The American health care system is notorious for its rigid practices; since the current claims process and infrastructure employed by health insurers is very complex and supported by the personal interests of third-party providers. To streamline healthcare claims and payments; healthcare-focused fintech startup CoverSelf has raised $8.2 million in a seed funding round led by BEENEXT and 3One4 Capital. The round also saw participation from Z21 Ventures and other healthcare leaders.
The startup will use the fresh capital to strategically grow operations and build generative AI capabilities. Moreover, it aims to increase the startup’s employee base across sales and marketing.
The US Healthcare Insurance Industry
Often, the majority of the US’s healthcare insurers outsource their claims and payment processing work to third-party providers. Consequently, these providers actively reject claims over even minor errors due to a financial incentive. The providers regularly reject legitimate claims as the business model operates on a contingency fee basis; in this case vendors receive a percentage of fees based on the identification of incorrect claims or payments.
To resolve this untoward practice, CoverSelf’s software allows insurers to in-source their payment work. The tool automates much of the payment process but also provides constant feedback to insurers and providers on where claims errors are cropping up. The tool ensures that insurers retain the ability to push back on claims that they need to dispute; in this way, they can settle genuine claims quickly.
“The current claims integrity systems are very complex, and the deployed technologies are antiquated. Significant software innovation is needed to address the broken system that is currently creating out-of-control healthcare costs and waste,” shared CoverSelf’s cofounder, Rajasekhar Maddireddy.
About CoverSelf
Founded in 2021, CoverSelf is led by health sector veterans Rajasekhar Maddireddy and Raghavendra Pawar. CoverSelf’s main target is the payers in the US system, the insurance companies that pay health care providers on behalf of patients. CoverSelf’s software empowers complete transparency in resolving claims and payments for health insurance companies. Moreover, it replaces outdated technology, which results in scattered data and reduced efficiency in real-time business decisions. CoverSelf said that its platform uses multiple approaches to reduce administrative costs while identifying new savings opportunities.
“According to the Centres for Medicare and Medicaid (CMS), Americans spent $4.1 trillion on healthcare in 2020, of which an estimated $1.2 trillion can be attributed to some form of waste or abuse that leads to overcharges. CoverSelf’s vision to democratise the healthcare claims and payment integrity industry with their fully open and transparent solution built with a spirit of collaboration is truly inspirational,” said BEENEXT Managing Partner Dirk Van Quaquebeke.
CoverSelf’s software is already live with two top health insurance providers, handling 25 times more claims than their previous outsourced services within the same timeframe. These insurers manage $3.5 billion in claims annually. This success has sparked interest from more insurers. Maddireddy anticipates onboarding two firms by year-end and three more in the new year.
“By bringing the payment integrity solution in-house, CoverSelf shifts the control of payment integrity from traditional outside vendors to payers. As payers start using CoverSelf, they will progressively need fewer external payment integrity vendors. Ultimately, CoverSelf will be the only payment integrity platform anyone will ever need,” said Sonal Saldanha, VP Investments at 3One4 Capital.
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