Pharmaceutical Rebate Receivables Admissibility

Submitted by Cynthia Braman on Thu, 05/04/2017 - 10:22am

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By Glenn Sackett, Booke Life and Health Instructor

Medical iconPharmaceutical rebates are arrangements between pharmaceutical companies and reporting entities in which the reporting entities receive rebates based upon the drug utilization of its subscribers at participating pharmacies.

Evaluation of the collectibility of pharmaceutical rebate receivables as well as other Health Care Receivables such as claim overpayment receivables, loans and advances to providers, capitation arrangement receivables, risk-sharing receivables and amounts receivable under government insured plans shall be made periodically.

The basis for aging of pharmaceutical rebates would use the date of the service (filling of the prescription). This receivable consists of reasonably estimated amounts and billed amounts. When amounts are estimated (for example, current quarter pharmaceutical rebates), the date of billing or invoice confirmation may not have occurred by the statement date so such a date would not be available as an anchor date

Use of date of service provides consistency across both estimated and billed/invoiced amounts. By definition, estimated amounts may only be accrued for prescriptions filled in the quarter ending with the statement date, so any estimated amount would then fall in the 1 to 90 day aging category

There are explicit conditions to be met as outlined in SSAP 84 with regard to the admissibility  of pharmaceutical rebates:

Paragraphs 10a) and 10b) :

10.       Pharmaceutical rebates receivables consist of reasonably estimated amounts and billed amounts. Both the billed amount and the estimated amount shall be admitted assets subject to the conditions specified below:

a.         Estimated amounts shall be related solely to actual prescriptions filled during the 3 months immediately preceding the reporting date;

b.         Billed amounts represent pharmaceutical rebate receivables that have been invoiced or confirmed in writing but not collected as of the reporting date. Billed amounts for an estimated amount under paragraph 10.a. shall be admitted only if the determination of the rebate, based on actual prescriptions filled, occurs and is invoiced or confirmed in writing within the 2 months following the reporting date of the estimated amount. Adjustments to previously billed amounts related to prior periods shall be nonadmitted until invoiced or confirmed in writing. Pharmaceutical rebates that have not been collected within 90 days of the invoice date or confirmation date shall be nonadmitted. Furthermore, if accrued pharmaceutical rebate receivables are not invoiced or confirmed in writing in accordance with the contract provisions, the accrual shall be nonadmitted

Learn more about all Health Care Receivables in our upcoming webinar on May 17, 2017.

Also, you may want to learn about other essential topics to complete your Health Annual Statement. Please refer to our 2017 Health Seminars by Date page.


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