Daffodil Health, an AI platform for health plan administration and claims processing, has raised $16.3 million in Series A funding to help scale the company, it announced on Tuesday.
The San Francisco-based startup provides AI-based software for U.S. health plans and third-party administrators to manage claims pricing and payment integrity. Its platform allows payers to handle out-of-network repricing in-house, using transparent benchmarks and real-time reporting. This work has historically been outsourced to vendors that have built “multi-billion dollar businesses sitting between providers and payers,” according to Navin Nagiah, CEO and co-founder of Daffodil Health. It offers a SaaS pricing model, versus a percentage-of-savings pricing model that companies like MultiPlan and Zelis use.
“We have automated that entire workflow end-to-end,” he said. “When a claim comes in, we benchmark it against market data, Medicare rates, historical allowed amounts by MSA, percentile distributions, and even provider-specific acceptance history. It takes minutes to configure, and then the system runs automatically claim by claim. Our goal is to give plans control, automation, and transparency at a fraction of the historical cost.”
Daffodil’s Series A round was led by Flare Capital Partners, with participation from LRVHealth and Maverick Ventures. Individual investors also participated, including Scott Mingee, former CEO of Equian (which was acquired by Optum), and Jim Lacy, former president and chief operating officer of Collective Medical (acquired by PointClickCare). In total, Daffodil has raised $20.9 million.
“Daffodil is redefining how health plans and TPAs modernize plan design, pricing, and claims infrastructure while helping payors capture more margin and deliver more member-centric experiences,” said Parth Desai, partner at Flare Capital Partners, in a statement. “With AI-native automation and auditability built in, Daffodil enables faster, defensible pricing and plan design decisions, at scale, that legacy incumbents and point solutions can’t match.”
With the financing, the company will scale its out-of-network repricing and pre-pay payment integrity solutions nationally, “so every payer can improve their margins without overpaying for legacy vendors,” Nagiah said.
Currently, healthcare represents about 20% of the U.S. economy. About 41% of Americans have medical debt and 58% of U.S. debt collections are tied to medical bills. Daffodil Health aims to move the needle on this issue
“Long-term, we want to modernize the engine room of healthcare,” Nagiah said. “There has been a lot of innovation at the front door, whether that is telehealth or digital health tools. But the plumbing and administrative infrastructure behind the scenes remains outdated. If we can rebuild that foundation with modern software and AI, we enable more customized plan design, more transparency with employers, and ultimately a more rational cost structure.”
Picture: Feodora Chiosea, Getty Images
