3.2 OBRA '90, Medicare/Medicaid & DUR

OBRA '90 and the Federal Foundations of Prospective DUR and Counseling

Congress enacted the Omnibus Budget Reconciliation Act of 1990 (OBRA '90) to control rising Medicaid prescription drug spending and improve therapeutic outcomes. OBRA '90 amended Section 1927 of the Social Security Act and conditioned a state's federal Medicaid drug rebate agreement on the state operating a drug utilization review (DUR) program. The pharmacy-facing requirements — a patient medication record, prospective drug use review, and an offer to counsel — took effect January 1, 1993, and became the template that most state pharmacy practice acts, including New York's, later extended to all patients, not just Medicaid beneficiaries.

The Three OBRA '90 Duties at the Point of Sale

OBRA '90 imposes three linked duties on the dispensing pharmacist:

1. Patient medication record (PMR). Make a reasonable effort to obtain, record, and maintain a medication record for each patient, including known allergies, chronic conditions, and a list of medications.
2. Prospective drug use review (ProDUR). Before dispensing, review the PMR and the new prescription to screen for problems.
3. Offer to counsel. Following the ProDUR screen, offer to counsel the patient or the patient's agent about the drug being dispensed.

What Prospective DUR Screens For

The Offer-to-Counsel Requirement

OBRA '90's counseling mandate is an offer, not a mandatory session — the patient may decline. Critically, the offer must be verbal (or through an equivalent interactive process); a sign stating "counseling available upon request" or a printed handout alone does not satisfy the requirement. Counseling content, when accepted, typically includes the drug name and indication, dosage and administration, special directions, common severe side effects, storage, and refill information. Pharmacies must document that the offer was made — many state boards, including New York's, require this documentation independent of federal Medicaid rules.

Retrospective DUR and the Modern CMS Framework

OBRA '90's original ProDUR mandate has grown into the modern Medicaid DUR program required under Section 1927(g) of the Social Security Act. Each state Medicaid program must operate both:

• Prospective DUR (ProDUR) — electronic point-of-sale screening at the time of dispensing.
• Retrospective DUR (RetroDUR) — ongoing, periodic review of claims data after dispensing to identify patterns such as therapeutic inappropriateness, adverse events, overuse, underuse, or fraud, paired with educational outreach to prescribers and pharmacists.

Under 42 CFR § 438.3(s), any Medicaid managed care organization (MCO) that covers outpatient drugs must run a DUR program at least as comprehensive as the state's fee-for-service program, consistent with 42 CFR Part 456, Subpart K.

Why OBRA '90 Set the National Floor

Before OBRA '90, patient counseling was largely discretionary and varied state by state — some states had voluntary counseling guidelines, others had none. By conditioning Medicaid drug rebate participation on ProDUR and a counseling offer, Congress effectively created a national floor that every state had to meet for Medicaid dispensing, and most state boards of pharmacy — including New York's — subsequently extended an equivalent verbal-offer requirement to all patients, not just Medicaid beneficiaries, through their own practice acts and regulations. On the MPJE, remember that OBRA '90 itself is federal Medicaid law; the New York-specific counseling regulation that applies it to every patient regardless of payer is addressed separately in this guide's New York practice chapters.

Medicare Part D: A Separate, Additional DUR and MTM Layer

Medicare Part D sponsors (stand-alone prescription drug plans and Medicare Advantage plans with drug coverage) operate under a distinct but related federal framework at 42 CFR § 423.153. Part D plan sponsors must maintain concurrent and retrospective DUR programs to screen for issues such as therapeutic duplication, drug interactions, and overutilization — separate from, and in addition to, state Medicaid DUR.

Part D sponsors must also establish a Medication Therapy Management (MTM) program under 42 CFR § 423.153(d) for targeted beneficiaries — those with multiple chronic conditions, multiple Part D drugs, and a likelihood of incurring annual drug costs above a CMS-set threshold. At minimum, MTM programs must offer an annual Comprehensive Medication Review (CMR) with a written summary meeting CMS's standardized format. A CMR is broader and more structured than an OBRA '90 point-of-sale counseling offer — it is a scheduled, often longer interaction reviewing the beneficiary's complete regimen, not a brief offer tied to a single new prescription.

Exam Traps

• OBRA '90 requires an offer to counsel, not counseling itself — a documented decline by the patient satisfies the duty as long as the offer was actually made.
• A written sign or handout alone does not satisfy the verbal-offer requirement.
• ProDUR happens before dispensing; RetroDUR happens after, using claims data.
• Medicare Part D MTM/CMR applies only to targeted beneficiaries meeting CMS criteria — not to every Part D enrollee — and is separate from the universal OBRA '90 counseling offer that applies to essentially all dispensed prescriptions.
• Medicaid MCOs covering outpatient drugs must match the state fee-for-service DUR program in rigor, not offer a lesser version.