Daffodil Well being, an AI platform for well being plan administration and claims processing, has raised $16.3 million in Sequence A funding to assist the corporate scale, it introduced Tuesday.

The San Francisco-based startup offers AI-based software program for U.S. well being plans and third-party directors to handle claims pricing and cost integrity. The platform permits payers to deal with out-of-network repricing internally, utilizing clear benchmarks and real-time reporting. This work has historically been outsourced to suppliers who’ve “constructed multi-billion greenback companies between suppliers and payers,” mentioned Navin Nagiah, CEO and co-founder of Daffodil Well being. It gives a SaaS pricing mannequin, versus a savings-based pricing mannequin that firms like MultiPlan and Zelis use.

“We automated that total workflow end-to-end,” he says. “When a declare is available in, we examine it to market information, Medicare charges, historic MSA allowable quantities, percentile distributions and even provider-specific underwriting historical past. It takes minutes to configure, after which the system runs mechanically on a claim-by-claim foundation. Our objective is to offer plans management, automation and transparency at a fraction of the historic price.”

Daffodil’s Sequence A spherical was led by Flare Capital Companions, with participation from LRVHealth and Maverick Ventures. Particular person traders additionally participated, together with Scott Mingee, former CEO of Equian (acquired by Optum), and Jim Lacy, former president and chief working officer of Collective Medical (acquired by PointClickCare). In complete, Daffodil has raised $20.9 million.

“Daffodil is redefining how well being plans and TPAs ​​modernize plan design, pricing and claims infrastructure, whereas serving to payers seize extra margin and ship extra member-centric experiences,” Parth Desai, companion at Flare Capital Companions, mentioned in an announcement. “With built-in AI-native automation and auditability, Daffodil permits quicker, defensible pricing and plan design selections, at scale, that legacy incumbents and level options can not match.”

With the funding, the corporate will scale its out-of-network repricing and prepayment integrity options nationally, “so that each payer can enhance their margins with out overpaying for legacy suppliers,” Nagiah mentioned.

Presently, healthcare represents roughly 20% of the U.S. financial system. About 41% of People have medical debt and 58% of U.S. collections are tied to medical payments. Daffodil Well being goals to maneuver the needle on this subject

“In the long term, we need to modernize the engine room of healthcare,” says Nagiah. “There was lots of innovation on the entrance door, whether or not it is telehealth or digital well being instruments. However the sanitary and administrative infrastructure behind the scenes stays outdated. If we are able to rebuild that basis with fashionable software program and AI, we’ll allow extra personalized plan design, larger transparency with employers, and finally a extra rational price construction.”

Photograph: Feodora Chiosea, Getty Pictures