AI-powered prior authorization startup raises $25M to improve request process

Humata Health, a company that develops systems that health plans can use to review patients’ requests for coverage, last week raised $25 million.

The biggest investor in the prior authorization technology startup was the Blue Venture Fund, a venture capital firm backed by Blue Cross and Blue Shield carriers. The list of investors also included UnitedHealth’s Optum Ventures and Highmark’s Highmark Ventures affiliate.

Related: Health plan prior authorization change bill returns to Senate

A “prior authorization” process is a form of utilization management. Health plans use prior authorization programs to review patients’ requests for coverage for expensive, potentially inefficient or potentially dangerous forms of care, such as CT scans and organ transplants.

Physicians have complained bitterly for years that plans’ prior authorization programs end up being complicated, time-consuming and often lacking in evidence that the reviewers understand the kind of care being reviewed.

Humata says it will use the funding it has raised to expand an AI-based system that can make prior authorization reviews better and faster.

About 42,000 physicians at 225 U.S. hospitals now use the Humata prior authorization request system, the company says.

Humata predicts that use of prior authorization tech will grow, because the Centers for Medicare and Medicaid Services recently adopted regulations that will require Medicare Advantage plans to conduct standard prior authorization reviews within seven days and urgent reviews within 72 hours.

Humata was founded by Dr. Jeremy Friese, a radiologist who worked as a business development executive at the Mayo Clinic.