Health IT

Prior authorization automation business closes $10.5M Series A round with plans to double staff

BIP Capital, an Atlanta-based venture firm targeting growth-stage companies, led the funding round, which also included NCT Ventures and Dan Gilbert-backed Detroit Venture Partners.

PriorAuthNow, a Columbus, Ohio-based business using software to automate the process of securing prior authorization for medical procedures, has closed a $10.5 million Series A round. In a phone interview, COO Mike Blackwell said the company hoped to double its staff by the end of the year with the funding as well fuel sales growth with healthcare providers, health systems, and insurance companies.

PriorAuthNow is one of several health IT companies seeking to make the labor-intensive and time-consuming process of pre-authorizations from insurance companies more efficient.

BIP Capital, an Atlanta-based venture firm, led the funding round, which also included NCT Ventures and Dan Gilbert-backed Detroit Venture Partners.

PriorAuthNow currently counts 39 hospitals and health systems among its customers. In addition, its customer base also includes laboratories and medical device manufacturers.

There are several different health IT companies seeking to compete in the prior authorization space, but they have a few different approaches. One of the most prominent is CoverMyMeds, which automates medication prior authorizations for pharmacies, prescribers, payers and pharmacy benefits managers. The Columbus, Ohio-based business was snapped up by McKesson in a $1.1 billion deal last year. Express Scripts acquired another, eviCore Healthcare, for $3.6 billion. EviCore Healthcare pre-approves scans and other tests for health plans.

Blackwell described PriorAuthNow as a business that builds software that integrates with existing platforms at hospitals, health systems, and insurance companies so that clients can automate their authorizations and handle them electronically, not manually. He noted that for insurance companies working with utilization management companies, it can take a longer time to navigate the pathway to get authorization. 

In reference to oncology, Blackwell offered up an example of how its medical benefits management tools PriorAuthNow’s tools are used.

“An oncologist could order a scan or a particular treatment for a patient, and that procedure requires a prior authorization for the health insurance company to ensure they will pay the claim. The oncologist’s office simply inputs the necessary information from the patient’s file and that is electronically submitted to the insurer for authorization. If the authorization request addresses the insurer’s requirements for the procedure, then in some cases it will be immediately approved. That’s how it can work as opposed to the doctor’s office staff faxing an entire medical file or spending an hour on the phone with the insurer to ask for an authorization.”

He contrasted this approach with business process outsourcers —vendors that manually process prior authorizations for a client and do the same faxing/phone calls that the client would otherwise do in-house, except that BPOs claim to be more efficient at doing it.

Although Blackwell said he hopes the company reaches one hundred employees by the end of the year, he cautioned that “several things have t happen to achieve that.”

Image: Getty Images

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