Pre-authorization, also known as pre-approval, is obtaining approval from an insurer or payer for a proposed medical treatment or procedure before it is performed. This process ensures that the proposed treatment is medically necessary and will be covered by the insurer or payer.
Pre-authorization may be required for specific treatments, such as surgeries, hospital stays, and certain types of medical equipment. The pre-authorization process typically involves submitting information about the proposed treatment and the patient’s medical history to the insurer or payer for review. A decision is then made on whether or not to approve the treatment and, if so, under what conditions.
Why is pre-authorization needed?
Pre-authorization is needed for a few reasons:
- To ensure that the proposed treatment or procedure is medically necessary: Pre-authorization allows insurers or payers to review it and determine if it is required for the patient’s health and well-being.
- To determine coverage: Pre-authorization allows insurers or payers to choose if the proposed treatment or procedure is covered under the patient’s insurance plan and, if so, under what conditions.
- To control costs: Pre-authorization helps insurers and payers to prevent expenses by ensuring that only medically necessary treatments and procedures are covered. It also allows insurers and payers to negotiate prices for treatments and procedures with providers.
- To avoid fraud: Pre-authorization helps prevent fraud by ensuring that only medically necessary treatments and procedures are covered and requiring that certain information be provided before the treatment or procedure is performed.
- To streamline the claims process: By completing the pre-authorization process before the treatment or procedure, you can avoid delays and denials of claims and ensure that payments will be made on time.
Which sectors use pre-authorization?
Pre-authorization is commonly used in the healthcare sector, particularly in the insurance and medical billing industries.
In the healthcare sector, insurance companies and payers, such as HMOs, PPOs, and government-funded programs like Medicare and Medicaid, often require pre-authorization for specific treatments or procedures. This allows them to review the proposed treatment or policy, determine if it is medically necessary and covered under the patient’s insurance plan, and control costs.
Hospitals, clinics, and other healthcare providers also use pre-authorization to ensure that the patient’s insurance covers treatments and procedures and that payments will be made on time.
Pre-authorization is also used in other sectors, such as the travel industry. For example, when customers buy travel insurance, they need to get pre-authorization for specific medical treatments in case of an emergency while traveling.
In the telecommunication industry, the pre-authorization process is used to activate a new service or device on the customer’s account.
Pre-authorization is used for credit card transactions and ATM withdrawals in the financial services sector.
Pre-authorization is generally used in any sector where a product or service needs to be provided with certain conditions or requirements.
Pre-authorization with payrequest
Pre-authorization with PayRequest refers to obtaining approval for a payment transaction before it is processed. This is typically done when the payment is for a significant amount or the merchant wants to ensure that the customer has the necessary funds to complete the transaction.
PayRequest is a platform that allows businesses to create and send online invoices and accept payments easily. With PayRequest, companies can also set up pre-authorization for their payments by creating a pre-authorization request, which the customer must approve before the payment is processed.
For example, a business may set up pre-authorization for a large purchase or a recurring subscription service. In this case, the customer would receive a pre-authorization request, including the total amount of the purchase or subscription. The customer would need to approve the appeal before the payment is processed.
By using pre-authorization with PayRequest, businesses can ensure that the payments are secure, that the customer has the necessary funds to complete the transaction, and that payments are processed smoothly.
Simplify your payment process with PayRequest pre-authorization. Click here to sign-up now.