What is "prior authorization" used for in healthcare?

"Prior authorization" is a critical process in healthcare payment systems, primarily used to control costs by requiring pre-approval for certain treatments, services, or medications before they are provided to patients. This process helps ensure that the proposed treatment is medically necessary and adheres to established guidelines, ultimately influencing the insurance reimbursement policies.

The requirement for prior authorization aims to manage and contain healthcare expenditures by preventing unnecessary procedures and ensuring that more expensive treatments are only utilized when appropriate. Additionally, it facilitates a review of the clinical necessity based on the patient's specific medical situation, promoting responsible healthcare practices while also giving insurance providers an opportunity to evaluate the effectiveness and efficiency of various treatment options.

This focus on cost management contrasts with other options that mention patient safety, satisfaction ratings, or inventory management, which, while important aspects of healthcare, do not directly relate to the primary purpose of the prior authorization process.