In medical billing, what is the purpose of preauthorization?

• A. To obtain insurer approval for a service before it is performed
• B. To schedule a service
• C. To notify the patient after service
• D. To bill after service

Answer: (A)

Preauthorization is the process of obtaining the insurer’s approval before performing a service. This step checks that the planned treatment is medically necessary under the patient’s plan and that the insurer will cover it, helping prevent claim denials and unexpected out-of-pocket costs. It’s not about scheduling the service, notifying the patient after the service, or billing after the service; those tasks happen around or after the procedure. If approval is granted, the provider can proceed with the service and the claim is filed with that authorization. If it isn’t approved, clinicians may need to consider alternatives or discuss potential costs with the patient.