Medicare’s new payment model is built for AI, and most of the tech world has no idea

Neil Batlivala has dedicated seven years to developing a healthcare company that operates largely under the radar of the tech industry, focusing on a patient demographic often overlooked by Silicon Valley. Recently, however, his company, Pair Team, found itself at the forefront of a significant initiative. On April 30, Pair Team announced its inclusion in ACCESS, a Medicare program designed to explore the potential of AI in medical care on a federal scale. The program is set to launch on July 5. "The government is establishing pathways for AI innovation in heavily regulated sectors," Batlivala explained during a recent Zoom call. "In industries like healthcare, the best solution often doesn't prevail, but this could change that dynamic." ACCESS, which stands for Advancing Chronic Care with Effective, Scalable Solutions, is a ten-year initiative by the Centers for Medicare & Medicaid Services (CMS) that aims to implement a payment structure rewarding health outcomes instead of merely the completion of specified tasks. Organizations participating in ACCESS, such as Pair Team, will receive consistent payments for managing chronic conditions, but the full payment will only be awarded when patients achieve specific health objectives, such as lower blood pressure or pain relief. Conditions covered include diabetes, hypertension, chronic kidney disease, obesity, and mental health issues like depression and anxiety. This marks a significant shift from traditional Medicare, which compensates based on the time spent with a clinician. Batlivala pointed out that the existing model lacks a payment structure for AI agents that monitor patients between visits, conduct check-ins, or assist with medication management. "This is a transformative payment model," he said. "Such a system wasn't feasible until now." The first cohort of ACCESS participants includes a diverse array of organizations, from AI-driven healthcare startups to virtual nutrition therapy providers and makers of connected devices and wearables like Whoop. Batlivala expressed some skepticism regarding the applicability of certain technologies for vulnerable populations, stating, "While I appreciate wearables, I question how effective they will be for seniors facing food insecurity." Pair Team was founded in 2019 with a mission to support individuals managing chronic conditions alongside challenges like unstable housing or food scarcity. This demographic represents about one-third of the American population. The company’s approach emphasizes that health outcomes cannot improve without considering the broader context of a patient's life. Currently, Pair Team employs around 850 clinical professionals, making it one of California's largest community health workforces, and it has achieved significant revenue growth, surpassing nine figures. The company has raised approximately $30 million in funding from notable investors including Kleiner Perkins and Kraft Ventures. Research supporting Pair Team’s model has shown promising results. A study co-authored by its researchers and published in the Journal of General Internal Medicine revealed that their community-integrated approach, which combines medical, behavioral, and social care for high-risk Medicaid members, demonstrated improved patient engagement and reduced unnecessary emergency and inpatient visits. Batlivala noted that one in four hospital visits and one in two ER visits are averted when patients are under Pair Team's care. However, scaling this level of care has traditionally required human teams, which can restrict growth. To address this challenge, Pair Team recently introduced a voice AI agent named Flora, which serves as a primary interface for patients. Flora operates around the clock, managing intake, coordinating referrals, and maintaining patient engagement between clinical appointments. Batlivala recalled a particularly impactful interaction with a 67-year-old woman living in her car, who spoke with Flora for over an hour. "It was both inspiring and heartbreaking," he recounted. "Flora might have been the only person she had talked to about her situation in weeks." The architects behind ACCESS, including Abe Sutton and Jacob Shiff, both of whom have startup backgrounds, have designed the program to prioritize outcome-based payments and encourage competition among participants. However, there are inherent risks, particularly regarding the sensitive patient data that will be transmitted through a federal system with a history of data breaches. Financial concerns also loom, as previous CMS innovation programs have had mixed results. A recent Congressional Budget Office report indicated that the CMS Innovation Center increased federal spending by $5.4 billion in its first decade, rather than generating projected savings. CMS is also offering lower-than-expected reimbursements, which could favor organizations that have automated most patient interactions. Batlivala views the lower reimbursement rates as a necessary aspect of the model, stating, "To create an environment that incentivizes AI usage, reimbursement must be limited. The economics only work for those operating with a lean, AI-driven approach." Currently, Pair Team has established partnerships that could potentially reach 500,000 patients, with plans to expand to one million within the next three years. The interest from healthcare investors is notable, as digital health funding has surged to its highest quarterly total since the pandemic, with AI companies receiving a substantial share of the investment. Despite this, ACCESS remains relatively unknown outside the health tech sector.