RCM Foundation Series · Continuity Practice Partners
Module 2 of 9
Module 2 · Patient Financial Clearance
What this module covers
Financial clearance is everything that happens before the patient walks through the door. It is the single most important step in preventing denials — and the one most clinics do inconsistently, if at all. In a rehab therapy practice, where most visits require prior authorization, financial clearance is not optional. It is the foundation of a clean claim.
What financial clearance is
Financial clearance is the process of confirming — before the visit — that you know who the patient is, what their insurance covers, what they owe, and whether you have permission from their payer to deliver the service. It has three components.
Registration
Collecting complete, accurate patient and insurance information — and keeping it current. Name, date of birth, address, insurance carrier, policy number, group number, subscriber ID. Any error in this data can cause a claim rejection. A rejected claim never reaches the payer. The timely filing clock is still running.
Verification
Confirming the patient's insurance is active on the specific date of service and that the services you plan to provide are covered under their plan. This is not a one-time task. Insurance changes constantly — job changes, plan-year resets, Medicaid eligibility shifts. Verify before every visit, or at minimum every 30 days for active patients. Verification done after the visit is too late.
Authorization
Written payer approval to deliver specific services to a specific patient. In rehab therapy, most commercial payers and Medicare Advantage plans require prior authorization for PT, OT, and SLP services. Authorizations are issued for a set number of visits or a date range. When authorized visits run out or the authorization expires, the next visit is not covered — and the denial that follows requires immediate action: contact the payer, request a retro authorization or extension, and resubmit if approved. Some payers will grant it once, especially for a first occurrence. If denied final, the balance is likely a write-off. Prevention is always the better outcome.
Financial clearance should happen before the visit — not at check-in, not after. The MGMA benchmark is to clear patients 48 to 72 hours before their scheduled appointment. That window gives you time to fix problems before the patient arrives.
What breaks — and what it costs
X
Wrong insurance on file: Claim submits to the wrong payer or with the wrong subscriber ID. It rejects or denies. If timely filing expires before anyone catches it, the revenue is permanently lost.
X
Expired or missing authorization: The visit is delivered without active authorization. The claim denies. Contact the payer immediately — request a retro auth or extension. If approved, resubmit. If denied final, the balance is likely a write-off.
X
Benefits not verified: Patient is seen for a service that requires a referral or is not covered under their plan. Claim denies for non-covered service. No appeal will change this.
What this looks like in your clinic
In a busy therapy clinic, financial clearance often gets compressed or skipped because staff are managing a full schedule and there is no time built into the workflow for pre-visit tasks. The result is a front desk that is doing financial clearance at check-in — or not at all — and a billing office that is managing the fallout weeks later.
This is a process and staffing design problem, not a staff performance problem. If the expectation is not set, the time is not built in, and the checklist does not exist, the outcome is predictable.
A denial that traces back to a missing authorization or wrong insurance is not a billing office problem. It is a front-end process failure. Management owns the process.
Before the next module
Ask whoever handles your front desk: what are the steps they take before a patient arrives? Is insurance verified before the appointment? Is authorization status checked? Is there a checklist? Write down what you hear. That is your financial clearance baseline.
Knowledge Check
3 questions · pass all 3 to unlock the next module
1. A patient has been coming to your clinic for 6 weeks. Their authorization expired after visit 8 and nobody caught it. Visit 9 was delivered without an active authorization. What is the correct next step?
2. True or false: Insurance only needs to be verified when a patient is new to the clinic.
3. Your front desk is verifying insurance the morning of the appointment instead of 48 to 72 hours before. What is the problem with this timing?
Module 2 Complete
Module 3 is unlocked →
Patient Check-In & Check-Out — the second financial clearance gate and why TOS collection matters.