Case Study: Missing Healthcare Supplier Rebates

Client Snapshot
Region Southeast
Headquarters Tennessee
Employees 7000
Beds 800
Patient Revenue $2.6 Billion

Missing Rebates
Instances where healthcare systems fail to accurately capture, claim or receive rebates to which they are entitled from vendors. These rebates are typically negotiated as part of contracts between the healthcare system and their vendors and are intended to provide discounts to the healthcare system.

problem

A multi-billion dollar regional healthcare system contracted Premier Cost Recovery to conduct a full-scale AP recovery audit to recoup any overpayments and lost funds in the procurement to payment cycle, including missing healthcare supplier rebates. An accounts payable recovery audit had not been completed for more than four years which left the healthcare system vulnerable to financial losses and operational inefficiencies.

results

Our team worked remotely, significantly reducing the impact on the AP department’s daily workflow, to analyze the accounting data uploaded to our servers. We also accessed the client’s imaging system to review copies of all vendor invoices.

Our auditors conducted a full-scale healthcare AP recovery audit that included identifying duplicate payments, obtaining credits for returns not closed out with a credit memo, validating sales-exempt status and sale tax payments, analyzing contract compliance, and identifying supplier rebates earned but not issued.

The effective management and allocation of rebates within healthcare systems pose significant challenges, often resulting in discrepancies, delays and outright losses.

During our analysis, we discovered a number of quarterly rebates had been issued by a supplier but they were not offered consistently to our client. Our review of the purchasing volume with this supplier confirmed our client qualified for the negotiated rebates and the rebates should not have been paused or skipped at any point during the contracted period.

 

Common Causes of Missing Healthcare Supplier Rebates:

  • Missing or inaccurate data reporting can result in the forfeiture of rebate opportunities or discrepancies in rebate calculations.
  • Inaccurate reconciliation of rebate transactions between suppliers and healthcare organizations can result in discrepancies or missed opportunities to claim rebates owed.
  • Limited visibility into rebate agreements, transactions and payments can hinder a healthcare system’s ability to track and validate rebate claims effectively. Without a transparent audit trail, identifying missing rebates or resolving discrepancies becomes challenging.
  • Manual data entry, disparate data systems and lack of automation may result in delays, errors or oversight in rebate management.

 

In our final audit report, our recommendations included:

  • Incentives, trade-in allowances, rebates and other discounts should be regularly noted and verified in Supply Chain and communicated to AP upon receipt
  • Statements should be monitored for credits as rebate periods approach
  • Capital POs should be reviewed thoroughly to ensure all incentives are included

Premier Cost Recovery was able to recover over $1,400 per staffed bed, including missing healthcare supplier rebates, that would otherwise have been lost.

benefits of working with pcr

  1. PCR recovered over $1,400 per staffed bed, in total funds recovered, during our accounts payable recovery audit.
  2. Clear communication and a non-biased review ensured the process was completed professionally so well-established supplier relationships remained intact.
  3. The client spent an average of just 15 minutes per week reviewing recoveries through our easy-to-use, transparent, real-time Claims Management Portal.

Addressing the issue of missing rebates requires healthcare organizations to implement robust rebate management processes, enhance data transparency and accuracy, and ensure compliance with contractual obligations. By leveraging technology, improving data analytics capabilities, and fostering collaboration with suppliers, healthcare systems can mitigate the risks associated with missing rebates and optimize their financial performance.

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