AI-Powered Payment Integrity: Tackling Healthcare’s $250bn+ Problem

3 min readApr 24, 2024
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Overpayments to healthcare providers siphon over $250bn from the US healthcare system each year. These overpayments can be as simple as a billing mistake where a provider double-bills for the same procedure, or, they can be the result of bad actors trying to game the system, making healthcare more expensive for everyone. The current claims review process has created many substantial public and PE-backed companies that rely on large, specialized teams to review a subset of claims.

With healthcare expenditures representing 17% of GDP today and projected to reach 37% by 2050, it’s now more crucial than ever that our resources are spent properly.

Identifying inappropriate charges is extremely tough. To do so, a medical specialist needs to review the details of the patient’s medical record to make sure the care provided matches the care billed for. Reviewing exhaustive itemized bills and medical records (sometimes tens of thousands of pages long) requires significant manpower and is only feasible in the most expensive cases, leaving billions to fall through the cracks.

Introducing Alaffia

We’re excited to announce that we’re leading a $10mm Series A round at Alaffia, the leading AI-powered automation for health insurers to efficiently detect and stop waste, fraud, and abuse through medical claim reviews.

Their proprietary algorithms can rapidly ingest thousands of pages of medical records and figure out what charges were appropriate and which weren’t. Leveraging the latest in LLM technologies, their platform enables workflows to be completely traceable and dynamic, allowing a reviewer to ask validating questions of the medical records themselves, and link back to the original source. This innovation represents a massive step forward for payment integrity, allowing claims to be reviewed 20x faster than traditional workflows. And, because reviews can now be done more efficiently, lower dollar claims can be analyzed as well, bringing transparency to more of the market.

The impact of Alaffia’s solution is clear — health plans, TPAs, and cost containment firms are embracing it, with Alaffia’s revenue growing 4x in 2023.

A Family Affair

We’re proud to partner with co-founders and siblings, TJ Ademiluyi and Adun Akanni, who have been immersed in the medical billing world since childhood.

TJ and Adun grew up helping to run their parents’ medical coding business. There, over summer breaks and weekends, they saw how complex claims could be, and how difficult it was for people to audit them. They knew technology could (and should) be used to make the review process easier, and they decided to do something about it.

Backing a Better Future of Healthcare

We strongly believe that technology will bend the curve in healthcare, making an unsustainable $4.3tn system more accessible and higher quality for everyone. To that end, we’ve backed incredible healthcare businesses like Ro, Justworks, Gravie, Ezra, Parsley, Workit, Legacy, and more, and we couldn’t be more excited to be leading Alaffia’s Series A round and welcoming them to the FirstMark family.

If you’re a healthcare payer and want to help bring transparency to your processes, or you are a talented candidate looking to make an impact, we encourage you to reach out to the Alaffia team today.