What is preauthorization and when is it commonly required?

What is preauthorization and when is it commonly required?

• A. A patient approval for all services.
• B. Payer approval before certain services or medications; required by many insurers for elective or high-cost procedures.
• C. Approval by the receptionist.
• D. Automatic approval for all services.

Answer: (B)

Preauthorization, or prior authorization, is the insurance payer’s approval before a service or medication is provided. It’s commonly required for elective or high-cost procedures to confirm medical necessity and ensure the service will be covered under the policy. Typically, a clinician submits relevant medical information and a treatment plan, and the insurer reviews it to decide whether coverage will be granted. If approved, the service is usually covered; if not, the patient may face higher out-of-pocket costs or need an alternative plan or an appeal. It’s not approval by the patient or the receptionist, nor is it automatic for all services.