Ali Sadat grew up doing homework in the dentist office where his mother worked. Now, many years later, Sadat believes his young startup can solve the back-office problems necessary to clear the path for faster insurance payouts to dentists.
Retrace Labs Inc., backed by Intel Capital and SoftBank Ventures Asia and supported by an artificial intelligence-driven technology that scours oral images and other documents, aims to turn around insurance claims reviews more quickly and efficiently. What’s more, Sadat said San Francisco-based Retrace promises to cut dentist offices’ costs for filing those claims.
The process could help cash flow particularly at mom-and-pop dental practices, many of which have closed, consolidated or been bought out by dental service organizations or private equity firms over the past two decades. According to the American Dental Association, the percentage of solo practices fell from 65% in 1999 to 50.3% in 2019; what’s more, the percentage of dentists in private practices who are owners dropped from 84.7% in 2005 to 76.1% in 2019.
Back-office time demands for an increasingly-complex claims process and slow turnaround on payouts are some of the reasons for the decline, Sadat said.
“Hopefully we’re bringing transparency to the (claims) process,” Sadat said.
For 38-year-old Sadat, Retrace is the culmination of years of cross-disciplinary training: technology management, entrepreneurism, bioengineering and biomedical engineering studies at the University of California, San Diego, followed by a dental surgery degree at UC San Francisco.
Sadat started Retrace in late 2016 seeded with more than $1 million from friends and family. The company closed its $18 million Series A round in November 2019, with Intel Capital taking the lead at $8 million and SoftBank Ventures Asia supplying $7 million.
And Sadat’s mom? Products launched by 24-person Retrace meant to automate the claims process face rigorous reviews by her and the staff at the Fairfield dental practice where she works, he said. “They know the terminology in the application, or they say, ‘Don’t use that color or that font,'” he said. “It’s good to another set of eyes and feedback.”Here’s how the company’s product works: An AI-based algorithm examines oral radiographs, attachments and substantiating documentation from dentists to determine in the weeks between a dental cleaning and a more-intensive followup procedure if — and for how much — insurance will cover the additional work. The technology is based on millions of images that insurers have reviewed with claims.
By the time patients return in a couple weeks for a filling or crown, for example, the dental practice knows its expected payout from insurers and patients know their true out-of-pocket costs. The payouts come immediately after patients’ treatments versus the typical claims turnaround time of 14 days to up to six months.
On the payer side, Sadat first turned to San Francisco-based Delta Dental of California and asked leaders there how big of a logjam was created by claims review. Some 98% of payouts have an imaging component, he said, so devising a way to sort images and other data points quickly could accelerate the process.
Going through payers rather than providers, Sadat said, allows Retrace to get to scale more quickly and streamline the process for practices.
“We’ve been working with payers on refinements for a couple years,” he said.
Retrace now is connected to more than 1,800 payer plans.
“Providers think, ‘Insurance companies just want to deny my claims,'” Sadat said. “But payers actually want to do the right thing. These payers actually want to pay these claims out.”
Less than 10% of dental benefits are maxed out annually, he said, and lockdowns and social-distancing requirements during the Covid-19 pandemic last year forced insurers to return premiums because many patients simply weren’t coming into dentists’ offices.
Claims clearinghouses often charge dental practices a flat fee of up to $99 per month. On top of that, those companies charge 25 cents to 50 cents for each claim submitted and they take a single-digit percentage of payouts. That means dental practices can end up paying as much as $2,000 a month just to get claims processed.
Retrace charges providers $99 a month but takes no percentage of insurance payouts, Sadat said. Instead, it charges payers based on the number of claims that come in.
While clearinghouses help complete claims packages and offer some level of realtime feedback to dental practices, they don’t know the minutiae of insurance policies, Sadat said, “so they’re nothing more than a liaison.”
Retrace, Sadat said, can be much more.