What is the definition of prior authorization in the healthcare context?

Prior authorization is defined as the process that insurance companies or Medicare use to determine whether a prescribed device, procedure, service, or medication will be covered and reimbursed. This process is crucial because it helps manage costs and ensures that the treatments that are being authorized are medically necessary based on established guidelines and criteria.

When a healthcare provider requests prior authorization, they must provide clinical justification for the recommended service or medication. The insurer then reviews this information to make a decision, which plays an integral role in controlling healthcare expenditures and ensuring that patients receive appropriate care.

The other options do not capture the specific focus of prior authorization. For example, determining patient eligibility for a healthcare plan relates to ensuring individuals are covered under a policy, while the requirement for a document for patient visits is not directly related to prior authorization. Additionally, the procedure for obtaining referrals for specialists pertains to another aspect of healthcare management, separate from the prior authorization process.