Prior Authorization Law and Legal Definition

Prior authorization in the context of a health care plan refers to the process of obtaining prior approval from a private or public third-party prescription insurer about the correctness, suitability, and coverage of a service or medication that allows a beneficiary to know in advance about whether a procedure, treatment, or service will be covered under his/her plan. Prior authorization differs according to the plan that is chosen by the beneficiary. It ensure a beneficiary that s/he will receive the appropriate level of care in the appropriate setting. It also helps a beneficiary to identify the situations that allow a beneficiary to receive additional attention.

Services requiring prior authorization include certain outpatient procedures, all inpatient admissions, and non-obstetric observation stays, potentially experimental and investigational procedures, potentially cosmetic procedures, maternity stays longer than 48 hours, hysterectomies, and back surgery.