8 Steps to Financial Clearance

One of the most critical components of a best practice revenue cycle is strong financial clearance. This functional point of treatment is incorporated within scheduling, pre-access, admissions, registration and the financial counseling process. It even plays a role as a fail-safe, post-discharge first party collection process.

Financial clearance, the first step to account resolution, has two major branches: demographic information integrity and reimbursement/payment security. The former, very simply, is accurately capturing and validating addresses and associated contact information for the patient and/or guarantor. The latter is a bit more complex. Reimbursement and/or payment security requires, first and foremost, obtaining and validating patient insurance and payment methods. Screening potentially qualified patients for Medicaid or medical assistance as well as for financial assistance are next steps, which finally lead to authorizing treatment, that is, cross-referencing planned visits with the insurance plan and obtaining prior authorization or certification when it’s needed.

When done right (the first time!), a proactive financial clearance methodology will actually:

  • Reduce the cost to collect when the account is resolved early in the revenue cycle process
  • Improve customer service by engaging the patient early in the treatment process
  • Initiate point-of-service collections

But how? Implementing a proven protocol and managing it with painstaking attention to detail might seem daunting.

So, start here, with these 8 easy steps to financial clearance.

1. Educate staff. Be sure that the staff who are handling financial clearance fully understand the elements of insurance and subsequent patient responsibility. They should know the differences between Medicare and Medicare Advantage plans, the general requirements for medical assistance programs such as Medicaid and Social Security disability, and the prerequisites of your organization’s financial assistance program.

It’s also a great practice to provide samples and how-to-read instructions of the top ten common insurance cards for your organization and to be well-versed in available payment plan options and guidelines.

2. Educate the Patient/Guarantor. While provider-patient communication is a subject all its own, it is imperative to have staff in place who are able to succinctly, respectfully and compassionately educate the patient regarding his or her insurance coverage for the service and subsequently his or her financial responsibility, and who are on-the-ready with alternatives in the event that the patient has no means to pay.

3. Establish specifically required data elements to determine mode of payment.

4. Leverage external data sources to compare demographic and insurance information accuracy.

5. Identify any patient open balances from prior services to incorporate into financial clearance option discussions.

6. Insure that your organization’s outsourcing vendors use the same methodology for financial clearance, including financial assistance linkage with appropriate data feedback to the organization of new insurance information, demographic changes and linkage to medical assistance/financial assistance. Outsourcing vendors should also include insurance and demographic scrubs contingent upon the age of referral.

7. Create scripts appropriate for the various scenarios that staff may encounter. These should include open-ended questions, verification of demographics for every admission/service and a request for the best mode for communication for obtaining approval (i.e, cell phone, text messaging, email.)

8. Train staff in how to use scripts. It is important that staff know not only what to say, but how to say it and when to say it, all while documenting the patient’s responses.


All told, many providers struggle to make financial clearance a priority, or to manage it meticulously. More and more, these organizations are reaching out to experienced consultancies for assistance, which can be a significant contributor to a successful financial clearance program.

Need to talk to someone about building a proactive financial clearance methodology? Drop us a line. We’re listening.

Managing aged insurance during growth

About Brad Baldwin, Chief Operating Officer

Brad Baldwin, Chief Operating Officer

Brad has profit and loss responsibility for full and extended business office services and coding services. He has assembled a strong team that consistently over-performs in areas of project pricing, operational execution, client management, performance analytics and technology.

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