Which statement best defines preauthorization?

• A. Prior approval required before service to determine eligibility.
• B. Review conducted after service to determine coverage.
• C. Payment guarantee regardless of service.
• D. Random check of claims after processing.

Answer: (A)

Preauthorization means obtaining prior approval from the payer before a service is performed to determine whether it is eligible for coverage and medically necessary under the patient's plan. This step happens before the service is provided, so clinicians and patients know in advance if the visit, procedure, or procedure code will be covered.

This definition fits best because it emphasizes the pre-service nature and the payer’s role in confirming eligibility and coverage before any work is done. It’s not about reviewing a service after it’s completed, which would be retrospective or post-service processing. It doesn’t guarantee payment regardless of service, since coverage depends on meeting plan rules and medical necessity. And it isn’t a random post-processing check, which describes audits or claim reviews after submission rather than a pre-approval step.

In practice, preauthorization helps ensure that costly or high-risk services are appropriate and covered by the plan, and it alerts the provider and patient to any special requirements, documentation, or alternative options needed to obtain coverage.