What is the term for an insurance company determining payment for a procedure before it is performed?

What is the term for an insurance company determining payment for a procedure before it is performed?

• A. Preauthorization
• B. Prior authorization
• C. Pre-determination
• D. Pre-certification

Answer: (A)

Insurer approval before a procedure is performed is called preauthorization. This process involves the provider or patient requesting the insurer to review the proposed service and confirm that it will be covered as medically necessary, so payment is approved in advance. It helps prevent claim denials after the service is done and often is required by many plans. Some plans use similar terms, like prior authorization, which means the same upfront approval concept. Pre-certification is another term you might encounter, used by some plans to mean the same verification of coverage. Pre-determination, however, is only an estimate of benefits and patient responsibility and does not guarantee payment. That’s why preauthorization is the best fit for the idea of determining payment before the procedure.

Insurer approval before a procedure is performed is called preauthorization. This process involves the provider or patient requesting the insurer to review the proposed service and confirm that it will be covered as medically necessary, so payment is approved in advance. It helps prevent claim denials after the service is done and often is required by many plans.

Some plans use similar terms, like prior authorization, which means the same upfront approval concept. Pre-certification is another term you might encounter, used by some plans to mean the same verification of coverage. Pre-determination, however, is only an estimate of benefits and patient responsibility and does not guarantee payment. That’s why preauthorization is the best fit for the idea of determining payment before the procedure.