R1 RCM, a healthcare revenue cycle management company, has announced a definitive agreement to acquire Humata Health, a Florida-based firm specializing in artificial intelligence-powered prior authorization automation. The acquisition is slated to close in the third quarter of this year, after which Humata's team will begin integrating its technology into R1's revenue cycle platform. Financial terms were not disclosed by an R1 spokesperson.

Strategic Rationale

R1 aims to leverage Humata's AI expertise to streamline the preapproval process that insurers require for certain medical treatments, furthering R1's broader objective of automating how healthcare providers receive payment for their services. The company, headquartered in Utah, processes over 600 million transactions annually across a network of 1,000 providers. R1 asserts that its billing platform eliminates the need for multiple disparate software tools, and the addition of Humata is expected to enhance its AI capabilities while helping providers reduce paperwork and improve their bottom lines.

While R1 has a broad focus on claims processing, Humata Health is exclusively dedicated to prior authorizations. Founded in 2023 by a Mayo Clinic-trained physician, Humata offers an AI-powered product that identifies insurer policies, generates prior authorization requests, and oversees them through final approval. Humata reports that its tool achieves up to a 96% first-pass approval rate on prior authorizations.

“Humata significantly enhances our coverage of the authorization process,” said R1 CEO Joe Flanagan in a statement.

Industry Context

The prior authorization process has long been a point of contention in healthcare. Patients often view preapprovals as a burden, while providers argue that they increase administrative work and delay care. Insurers, however, maintain that prior authorizations are essential for controlling costs and reducing overall healthcare spending.

R1 states that its goal is to make real-time prior authorizations a reality—a goal shared by the federal government. A rule finalized in 2024 requires insurers to expedite prior authorization decisions and implement technology to enable electronic preapprovals. Additionally, last summer, the Trump administration secured voluntary commitments from insurers that at least 80% of electronic prior authorization approvals will be answered in real time next year.

Other IT companies are also entering the space. Electronic health record company Epic launched a tool this week that enables clinicians to instantaneously check whether an insurer requires prior authorization, signaling a broader industry push toward automation and efficiency.

As R1 integrates Humata's capabilities, the move underscores the growing importance of AI in reducing administrative friction and accelerating the path to reimbursement. The acquisition is expected to close in the third quarter, subject to customary closing conditions.