What is the purpose of preauthorization (prior auth) and when is it required?

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Preauthorization is the payer’s approval obtained before a service is performed to confirm that it’s medically necessary and covered by the patient’s plan. It’s required for many procedures, hospital admissions, or diagnostic tests as defined by the insurer’s policy, and not obtaining this approval can lead to a denial or non-payment for the service. It’s not a guarantee of payment—coverage and preauth requirements vary by plan, and some services may require preauthorization in-network or out-of-network depending on the policy. In practice, checking preauthorization requirements before scheduling or performing a service helps ensure smoother processing and avoids unexpected patient financial responsibility.