Medicare’s AI-Ready Payment Model: The Tech World Remains Unaware
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Neil Batlivala’s Journey with Pair Team
Neil Batlivala has dedicated the past seven years to building a healthcare company that remains relatively unknown in the tech industry yet addresses the needs of a patient population often overlooked by Silicon Valley. Recently, his efforts led him to a significant milestone.
On April 30, Pair Team announced its acceptance into ACCESS, a Medicare initiative created by the Centers for Medicare & Medicaid Services (CMS). This program, launching on July 5, will involve 150 participants testing the potential of AI-driven healthcare on a federal scale.
Embracing AI in Healthcare
During a recent Zoom conversation, Batlivala shared his insights on the implications of this development. “The government is creating pathways for AI innovation in heavily regulated industries,” he stated. “The best solution wins, which has not been the case in healthcare until now.”
ACCESS, which stands for Advancing Chronic Care with Effective, Scalable Solutions, is a decade-long CMS program focused on a payment model that prioritizes health outcomes over prescribed activities. Organizations like Pair Team will receive fixed payments for managing qualifying health conditions, only to maximize this payment when patients achieve measurable health improvements, such as lower blood pressure or reduced pain. The program targets diabetes, hypertension, chronic kidney disease, obesity, depression, and anxiety.
A Transformative Payment Structure
One of the main highlights of ACCESS is its innovative payment structure. Traditional Medicare payments are based on the time a clinician spends with a patient, with no existing mechanism to compensate for AI-based interactions. For the first time, ACCESS intends to address this gap, allowing AI agents to monitor patient conditions between visits, coordinate referrals, and ensure medication adherence.
“This is a transformative payment model,” Batlivala remarked. “Such a system wasn’t feasible before.”
Diverse Cohort of Participants
Pair Team’s participation connects it with a range of organizations, including AI doctor startups, virtual nutrition therapy providers, and wearable technology companies like Whoop. However, Batlivala remains cautious about some peer companies. “I’m a fan of wearables, but I’m not sure how effective Whoop will be for a senior facing food insecurity,” he noted.
Founded in 2019, Pair Team targets individuals with chronic conditions who are also grappling with issues such as unstable housing or insufficient food supplies—approximately one third of the American population. The company operates under the premise that health improvements cannot occur without understanding the broader context of a person’s life.
Impressive Growth and Community Impact
Today, Pair Team boasts around 850 clinical professionals and claims to manage the largest community health workforce in California. Batlivala reports that the company generates over nine figures in revenue and has secured approximately $30 million in funding from notable investors like Kleiner Perkins, Kraft Ventures, and Next Ventures.
The company’s model garners support from peer-reviewed evidence. A recent study co-authored by Pair Team researchers and published in the Journal of General Internal Medicine examined the community-integrated healthcare model. This approach combines medical, behavioral, and social support for Medicaid patients facing significant challenges like homelessness and mental health issues. The findings indicated strong patient engagement and substantial reductions in unnecessary emergency room visits and hospitalizations. Batlivala reports that one in four hospital visits and one in two ER visits are avoided when patients are cared for by his team.
Introducing AI with Flora
For years, delivering such comprehensive care required human teams, which limited Pair Team’s ability to scale rapidly and cost-effectively. However, about nine months ago, the company introduced Flora—a voice AI agent that serves as the primary patient interface. Available 24/7, Flora manages patient intake, coordinates referrals, and conducts regular check-ins to maintain patient engagement between visits.
Batlivala recalls a pivotal conversation that changed his outlook on AI’s potential in healthcare. He shared a story about a 67-year-old woman living in her car, battling PTSD and congestive heart failure, who spoke with Flora for over an hour. “It was both incredible and depressing,” he reflected. “Flora may have been the only person she had talked to about her situation in weeks.” These hour-long dialogues have now become routine, demonstrating Flora’s capacity for companionship, which Batlivala highlights as a valuable intervention in itself.
The Architects Behind ACCESS
The architects of the ACCESS initiative come from startup backgrounds. Abe Sutton, Director of the CMS Innovation Center, and Jacob Shiff, Chief AI and Technology Officer, designed the program with a vision for innovation. Sutton, formerly a venture capitalist with Rubicon Founders, and Shiff, a healthcare founder, both joined CMS during the Trump administration. Their experiences are evident in the program’s structure, emphasizing outcome-based payments, direct-to-consumer enrollment, and fostering competition within the healthcare landscape.
Addressing Risks and Concerns
While the potential benefits are considerable, the program does carry risks. ACCESS will handle highly sensitive patient data, including discussions about mental health and financial hardships, within a federal infrastructure known for breaches and data exposure concerns. This is particularly troubling as it affects vulnerable populations the program aims to help.
Pair Team also faces challenges within this context. A 2023 Congressional Budget Office analysis revealed that the CMS Innovation Center increased federal spending by $5.4 billion over its first decade instead of generating the expected savings. Furthermore, CMS’s reimbursement rates per patient are lower than many participants anticipated, necessitating that organizations fully automate patient interactions to remain viable.
Batlivala views the reimbursement issue as a structural feature rather than an impediment. “If we want to create a model that genuinely incentivizes AI use, reimbursement rates must be low,” he explained. “The economics only function when you’re running a lean, AI-focused operation.”
Looking to the Future
At present, Pair Team has secured partnerships to tap into a potential patient base of around 500,000 and aims to reach one million patients within three years.
Investors are paying close attention to these developments. Digital health funding recently reached its highest first-quarter total since the pandemic, with AI companies receiving a significant share. However, the ACCESS initiative has largely gone unnoticed outside of health tech circles.
As the healthcare landscape evolves, Batlivala’s work and Pair Team’s participation in ACCESS may well shape the future of AI-driven healthcare, potentially leading to better outcomes for some of the most underserved populations.
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