Dive Brief:
- Healthcare revenue cycle management company R1 has agreed to acquire Humata Health, a company specializing in artificial intelligence-powered prior authorizations.
- R1 is banking that Humata’s AI expertise will help it streamline the preapproval process required by insurers for certain medical treatments, and further its goal of automating how healthcare providers get paid for their services.
- The acquisition is expected to close in the third quarter this year, after which Humata’s team will start integrating its technology into R1’s revenue cycle platform. An R1 spokesperson declined to share the financial terms of the deal.
Dive Insight:
R1 says the acquisition should expand its AI capabilities while helping providers reduce paperwork and improve their bottom lines.
The Utah-based company, which processes over 600 million transactions annually across its network of 1,000 providers, says its billing platform eliminates the need for multiple disparate software tools.
While R1 has a broad focus on claims processing, Florida-based Humata Health is exclusively focused on prior authorizations.
The company, founded in 2023 by a Mayo Clinic-trained physician, offers an AI-powered product that identifies insurer policies, creates prior authorization requests and oversees them through final approval. Humata says its tool has up to a 96% first-pass approval rate on prior authorizations.
“Humata significantly enhances our coverage of the authorization process,” R1 CEO Joe Flanagan said in a statement.
The prior authorization process has long been a headache for the healthcare industry. Patients say the preapprovals are a burden, while providers say they increase administrative work and delay care. But insurers contend that prior authorizations are imperative to saving money and lowering healthcare spending.
R1 says its goal is to make real-time prior authorizations a reality. It’s a goal shared by the federal government — a rule finalized in 2024 requires insurers to speed up prior authorization decisions and implement tech to enable electronic preapprovals.
Last summer, the Trump administration secured voluntary commitments from insurers that at least 80% of electronic prior authorization approvals will be answered in real time next year.
Other IT companies are also debuting products they say help with real-time prior authorizations. Electronic health record company Epic launched a tool this week that enables clinicians to instantaneously check whether an insurer requires prior authorization.
