What does "pre-authorization" mean in healthcare insurance terms?

In healthcare insurance terms, "pre-authorization" refers to the approval process that an insurance company requires for specific services or treatments before they are performed. This step is crucial as it ensures that the proposed service is medically necessary and covered under the patient's insurance plan. By obtaining pre-authorization, healthcare providers secure financial commitment from the insurance company, minimizing the risk of denial of payment after the service has been provided.

This process is particularly important for expensive procedures or treatments, as it helps to control healthcare costs and ensure that patients receive appropriate care in line with their coverage. The other options describe different aspects of healthcare billing and insurance processes but do not accurately reflect the definition of pre-authorization.