Requirement imposed by a third party, under some systems of utilization review, that a provider must justify before a peer review committee, insurance company representative, or State agent the need for delivering a particular service to a patient before actually providing the service in order to receive reimbursement. Generally, prior authorization is required for non-emergency services which are expensive (involving a hospital stay, preadmission certification, for example) or particularly likely to be overused or abused (many State Medicaid programs require prior authorization of all dental services, for instance).
The approval by an insurer or other third-party payor of a health care service before the service is rendered. This approval is required in order for the insurer to pay the provider for the service.