Humata Health pulls in $25M funding round for prior authorization AI

Humata Health has received $25 million in a funding round to improve the prior authorization experience for payers and providers.

The funding round was led by Blue Venture Fund, the VC arm of most Blue Cross Blue Shield companies, and LRVHealth. Other investors included Optum Ventures, .406 Ventures, Highmark Ventures and VentureforGood.

Humata says the company will use the funds to invest further in generative AI. Its products give recommendations on documents that should be included in a prior auth submission using machine learning. Potential reasons for claims denials are flagged by the system.

The company was founded by Jeremy Friese, M.D., in 2023. He served as a president of healthcare AI startup Olive, before the business sold its remaining assets to Waystar and Humata Health. Olive acquired another prior auth company he co-founded, Verata Health, in 2020.

Simplifying a complex prior authorization process is a top issue for lawmakers, federal regulators and nearly everyone in the healthcare system. A recent bill, endorsed by more than 370 organizations and industry groups, was cosponsored by 172 Congressional members and calls for standardizing the prior auth process for Medicare Advantage plans and improving transparency surrounding claims decisions.

“As a physician executive at Mayo Clinic, I learned both the challenging complexities and importance of the prior authorization process. That’s why I founded Verata Health and now Humata Health to deliver a solution that combines the power of AI, automation and connectivity between payers and providers to create a frictionless process,” Friese said in a statement. "Raising this investment from strategic investors that represent some of the nation’s largest and most innovative providers and payers is a testament to our approach and rapidly accelerates our trajectory to have a positive impact for patients and the healthcare system."

In January, Centers for Medicare and Medicaid Services (CMS) finalized a rule requiring health plans to send prior auth decisions within three days for urgent requests and seven days for standard requests. Humata believes regulations like these will lead more payers and providers to its offerings, as payers would see reduced administrative burden and providers would achieve more approvals.

More than 225 hospitals use Humata’s products, the company said in a news release.