Why may an insurance plan require prior authorization for certain services?

An insurance plan may require prior authorization for certain services primarily to ensure medical necessity and appropriateness of care. This process involves the insurance company evaluating the proposed treatment or service to confirm that it is essential for the patient's health condition and aligns with clinical guidelines. By requiring prior authorization, insurers help to contain costs and prevent unnecessary treatments while ensuring that patients receive the most effective and appropriate care for their specific situation.

This mechanism also serves to promote efficient use of healthcare resources, as it allows the insurer to review the patient's medical history and the proposed intervention before it occurs, leading to more informed healthcare decisions. Consequently, this step helps to manage healthcare quality and effectiveness, ensuring that only treatments deemed necessary and appropriate are authorized.

The other options highlight different aspects of insurance plans but do not align with the primary purpose of prior authorization. Reducing costs, limiting provider networks, or encouraging preventive care represent broader goals of insurance management rather than the specific function of prior authorization, which focuses on verifying medical necessity.