The Centers for Medicare & Medicaid Services (CMS) is launching a mandatory payment model known as the Transforming Episode Accountability Model (TEAM). Building upon previous initiatives like the Bundled Payments for Care Improvement Advanced (BPCI Advanced) and Comprehensive Care for Joint Replacement (CJR) models, TEAM represents the next step in episode-based alternative payment models. Set to begin on January 1, 2026, and run for five years until December 31, 2030, TEAM is designed to improve the quality and coordination of care for Medicare beneficiaries undergoing specific surgical procedures. This mandatory model, with policies finalized through rulemaking, incorporates lessons from past models and stakeholder feedback gathered in 2023.
Understanding the Transforming Episode Accountability Model (TEAM)
The Transforming Episode Accountability Model (TEAM) is a mandatory, episode-based alternative payment model focused on selected acute care hospitals. These hospitals will be responsible for coordinating care for Traditional Medicare patients undergoing specific surgical procedures – these procedures initiate a “care episode.” This responsibility encompasses the cost and quality of care from the surgery itself through the 30 days following the patient’s discharge from the hospital. CMS has chosen Core-Based Statistical Areas (CBSAs) to geographically target the model. Hospitals within these selected CBSAs, paid under the Inpatient Prospective Payment System (IPPS), are required to participate in TEAM. The specific CBSAs mandated for participation were detailed in the final rule. Notably, hospitals currently participating in the BPCI Advanced or CJR models have a one-time voluntary option to opt-in to TEAM, encouraging a continued commitment to value-based care.
A key component of TEAM is the emphasis on patient care partnership. By taking ownership of costs and quality during a surgical episode, participating hospitals are expected to connect patients with primary care services. This connection aims to foster accountable care relationships and promote better long-term health outcomes for patients. The surgical procedures included in TEAM are: lower extremity joint replacement, surgical hip femur fracture treatment, spinal fusion, coronary artery bypass graft, and major bowel procedure. For each TEAM episode, CMS will provide a target price. This price is designed to cover the majority of Medicare spending during the episode, from the initial surgery (inpatient or outpatient) to post-discharge services like skilled nursing facility stays and follow-up provider visits. By making participants accountable for the comprehensive costs of an episode, TEAM seeks to incentivize better care coordination, smoother patient transitions, and a reduction in avoidable hospital readmissions. Furthermore, TEAM incorporates a voluntary Decarbonization and Resilience Initiative, supporting hospitals in improving care quality by addressing climate change-related threats to patient health and the healthcare system.
| ## Key Highlights of the TEAM Model |
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| – Fragmented care following surgery can lead to complications, extended recovery, and potentially avoidable healthcare utilization. The Transforming Episode Accountability Model (TEAM) directly addresses this by improving the patient journey from surgery through recovery. It focuses on care coordination and transitions between providers, aiming for successful recovery and reduced avoidable hospital readmissions and emergency department visits. TEAM will initially focus on episodes related to lower extremity joint replacement, surgical hip femur fracture treatment, spinal fusion, coronary artery bypass graft, and major bowel procedures. – A core requirement of TEAM is that participants must connect patients with primary care services. This is a mandatory part of the model, designed to ensure continuity of patient care partnership and foster positive long-term health outcomes. – Health equity is a central priority within TEAM. The model includes flexibilities such as allowing safety net hospitals to participate in tracks with reduced financial risk and reward. The pricing methodology also incorporates adjustments to account for the needs of underserved populations. |
Purpose of the TEAM Model: Addressing Fragmented Surgical Care
Traditional Medicare beneficiaries undergoing surgery, whether as inpatients or outpatients, often experience fragmented care. In a fee-for-service (FFS) payment system, where providers are paid separately for each service, care can become disjointed. This fragmentation can lead to recovery complications, unnecessary hospitalizations, and increased healthcare costs due to duplicated resources and avoidable utilization. TEAM seeks to remedy this by testing an episode-based payment model. Participating acute care hospitals, designated as TEAM participants, will receive a target price to cover all costs associated with a defined episode of care. This includes the hospital stay or outpatient procedure, as well as all related services post-discharge, such as skilled nursing facility care and follow-up appointments. By setting a target price, CMS holds TEAM participants accountable for both spending and quality of care. This accountability is intended to motivate healthcare providers to enhance care coordination and improve overall care quality. For Traditional Medicare patients receiving the specified surgical procedures, TEAM offers the potential for improved care transitions, increased provider investment in healthcare infrastructure and redesigned care processes, and incentivized high-value care throughout the inpatient and post-acute care settings within the episode. The five surgical procedures included in TEAM are: lower extremity joint replacement, surgical hip femur fracture treatment, spinal fusion, coronary artery bypass graft, and major bowel procedure.
Model Design: Risk Sharing and Care Coordination
TEAM is structured as a five-year mandatory episode-based payment model, commencing in January 2026. Mandatory participation is based on hospitals located in selected geographic regions, defined by CBSAs across the United States. Furthermore, hospitals that were participants in the BPCI Advanced or CJR models until their conclusion are offered a one-time voluntary opt-in to TEAM, encouraging continued engagement in value-based care initiatives. To facilitate a smooth transition to full financial risk, TEAM incorporates a one-year glide path for all participants. The model features three participation tracks: Track 1, offering no downside risk and lower rewards for the first year (or up to three years for safety net hospitals); Track 2, with lower risk and reward levels for certain participants like safety net and rural hospitals in years 2-5; and Track 3, with higher risk and reward levels throughout the five years.
Episodes under TEAM begin with a hospital inpatient stay or outpatient procedure for one of the five specified surgical procedures: lower extremity joint replacement, surgical hip femur fracture treatment, spinal fusion, coronary artery bypass graft, and major bowel procedure. Each episode concludes 30 days after the patient is discharged from the hospital.
TEAM participants will continue to bill Medicare fee-for-service as usual but will be provided with target prices for included episodes before each performance year. These target prices are calculated based on all Medicare Parts A & B services included within an episode and are risk-adjusted to account for patient and hospital-level factors. Performance within the model is evaluated by comparing a participant’s actual Medicare FFS spending for an episode against their target price, alongside an assessment of performance on specific quality measures. If total Medicare costs for an episode are below the target price, TEAM participants may receive a payment from CMS, adjusted for quality performance. Conversely, if costs exceed the target price, participants may owe a repayment to CMS, also subject to quality performance adjustments.
In alignment with the CMS Innovation Center’s strategy to promote accountable care and integrate specialty and primary care, TEAM is designed to complement longitudinal care management through policies that align with Accountable Care Organizations (ACOs) and encourage primary care referrals. A patient receiving care from providers within an ACO will still be included in a TEAM episode if they undergo one of the specified surgeries at a participating TEAM hospital. This dual inclusion in both TEAM and ACO initiatives aims to foster provider collaboration to identify opportunities for quality improvement and Medicare spending reduction. Crucially, TEAM mandates that hospitals refer patients to primary care services, reinforcing continuity of care and promoting positive long-term health outcomes, solidifying the patient care partnership as a core mandatory part of the recovery process and beyond.
Health Equity Strategy: Addressing Disparities in Care
TEAM is committed to CMS’ broader goal of advancing health equity, ensuring optimal health outcomes for all populations by improving access to high-quality care. The model offers specific flexibilities to support participants serving a higher proportion of underserved individuals, particularly safety net hospitals. These flexibilities mitigate the financial challenges sometimes associated with value-based model participation. This includes the option for safety net hospitals to participate in Tracks 1 and 2, which feature lower financial risks and rewards compared to Track 3. Furthermore, the model’s target pricing methodology incorporates a social risk adjustment to ensure target prices adequately reflect the additional financial resources needed to care for underserved populations. To further address disparities and support continuous quality improvement, participants can voluntarily submit health equity plans to CMS and report demographic data. TEAM participants also have the option to voluntarily screen and report individuals for health-related social needs.
Decarbonization and Resilience Initiative: Sustainability in Healthcare
TEAM also supports CMS and HHS initiatives to enhance care quality by strengthening the health system’s climate resilience and sustainability. It assists participants in addressing the threats posed by climate change to both patient health and the healthcare system itself. TEAM participants can voluntarily report metrics related to greenhouse gas emissions to CMS. CMS will provide individualized feedback reports and public recognition for participation in this initiative. Additionally, participants will have access to technical assistance and learning resources to improve organizational sustainability, support care delivery methods that reduce greenhouse gas emissions, and identify tools for emissions measurement.
Additional Information and Outreach
For further information, updates, or inquiries regarding the Transforming Episode Accountability Model (TEAM), please consult the resources provided below.
