatrist who specializes in geriatrics. This is too complicated to figure out on your own. With professional guidance, you may be able to get your family member relief from pain.
I wish you well.