In insurance billing, what is the difference between Assignment of Benefits (AOB) and prior authorization?

In insurance billing, what is the difference between Assignment of Benefits (AOB) and prior authorization?

• A. AOB directs payment to the provider; prior authorization obtains payer approval before a service.
• B. AOB is the process of obtaining prior authorization; prior authorization funds the claim.
• C. AOB is a requirement only for out-of-network services.
• D. AOB always requires patient consent to release PHI.

Answer: (A)

Assignment of Benefits means the patient signs over the right to receive insurance payments, so the payer sends payments directly to the provider. Prior authorization is the pre-service step where the payer approves the service before it’s performed to confirm coverage and medical necessity. These are separate ideas: one changes who gets paid, the other confirms whether the service will be covered in advance. The other statements mix up the roles—AOB isn’t the process of obtaining prior authorization, prior authorization doesn’t fund the claim, AOB isn’t limited to out-of-network services, and AOB doesn’t by itself require PHI release (PHI release is governed by HIPAA and separate authorizations).

Assignment of Benefits means the patient signs over the right to receive insurance payments, so the payer sends payments directly to the provider. Prior authorization is the pre-service step where the payer approves the service before it’s performed to confirm coverage and medical necessity. These are separate ideas: one changes who gets paid, the other confirms whether the service will be covered in advance. The other statements mix up the roles—AOB isn’t the process of obtaining prior authorization, prior authorization doesn’t fund the claim, AOB isn’t limited to out-of-network services, and AOB doesn’t by itself require PHI release (PHI release is governed by HIPAA and separate authorizations).