On Jan. 1, CMS will begin implementation of a new alternative payment system for select hospitals. The Transforming Episode Accountability Model will hold participating hospitals responsible for the care quality, costs and post-acute coordination associated with five surgical procedures.
The model is intended to mark a shift toward shared accountability and a test of whether healthcare providers can function as “team players” in value-based care.
What is TEAM?
Through TEAM, CMS aims to test how and if episode-based payments improve care quality while reducing Medicare expenditures. Participating hospitals will be responsible for the patient’s care quality and costs for 30 days after discharge for five surgical procedures.
The five procedures included in TEAM are:
- Coronary artery bypass graft surgery
- Lower extremity joint replacement
- Major bowel procedure
- Surgical hip and/or femur fracture
- Spinal fusion
Of the more than 700 hospitals participating in TEAM, only 10 are doing so voluntarily. CMS-certified acute care hospitals located within a selected Core-Based Statistical Area that receive payment for care episodes under the IPPS and OPPS are required to participate in TEAM.
CMS chose a mandatory participation model to ensure data is collected from a variety of healthcare organizations. The mandatory model also works to address attrition and selection bias challenges associated with voluntary models.
Hospitals in Maryland as well as Indian Health Service and Tribal hospitals are exempt from participation.
ASCs and joint-venture ASCs are exempt from participation, though services provided at an ASC may be included as part of the total care episode costs.
How will TEAM work?
The model will be divided into five performance years beginning Jan. 1, and ending Dec. 31, 2030.
An episode of care will be triggered for the aforementioned procedures and extend for 30 days post-discharge. All Medicare Part A and Part B services associated with the procedure, including post-acute care services, will count toward one care episode. Providers will bill Medicare fee-for-service as usual.
After one full performance year, CMS will conduct a reconciliation process to compare the hospital’s actual per-episode care spending to a set target price. Reconciliation will occur once per performance year, roughly six months after the performance year ends.
Participating hospitals will be notified of their target prices, which will vary based on geographic location, baseline costs and patient mix. CMS will update target prices before each performance year begins.
If a hospital’s spending ends below its target price, the hospital will earn a reconciliation payment for that performance year. If the spending ends above its target price, the hospital will owe CMS a repayment. CMS has classified this reward structure as “upside” and “downside” risk.
Reconciliation payments will also be influenced by quality performance. Existing CMS quality measures, such as readmissions, adverse events, surgical complications and patient-reported outcomes, may reduce the final reconciliation earned or amount repaid to CMS by 10% to 20%.
What are CMS’ TEAM tracks?
CMS has created three participation “tracks” to ease participants into the new payment model.
TEAM Track 1:
- Provides no downside risk but offers lower upside risk.
- All TEAM participants may select Track 1 for the first performance year.
- Safety-net and rural hospitals may select Track 1 for the first three performance years.
- A hospital on Track 1 whose spending ends above the target price will not be required to repay CMS after reconciliation.
- A hospital on Track 1 whose spending ends below the target price will be eligible to earn up to 10% more per episode spending after reconciliation.
- Quality performance can reduce a hospital’s reconciliation payment by up to 10%.
TEAM Track 2:
- Provides both upside and downside risk with narrow limits.
- Safety-net and rural hospitals may select Track 2 during performance years two through five.
- A hospital on Track 2 whose spending ends above the target price will owe CMS a repayment, capped at 5% of episode spending.
- A hospital on Track 2 whose spending ends below the target price will be eligible to earn a reconciliation payment, capped at 5% of episode spending.
- Quality performance can reduce reconciliation gains by up to 10% and reduce repayment amounts by up to 15%.
TEAM Track 3:
- Provides both upside and downside risk with wider limits.
- Most hospitals will be required to participate in Track 3 during performance years two through five.
- A hospital on Track 3 whose spending ends above the target price will owe CMS a repayment, capped at 20% of episode spending.
- A hospital on Track 3 whose spending ends below the target price will be eligible to earn a reconciliation payment, capped at 20% of episode spending.
- Quality performance can reduce reconciliation gains by up to 10% and reduce repayment amounts by up to 10%.
What is CMS’ goal for TEAM?
Through TEAM, CMS aims to reward hospitals that effectively reduce spending without sacrificing care quality by incentivizing intentional care-coordination across surgical, inpatient and post-acute care settings.
“By holding participants accountable for the quality and cost of the episodes in TEAM and ensuring patients are referred to primary care services, the model will promote prevention and support optimal, long-term health outcomes,” CMS said.
How can hospitals prepare for TEAM?
Though not a TEAM participant, Felipe Osorno, chief post-acute care officer at Los Angeles-based Keck Medicine of USC, shared with Becker’s his insights on care coordination. Keck Medicine’s focus is not to own post-acute care, but to build partnerships and programs that enhance care transitions and support its primary focus of tertiary and quaternary care.
“We know that to continue to grow, having a pathway to get patients to the right setting at the right time is really important,” he said. “Just throwing a post-acute referral into the ether and hoping someone will take the patient is not a sustainable strategy.”
Here is how three leaders told Becker’s their organizations were preparing for the new payment model:
Jacqueline Gisch. Vice President of Safety, Quality and Patient Experience at Baptist Health (Louisville, Ky.): We have strong relationships with many local post-acute providers. At this time, we have no intent to limit our partnerships. The post-acute care obstacles we foresee are challenges in transitions of care, such as social determinants of health, family support and care coordination once patients leave Baptist Health.
Gena Lawday. Vice President and Chief Quality Officer at UVA Health (Charlottesville, Va.): To prepare for CMS TEAM bundled payment model implementation, we have prioritized reducing unnecessary variation in care for surgical patients, recognizing that consistent, evidence-based practices are essential to achieving both optimal clinical outcomes and cost efficiency.
A key focus area has been strengthening our surgical site infection prevention program. We have set up an SSI Prevention Committee with the goal of adopting evidence-based SSI prevention bundles in our perioperative spaces, which incorporate best practices such as standardized preoperative skin preparation, appropriate antibiotic prophylaxis, strict adherence to sterile technique and optimal wound care.
In addition, we are developing standardized care pathways and postoperative care milestones to guide patients through their recovery with a consistent and evidence-based approach. These pathways include defined timelines for clinical assessments, wound/incisional care, mobility goals and discharge readiness criteria.
By aligning the multidisciplinary team around these protocols, we can ensure consistency across providers and sites, reduce complications and improve patient satisfaction. These efforts, combined with discharge planning and clinical documentation efforts, position us to meet the quality, efficiency, and coordination goals of the CMS TEAM bundled payment model while delivering safe and efficient care.
Shelley Veal. Vice President of Network and Payer Development for AdventHealth (Altamonte Springs, Fla.): Seventeen AdventHealth hospitals across four states were selected by CMS to participate in the TEAM model, which aligns with our efforts to make the journey easier for patients preparing for and recovering from surgery. Facilitated by a dedicated government programs team, each facility has convened a multidisciplinary team of hospital leaders, surgeons, care managers, clinical navigators and service line experts. Drawing on a decade of experience with bundled payment models, AdventHealth is preparing for this initiative through education, data insights and a cohesive strategy.
Our work began with structured education on the model’s framework and performance levers, followed by sharing baseline data to identify opportunities to reduce avoidable hospitalizations, emergency department visits and post-acute care utilization.
To drive improved outcomes, we have focused on two primary recovery factors: preparing patients before surgery and creating comprehensive discharge plans in advance. These strategies help enhance care transitions, reduce variation in post-acute care and lower readmission risk.
AdventHealth hospitals are also partnering with post-acute providers to standardize care protocols, improve communication and share data on quality metrics such as length of stay and readmission rates. This coordination, with patients at the center, supports value-based care and ensures we can address health in terms of the whole person — body, mind and spirit.
Editor’s note: This article was updated Sept. 22, 2025 at 2:27 pm CT.
