Medicare’s Secret AI Engine: The Payment Model Tech Leaders Are Missing

Key Takeaways:

• Medicare Embraces AI-Driven Outcomes: Pair Team, a healthcare company serving vulnerable populations, has been selected as one of 150 participants in ACCESS, a groundbreaking 10-year Medicare program. This initiative will test AI-driven medical care at a federal scale, shifting from traditional fee-for-service to outcome-based payments.
• Scaling Compassion with Technology: Pair Team leverages its proprietary voice AI agent, Flora, to provide 24/7 patient engagement and support, addressing social determinants of health alongside medical needs. This model enables efficient, affordable care for complex patients, demonstrating AI’s potential for both practical and emotional intervention.
• A New Paradigm for Healthcare Reimbursement: The ACCESS program’s payment structure is revolutionary, rewarding measurable health goals rather than activities. This creates the first mechanism to reimburse for AI-powered interactions and between-visit patient monitoring, fundamentally transforming how healthcare services can be delivered and paid for in regulated industries.

Neil Batlivala has dedicated seven years to cultivating a healthcare enterprise that, until recently, largely flew under the radar of the mainstream tech industry. His company, Pair Team, focuses on a patient demographic often overlooked by Silicon Valley’s typical ventures. Yet, last month, Batlivala and Pair Team found themselves thrust into the vanguard of a far larger, more transformative movement in healthcare.

On April 30, Pair Team made a significant announcement: its acceptance into ACCESS, a pioneering Medicare program. Out of 150 organizations meticulously chosen by the Centers for Medicare & Medicaid Services (CMS), Pair Team will play a pivotal role in piloting what AI-driven medical care could truly look like at a federal level. This ambitious program is set to go live on July 5, marking a potential watershed moment for the integration of artificial intelligence into regulated healthcare systems.

“The government is creating swim lanes for AI innovation in traditionally regulated industries,” Batlivala shared during a recent Zoom call. “The best solution wins, which, in regulated industries like healthcare — that’s not been the case.” His statement underscores the profound shift ACCESS represents, moving away from entrenched systems towards a meritocratic approach where innovation can genuinely thrive.

ACCESS: Rewriting the Rules of Medicare Reimbursement

ACCESS, an acronym for Advancing Chronic Care with Effective, Scalable Solutions, is not merely another pilot program. It is a monumental 10-year CMS initiative designed to test a radically different payment model. Unlike traditional Medicare, which reimburses based on time spent with a clinician or specific services rendered, ACCESS rewards health outcomes. Participating organizations like Pair Team receive predictable payments for managing qualifying chronic conditions such as diabetes, hypertension, chronic kidney disease, obesity, depression, and anxiety. Crucially, they earn the full payment only when patients achieve measurable health goals, like lower blood pressure or reduced pain.

This payment structure is, by all accounts, the core innovation. Conventional Medicare has no mechanism to compensate for an AI agent that monitors a patient between visits, makes proactive check-in calls, facilitates a housing referral, or ensures medication adherence. ACCESS, for the first time, creates that vital mechanism. “It’s a payment model transformation,” Batlivala emphasized. “You just couldn’t do this before.” This fundamental shift opens the door for technologies, particularly AI, to play a central role in continuous, proactive patient care, moving beyond the confines of episodic, in-person consultations.

The initial cohort of ACCESS participants is diverse, encompassing everything from nascent AI doctor startups and virtual nutrition therapy providers to connected device companies and wearable makers like Whoop. Batlivala, however, expresses a healthy skepticism about some of these participants. “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 mused, implicitly contrasting it with Pair Team’s own deep-seated approach. “We’ve been building toward this for five-plus years now,” he added, highlighting his company’s long-term commitment to this specific model of care.

Pair Team’s Mission: Care for the Whole Person

Pair Team launched in 2019 with a clear and compelling vision: to serve patients managing chronic conditions who are simultaneously grappling with fundamental social determinants of health, such as unstable housing, food insecurity, or lack of reliable transportation. This demographic, often overlooked, represents a significant portion of the U.S. population – approximately a third of Americans fall into this complex category. The company’s founding premise was elegantly simple yet profoundly impactful: true health outcomes cannot be improved without addressing the full, intricate context of an individual’s life.

Today, Pair Team is a formidable force in integrated care. It employs roughly 850 clinical professionals and operates what it proudly describes as the largest community health workforce in California. According to Batlivala, the company generates revenue surpassing nine figures, backed by approximately $30 million in funding from prominent investors like Kleiner Perkins, Kraft Ventures, and Next Ventures.

The efficacy of Pair Team’s model is not just anecdotal; it is supported by peer-reviewed evidence. A study, co-authored by Pair Team researchers and published in the Journal of General Internal Medicine, rigorously evaluated their community-integrated model. This approach seamlessly blends medical, behavioral, and social care for Medicaid members who experience high rates of homelessness, serious mental illness, and chronic disease. The findings were compelling: strong patient engagement and significant reductions in avoidable emergency and inpatient utilization. Batlivala asserts that when patients are under Pair Team’s care, one in four hospital visits and one in two ER visits are prevented, a testament to the power of holistic, proactive intervention.

Flora: AI as a Companion and Care Coordinator

For years, delivering this comprehensive level of care necessitated extensive human teams, which inherently limited the speed and affordability of scaling. This changed dramatically about nine months ago when Pair Team introduced Flora, a sophisticated voice AI agent, as its primary patient-facing interface. Flora operates 24 hours a day, seamlessly handling patient intake, coordinating referrals to various services, and conducting the crucial check-ins that maintain patient engagement between traditional clinical visits.

Batlivala recounts a particularly poignant early interaction that crystallized Flora’s impact. It involved a 67-year-old woman living out of her car, struggling with PTSD and congestive heart failure. She spoke with Flora for over an hour. “It was both incredible and depressing,” Batlivala recalled. “Flora was probably the only ‘person’ she’d talked to in weeks about her situation.” Such hour-long conversations with Flora have since become routine. “That’s the companionship piece,” he explained. “And it turns out that is truly an intervention.” This revelation highlights AI’s potential not just for logistical efficiency but also for addressing the profound human need for connection and support, especially among vulnerable populations.

Startup Savvy at the Helm of CMS Innovation

The strategic design of ACCESS bears the unmistakable imprint of its architects, Abe Sutton, Director of the CMS Innovation Center, and Jacob Shiff, Chief AI and Technology Officer of the CMS Innovation Center. Both are former startup operators: Sutton was a venture capitalist at the healthcare fund Rubicon Founders, and Shiff previously founded a healthcare company. Their entrepreneurial backgrounds, even having joined CMS under the Trump administration, are clearly reflected in ACCESS’s framework: a strong emphasis on outcome-based payments, direct-to-consumer enrollment pathways, and a deliberate cultivation of competition among participants. This innovative approach aims to inject agility and market dynamics into a traditionally bureaucratic system.

Navigating the Risks: Data, Dollars, and the Future

Despite its promise, ACCESS is not without significant risks. One major concern revolves around data security. Participants are entrusting extraordinarily sensitive patient data – intimate conversations about housing, chronic 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 specifically designed to serve, this is not an abstract fear but a very real and pressing concern.

Financial risks also loom large. The track record of CMS innovation programs is decidedly mixed. A 2023 Congressional Budget Office analysis, for instance, found that the CMS Innovation Center actually increased federal spending by $5.4 billion during its first decade, rather than delivering the projected savings. Furthermore, CMS is reportedly paying less per patient per month than many participants initially anticipated. This financial constraint means the economics of participation will only work for organizations that have achieved a high degree of automation in their patient interactions.

Batlivala, however, views these low reimbursement rates as a deliberate design feature, not a flaw. “If you want to build a model that truly incentivizes the use of AI, the reimbursement rates have to be low,” he contended. “The economics only work if you’re running a lean, AI-first operation.” This perspective underscores the program’s implicit pressure for participants to innovate efficiently and leverage technology to its fullest extent.

An Ambitious Horizon

Pair Team is already laying the groundwork for substantial growth. The company currently boasts partnerships that provide access to approximately 500,000 potential patients, with an ambitious target of reaching one million within the next three years. Despite digital health funding hitting its highest Q1 total since the pandemic this year, with AI companies capturing the lion’s share, the ACCESS program has, surprisingly, garnered little attention outside of specialized health tech trade publications. This quiet revolution, however, may soon reshape the landscape of federal healthcare and the role of AI within it.

Bottom Line

The ACCESS program, spearheaded by CMS with innovative startup minds, represents a pivotal moment in healthcare. By enabling outcome-based payments for AI-driven care, it is systematically dismantling traditional reimbursement barriers and fostering a new era where companies like Pair Team can scale comprehensive, compassionate support for vulnerable populations. While challenges of data security and financial viability persist, this initiative is a bold experiment that could fundamentally transform Medicare, demonstrating AI’s profound potential to deliver more efficient, equitable, and effective healthcare at a national scale.