Medicare's health tech spending test

• But there's a genuine belief that emerging technologies can improve people's health if we fundamentally change the way the health system pays for care.
• How to pay for Doctor AI is exactly what Medicare is experimenting with.

Driving the news: The Centers for Medicare and Medicaid Services' ACCESS payment model launches Sunday, with more than 150 participating health care organizations.

• Medicare will pay providers based on whether patients reach specific, measurable outcomes, like lowering the blood pressure of a patient with hypertension — not on how much care they receive.
• The focus is on chronic conditions that CMS says affect more than two-thirds of Medicare enrollees, including high blood pressure, heart disease, diabetes, chronic pain and depression.
• And the low fixed payments — which translate to upfront payments as low as $7.50 per patient, per month — almost ensure that providers will make heavy use of technology and automation to reach desired outcomes.

The big picture: Moving away from paying for individual health care services has been a white whale for policymakers and the health care industry for as long as I've been covering it.

• So far, there's been very limited success, and national health care spending reached $5.7 trillion in 2025.
• But the market is increasingly warming to performance-based contracting, according to a recent Peterson Center on Healthcare report.
• Backing from Medicare — the nation's largest payer — will almost certainly add momentum to its use if the model is successful.

Yes, but: There are multiple ways that AI and other emerging technologies influence health care spending, and this only addresses part of the overall concern.

• AI "bot wars" over payment rates and care approvals are already having an inflationary effect.
• "It's very clear on the administrative side, AI is increasing spending. On the clinical side, it could go either way," said Peterson Health Technology Institute executive director Caroline Pearson.

Between the lines: The ACCESS payment rates are much lower than the industry was expecting when the program was announced last December — which may have scared off some digital health companies that require intensive human labor.

• "It's very clear that CMS is trying to encourage the use of very tech-heavy solutions — solutions that are leveraging tech rather than humans — and that's the only way you can succeed under this model," Pearson said.

• Some of the biggest names in the digital health world are staying on the sidelines, possibly because they're designed for fee-for-service payments and can't generate enough cash flow per person.

What they're saying: "I think if you are delivering care in a way that's software-first with doctor supervision, you can totally make the rates work," said Brandon Ballinger, co-founder of Empirical Health, one of the ACCESS participants.

By the numbers: Peterson Health Technology Institute has been measuring the impact of various health technologies on health spending for several years now, and the results are all over the place.

• Remote patient monitoring for diabetes is estimated to increase commercial spending by around $2,000 per user each year, while gastrointestinal management services reduce spending by nearly $1,900 annually.
• Other similarly ambiguous assessments underscore ACCESS' central premise: whether paying for measurable outcomes, rather than digital services themselves, can produce better health at lower cost.

What we're watching: Commercial insurers have pledged to incorporate outcomes-based payments aligned with ACCESS in their coverage by the beginning of 2028.

• That could extend the experiment well beyond Medicare — but without knowing whether the new arrangements are workable.