Daffodil Health, an artificial intelligence platform for health plan management and claims processing, has raised $16.3 million in Series A funding to help scale the company, it announced Tuesday.
The San Francisco-based startup provides AI-based software for US health plans and third-party administrators to manage claims pricing and payment integrity. Its platform allows payers to internally manage out-of-network pricing reviews, using transparent benchmarks and real-time reporting. Historically, this work has been outsourced to providers who have created “multi-million dollar businesses between providers and payers,” according to Navin Nagiah, CEO and co-founder of Daffodil Health. It offers a SaaS pricing model, compared to a percentage savings pricing model used by companies like MultiPlan and Zelis.
“We’ve automated that entire workflow from end to end,” he said. “When a claim comes in, we compare it to market data, Medicare rates, historical MSA allowable amounts, percentile distributions, and even provider-specific acceptance history. It takes a few minutes to set up, and then the system runs automatically on a claim-by-claim basis. Our goal is to provide plans with 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 COO 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 payers capture more margin and deliver more member-centric experiences,” Parth Desai, partner at Flare Capital Partners, said in a statement. “With AI-native automation and auditability built in, Daffodil enables faster, more defensible pricing and plan design decisions, at scale, that traditional brick-and-mortar and point solutions cannot match.”
With the financing, the company will expand its out-of-network pricing review and prepaid payment integrity solutions nationwide, “so every payer can improve their margins without overpaying legacy providers,” Nagiah said.
Currently, healthcare represents about 20% of the US economy. About 41% of Americans have medical debt and 58% of American debt collections are tied to medical bills. Daffodil Health aims to advance this issue
“In the 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 it’s telehealth or digital health tools. But the administrative and plumbing infrastructure behind the scenes remains outdated. If we can rebuild that foundation with modern software and artificial intelligence, we will enable more personalized plan design, more transparency with employers and, ultimately, a more rational cost structure.”
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