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May 13, 2026 • Connie Loizos

Medicare's New Payment Model Is Built for AI

Medicare's New Payment Model Is Built for AI Medicare's New Payment Model Is Built for AI Medicare's New Payment Model Is Built for AI

Medicare's New Payment Model Is Built for AI

The ACCESS Program: A Federal Framework for AI-Driven Healthcare

On April 30, 2025, the Centers for Medicare & Medicaid Services (CMS) accepted 150 participants into ACCESS (Advancing Chronic Care with Effective, Scalable Solutions) — a 10-year Medicare program testing AI-driven medical care at federal scale. The program launches July 5, 2025.

Key Innovation: Outcome-Based Payment Structure

Traditional Medicare reimburses based on clinician time spent with patients. ACCESS changes this fundamentally:

  • Participants receive predictable payments for managing chronic conditions
  • Payment is outcome-based: full amounts earned only when patients meet measurable health goals (lower blood pressure, reduced pain, etc.)
  • Creates the first federal payment mechanism for AI agents that:
    • Monitor patients between visits
    • Make check-in calls
    • Coordinate housing referrals
    • Ensure medication pickup

Covered Conditions

  • Diabetes
  • Hypertension
  • Chronic kidney disease
  • Obesity
  • Depression
  • Anxiety

Case Study: Pair Team's AI-First Model

Neil Batlivala's company Pair Team was accepted as one of the 150 participants. The company has spent seven years building toward this moment:

Company Profile:

  • Founded in 2019
  • ~850 clinical professionals
  • Runs California's largest community health workforce
  • Revenue: above nine figures
  • Funding: ~$30 million from Kleiner Perkins, Kraft Ventures, Next Ventures

Target Population:

Patients managing chronic conditions who also face:

  • Unstable housing
  • Food insecurity
  • Lack of transportation
  • (~33% of Americans)

Clinical Results:

Peer-reviewed study in Journal of General Internal Medicine showed:

  • Strong patient engagement
  • 1 in 4 hospital visits prevented
  • 1 in 2 ER visits prevented

AI Implementation: Flora Voice Agent

Nine months ago, Pair Team deployed Flora, a voice AI agent as their primary patient interface:

Capabilities:

  • Available 24/7
  • Handles intake
  • Coordinates referrals
  • Performs check-ins between clinical visits
  • Hour-long conversations now routine
  • Serves as companionship intervention for isolated patients

Example: 67-year-old woman living in her car, managing PTSD and congestive heart failure, spoke with Flora for over an hour — likely her only substantive conversation in weeks.

Program Design: Built by Former Startup Operators

Key Architects:

  • Abe Sutton - Director, CMS Innovation Center (former VC at Rubicon Founders)
  • Jacob Shiff - Chief AI and Technology Officer, CMS Innovation Center (former healthcare founder)

Design Philosophy:

  • Outcome-based payments
  • Direct-to-consumer enrollment
  • Deliberate push for competition
  • Low reimbursement rates that require AI automation to be profitable

Critical Risks

Data Security:

  • Sensitive patient data (housing, diseases, mental illness) fed into federal infrastructure
  • CMS has documented history of breaches, including exposed Social Security numbers
  • Particularly dangerous for vulnerable populations

Financial Viability:

  • 2023 Congressional Budget Office analysis: CMS Innovation Center increased federal spending by $5.4 billion in first decade (instead of projected savings)
  • CMS paying less per patient per month than many participants anticipated
  • Economics only work for fully automated, AI-first operations

Market Implications

Batlivala's Thesis:

"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's Growth Plan:

  • Current access to ~500,000 potential patients through partnerships
  • Target: 1 million patients within 3 years

Broader Market:

  • Digital health funding hit highest Q1 total since pandemic in 2025
  • AI companies capturing bulk of investment
  • ACCESS program barely registered outside health tech trade press

The Bottom Line

Why This Matters: ACCESS creates the first federal payment infrastructure that requires AI automation to be economically viable. It's not about whether AI can handle healthcare coordination — it's that the payment model makes it mandatory. This is a structural forcing function for AI adoption in a $4+ trillion industry.

The Selection Effect: The low reimbursement rates aren't a bug — they're designed to filter for organizations that have already solved the automation problem. Traditional healthcare providers cannot participate profitably. Only AI-first companies can make the math work.

Regulatory Innovation: For the first time, the federal government is creating "swim lanes" where the best AI solution wins in a traditionally regulated industry, rather than incumbents maintaining advantage through compliance overhead.