Daffodil Health Raises $16.3M for AI Claims Automation

Why It Matters

Automating claims reduces costly administrative overhead, directly lowering premium expenses for employers and improving payer transparency. The capital infusion positions Daffodil to challenge entrenched players and accelerate AI‑driven efficiency in health‑plan operations.

Key Takeaways

• $16.3M Series A led by Flare Capital.
• AI LLMs automate out‑of‑network pricing.
• Funds target product upgrades and health‑plan partnerships.
• Reduces admin costs for employers and payers.
• Competes with Change Healthcare and Experian Health.

Pulse Analysis

Daffodil Health’s latest Series A underscores a broader shift toward AI‑first solutions in health‑plan administration. By leveraging large‑language models, the company can parse complex claim data, generate employer‑specific pricing rules, and produce transparent pricing rationales at scale. This automation tackles one of the industry’s most stubborn cost drivers—out‑of‑network (OON) repricing—allowing payers to replace manual, error‑prone processes with real‑time, data‑driven decisions. The infusion of $16.3 million will fund enhancements to its AI engine and accelerate integration with health‑plan and third‑party administrator ecosystems, positioning Daffodil as a nimble alternative to legacy vendors.

The competitive landscape is heating up as giants like UnitedHealth’s Change Healthcare and Experian Health expand their own claims‑automation suites. Daffodil differentiates itself through a pure AI focus, eschewing legacy rule‑based systems for adaptable LLM‑driven models that can quickly incorporate new regulations and employer‑specific contracts. For employers, this translates into measurable premium savings, as the platform aims to curb the “middle‑man” markup that inflates out‑of‑network costs. Early adopters can expect faster claim adjudication, reduced administrative labor, and clearer audit trails—benefits that resonate with CFOs seeking to control rising health‑care spend.

Looking ahead, the convergence of regulatory pressure for price transparency and the maturation of generative AI creates fertile ground for Daffodil’s growth. Investors are increasingly allocating capital to health‑tech ventures that promise both cost containment and data‑centric insights. As the company scales its partnerships, it may catalyze a broader industry move toward AI‑driven payment integrity, potentially reshaping how insurers negotiate contracts and reimburse providers. Continued funding rounds could further accelerate product rollout, cementing Daffodil’s role in the next wave of digital health transformation.

Daffodil Health raises $16.3M for AI claims automation

Source: MobiHealthNews

Daffodil Health, a company focused on automating health plan administration and claims processing, has raised $16.3 million in Series A funding, bringing its total raise to $20.9 million.

Flare Capital Partners led the round, with participation from LRVHealth and existing investor Maverick Ventures. Individual investors Scott Mingee, former CEO of Equian (acquired by Optum), and Jim Lacy, former president and COO of Collective Medical (acquired by PointClickCare), also participated in the round.

What It Does

The San Francisco‑based company uses AI and large language models (LLMs) to automate healthcare pricing and administration, focusing on reducing administrative costs. Daffodil says it can help develop employer‑ and code‑specific pricing rules, configure employer and provider reports, and generate pricing rationale.

Daffodil will use the Series A funds to enhance its product and expand its partnerships with health plans and third‑party administrators.

“For most employers, healthcare premiums are already the second or third largest line item on the P&L, and they continue to rise faster than wages or revenue. A significant driver of that cost sits upstream with payers, in the form of low‑value out‑of‑network repricing and payment integrity middlemen whose incentives are fundamentally misaligned,”

— Navin Nagiah, co‑founder and CEO of Daffodil, told MobiHealthNews.

“Daffodil automates OON and payment integrity end‑to‑end with an AI‑first platform, giving innovative payers control over pricing and transparency — and allowing savings to flow back to employers, where they belong.”

Market Snapshot

In 2024, Daffodil garnered $4.6 million in seed funding in a round led by Maverick Ventures, with participation from Epic Ventures.

Other companies offering claims automation include Change Healthcare (owned by UnitedHealth Group) and Experian Health.