Medicare’s New Payment Model for AI: A Game Changer for Healthcare Innovation
Neil Batlivala has spent seven years building a healthcare company that most of the tech industry has never heard of and serves a patient population that Silicon Valley often overlooks. But last month, his work put him at the center of something much bigger.
Batlivala’s company, Pair Team, was announced on April 30 as one of 150 participants chosen by the Centers for Medicare & Medicaid Services (CMS) to test what AI-driven medical care could look like at federal scale through the ACCESS program. The program is set to go live on July 5.
“The government is creating lanes for AI innovation in traditionally regulated industries,” Batlivala told me over a Zoom call shortly after. “In healthcare, it’s not been this way before.”
The ACCESS program is a 10-year CMS initiative designed to test a payment model that rewards health outcomes rather than required activities like a certain number of check-ins. Participants receive predictable payments for managing qualifying conditions and earn the full amount only when patients meet measurable goals, such as lower blood pressure or reduced pain. It covers conditions like diabetes, hypertension, chronic kidney disease, obesity, depression, and anxiety.
The real news here is the payment structure — a mechanism that has never existed before for AI-driven care. Traditional Medicare reimburses based on time spent with a clinician, but there’s no way to pay for an AI agent that monitors patients between visits or coordinates housing referrals. ACCESS creates this mechanism for the first time.
This payment model transformation is significant because it allows organizations like Pair Team to focus on delivering care rather than managing administrative tasks. For example, Flora — a voice AI agent available 24/7 — handles intake, manages patient referrals, and conducts check-ins that keep patients engaged between clinical visits.
“It’s a game changer,” Batlivala said. “You just couldn’t do this before.”
The ACCESS program spans a wide range of participants: AI doctor startups, virtual nutrition therapy providers, connected device companies, and wearable makers like Whoop. Pair Team is skeptical about some of these players but confident in its own approach.
“I’m a big fan of wearables, but for someone dealing with food insecurity or unstable housing, I don’t know how much they can do,” Batlivala said, adding that his company has been building toward this model for five-plus years. “We’ve built our own AI-first operation to complement the human care teams.”
Pair Team launched in 2019 with a specific patient population in mind: those managing chronic conditions while also dealing with housing instability, food insecurity, or transportation issues. About a third of Americans fall into this category.
The company’s model blends medical, behavioral, and social care for Medicaid members who are at high risk of hospital visits and emergency room (ER) use due to their complex health needs. A peer-reviewed study found strong patient engagement and significant reductions in avoidable ER and hospital visits when patients were in Pair Team’s care.
However, the ACCESS program also comes with risks. Participants are handling highly sensitive data — intimate conversations about housing and diseases — through a federal infrastructure that has a history of breaches, including exposed Social Security numbers. For vulnerable populations like those served by ACCESS, this is a significant concern.
There are also financial risks. The program’s reimbursement rates are low to incentivize the use of AI, but participants have expressed disappointment about the actual payments they receive. To make it work financially, organizations need to fully automate most patient interactions using AI.
Batlivala argues that the lower reimbursement rates are intentional and necessary for a successful model: “If you want to build a model that truly incentivizes the use of AI, the reimbursement rates have to be low. The economics only work if you’re running a lean, AI-first operation.”
Pair Team currently has partnerships in place giving it access to roughly 500,000 potential patients and aims to reach one million within three years.
Healthcare investors have been closely watching the ACCESS program. In 2023, digital health funding hit its highest Q1 total since the pandemic, with AI companies capturing a significant portion of it. However, ACCESS has barely registered outside health tech trade press.
Key Takeaways
- The ACCESS program is a 10-year CMS initiative testing an outcome-based payment model for AI-driven medical care.
- This mechanism allows organizations like Pair Team to focus on delivering care rather than managing administrative tasks.
- Participants handle sensitive patient data through the federal infrastructure, raising concerns about security and privacy.
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