Which statement correctly describes precertification and preauthorization in Medicare billing?

Which statement correctly describes precertification and preauthorization in Medicare billing?

• A. Precertification is the first step; Preauthorization is a payer decision to approve the service
• B. Preauthorization is the first step; Precertification is a payer decision to approve the service
• C. They are the same thing
• D. Precertification occurs after the service

Answer: (A)

Understanding the sequencing and purpose of precertification and preauthorization in Medicare billing helps explain why the correct statement is that precertification is the first step and preauthorization is the payer decision to approve the service. Precertification is the pre-service review used to determine whether a service will be covered and medically necessary under the patient’s plan, and it occurs before the service is provided. Preauthorization (or prior authorization) is the payer’s formal decision to approve payment for the service, issued before the service is performed. So the described order—precertification first, followed by a payer decision to authorize the service—is the correct arrangement. The other options conflict with this timing or imply they are the same, which they are not, and one wrongly places precertification after the service.

Understanding the sequencing and purpose of precertification and preauthorization in Medicare billing helps explain why the correct statement is that precertification is the first step and preauthorization is the payer decision to approve the service. Precertification is the pre-service review used to determine whether a service will be covered and medically necessary under the patient’s plan, and it occurs before the service is provided. Preauthorization (or prior authorization) is the payer’s formal decision to approve payment for the service, issued before the service is performed. So the described order—precertification first, followed by a payer decision to authorize the service—is the correct arrangement. The other options conflict with this timing or imply they are the same, which they are not, and one wrongly places precertification after the service.