What does “preauthorization” refer to in health insurance?

Preauthorization is an essential concept in health insurance that involves obtaining approval from an insurance company prior to a patient receiving specific treatments or procedures. This process is crucial because it helps ensure that the medical services requested are deemed medically necessary and covered under the patient's insurance policy. By requiring preauthorization, insurance companies can manage costs and maintain oversight over the treatments being provided, which can ultimately lead to better patient outcomes and less financial burden related to uncovered services.

The focus on medical necessity is a key aspect of preauthorization, allowing insurance companies to reduce unnecessary expenses and ensure that patients receive appropriate care based on established guidelines or criteria. When a treatment or procedure requires preauthorization, the healthcare provider typically submits the necessary documentation to the insurance company, which then reviews the information before making a decision about coverage.

Understanding this process is essential for medical administrative assistants, as it plays a significant role in patient care coordination and claims management.