Medicare’s New AI Payment Model is Flying Under Tech’s Radar
▼ Summary
– Pair Team, a healthcare company serving vulnerable populations, was accepted into the CMS ACCESS program to test AI-driven care at federal scale, with the program launching July 5.
– ACCESS is a 10-year Medicare program that pays participants based on patient health outcomes (e.g., lower blood pressure) rather than traditional time-based billing, covering conditions like diabetes and hypertension.
– Pair Team uses a voice AI agent called Flora for 24/7 patient intake, check-ins, and referrals, which has enabled hour-long conversations that provide companionship and serve as a medical intervention.
– The program was designed by former startup operators and includes risks such as sensitive patient data exposure in federal systems and financial challenges, as CMS pays less per patient than anticipated.
– Pair Team has peer-reviewed evidence showing reduced emergency visits and hospitalizations, and aims to reach one million patients within three years through its AI-first, community-integrated care model.
Neil Batlivala spent the better part of a decade building a healthcare company that remains largely invisible to the tech industry, serving a patient population that Silicon Valley routinely overlooks. But last month, that quiet work landed him at the center of a major federal experiment.
On April 30, his company Pair Team was one of 150 organizations selected by the Centers for Medicare & Medicaid Services to participate in ACCESS, a new Medicare program designed to test AI-driven medical care at a national scale. The program launches July 5.
“The government is creating swim lanes for AI innovation in traditionally regulated industries,” Batlivala told me over Zoom. “The best solution wins, which, in regulated industries like healthcare , that’s not been the case.”
ACCESS , short for Advancing Chronic Care with Effective, Scalable Solutions , is a 10-year CMS initiative that tests a payment model rewarding health outcomes instead of required activities like a set number of check-ins. Participating organizations receive predictable payments for managing qualifying conditions and only earn the full amount when patients hit measurable health goals, such as lower blood pressure or reduced pain. The program covers diabetes, hypertension, chronic kidney disease, obesity, depression, and anxiety.
That payment structure is the real headline.
Traditional Medicare pays based on time spent with a clinician. There is no mechanism to reimburse an AI agent that monitors a patient between visits, calls to check in, coordinates a housing referral, or ensures medication adherence. ACCESS creates that mechanism for the first time.
“It’s a payment model transformation,” Batlivala said. “You just couldn’t do this before.”
The first cohort includes a diverse mix of participants , AI doctor startups, virtual nutrition therapy providers, connected device companies, and wearable makers like Whoop. Batlivala is skeptical of some of them.
“I’m a big fan of wearables, but for a senior who’s struggling with food insecurity, I don’t know how much Whoop is going to be able to do,” he said, adding of his own company, “We’ve been building toward this for five-plus years now.”
Pair Team launched in 2019 with a specific patient in mind: people managing chronic conditions while also dealing with unstable housing, food insecurity, or lack of transportation. About a third of Americans fall into that category.
The company’s premise is that you cannot improve health outcomes without addressing the full context of someone’s life. It now employs roughly 850 clinical professionals, runs what it calls the largest community health workforce in California, and, according to Batlivala, generates revenue above nine figures. It has raised about $30 million from investors including Kleiner Perkins, Kraft Ventures, and Next Ventures.
The model has peer-reviewed evidence behind it. A study co-authored by Pair Team researchers and published in the Journal of General Internal Medicine evaluated the company’s community-integrated model, which blends medical, behavioral, and social care for Medicaid members with high rates of homelessness, serious mental illness, and chronic disease. It showed strong patient engagement and significant reductions in avoidable emergency and inpatient utilization. Batlivala says one in four hospital visits and one in two ER visits are avoided when a patient is in his company’s care.
But for years, delivering that level of care required human teams, which limited speed and scalability. Then, about nine months ago, Pair Team deployed a voice AI agent called Flora as its primary patient-facing interface. Flora is available 24 hours a day, handles intake, coordinates referrals, and performs check-ins that keep patients engaged between clinical visits.
The first call that shifted Batlivala’s thinking came from a 67-year-old woman living out of her car, managing PTSD and congestive heart failure. She spoke with Flora for over an hour. “It was both incredible and depressing,” Batlivala told me. “Flora was probably the only ‘person’ she’d talked to in weeks about her situation.” Now, hour-long conversations with Flora are routine. “That’s the companionship piece,” he said. “And it turns out that is truly an intervention.”
The architects of ACCESS are themselves former startup operators. The program was designed by Abe Sutton, Director of the CMS Innovation Center, and Jacob Shiff, Chief AI and Technology Officer of the CMS Innovation Center. Sutton was previously a venture capitalist at Rubicon Founders, a healthcare fund. Shiff is a former healthcare founder. Both joined CMS under the Trump administration, and their startup backgrounds are reflected in the program’s design: outcome-based payments, direct-to-consumer enrollment, and a deliberate push for competition.
There are real risks. Participants are feeding extraordinarily sensitive patient data , intimate conversations about housing, diseases, and mental illness , into a federal infrastructure with a documented history of breaches, including exposed Social Security numbers. For the vulnerable populations ACCESS is designed to serve, that concern is far from theoretical.
Financial risks also loom. The track record of CMS innovation programs is mixed. A 2023 Congressional Budget Office analysis found that the CMS Innovation Center increased federal spending by $5.4 billion during its first decade rather than producing projected savings. CMS is also paying less per patient per month than many participants anticipated, meaning the math only works for organizations that have fully automated most patient interactions.
Batlivala’s answer to the reimbursement concern is that it’s a feature, not a bug. “If you want to build a model that truly incentivizes the use of AI, the reimbursement rates have to be low,” he told me. “The economics only work if you’re running a lean, AI-first operation.”
Pair Team says it currently has partnerships in place that give it access to roughly 500,000 potential patients, and it aims to reach one million within three years.
Healthcare investors have been watching closely. Digital health funding hit its highest Q1 total since the pandemic this year, with AI companies capturing the bulk of it. Meanwhile, ACCESS has barely registered outside health tech trade press.
(Source: TechCrunch)
