Alaffia Health gets $55M for AI engine to solve healthcare waste problem
Rapid adoption of AI by healthcare providers is driving payers to accelerate their use of AI management tools, while health plans look for ways to keep up with and manage increasingly complex claims reviews.
On Tuesday, a New York-based startup announced the closing of a $55 million Series B round led by Transformation Capital, which is committed to achieving this goal. The company, called Alaffia Health, has raised a total of $73 million since its founding in 2020. Other investors include FirstMark Capital, Tau Ventures and Twine Ventures.
Alaffia CEO TJ Ademiluyi said it exists to help health plans reduce waste by making claims review faster and easier to defend.
He explained that many claims are still reviewed manually and inconsistently, often without full clinical context—a dynamic that can lead to overpayments, slow turnaround times, strained provider relationships and greater regulatory risk.
“At a high level, Alaffia pairs experienced clinicians with agent AI who understands the full context of a claim and its supporting clinical information, including patient medical records – data that is often unstructured, siled and overlooked,” said Ademiluyi.
The platform extracts key clinical facts from medical records and other documents and then compares those facts to provider bills to determine whether the claim is accurate and complies with health plan reimbursement policies and clinical guidelines.
Ademiluyi said AI “does the heavy lifting” by synthesizing complex data and presenting clear results, allowing health plan teams to quickly understand how and why claims were billed.
“The clinician remains at the helm, reviewing the AI's output and making the final decision,” he added.
He described Alaffia's target customers as regional and national health plans and said the company competes with traditional payment integrity vendors and newer AI-only health care automation tools.
Ademiluyi noted that legacy vendors often rely heavily on manual processes, while pure AI tools may evolve quickly but encounter difficulties with explainability, configurability and regulatory trust.
He said Alaffia sets itself apart through its transparency and clinical oversight. He also noted that the platform was purpose-built for real-world payer environments and was designed with changing compliance guidelines in mind.
“This balance allows Alaffia to achieve meaningful savings without increasing compliance or provider relationship risk,” Ademiluyi declared.
Whether this approach will become the model for AI management among health plans remains to be seen, but investor interest suggests the bet is gaining traction.
Photo: Richard Drury, Getty Images
