The CMS Innovation Center (CMMI) continues to prepare for its next episode-based alternative payment model, the Transforming Episode Accountability Model, or TEAM for short. This five-year model will offer both incentive payments for meeting a pre-determined target price and downside risk to TEAM hospitals that exceed that target price.
TEAM will be a mandatory program for almost 750 hospitals selected by CMMI in specific geographic areas, including Washington, D.C., northern Virginia, Connecticut, Vermont and the greater New York City/New Jersey area. The names of these facilities were provided by CMS earlier this month and are available on CMMI’s TEAM website. (Each facility should register their primary point of contact with CMMI via their website portal.) CMMI has indicated that the administrative process will begin in January to support a kickoff date of Jan. 1, 2026. This means that acute care hospitals required to participate in TEAM will need to get a better understanding of the program in short order.
TEAM will be an episode-based model for five surgical episodes – lower extremity joint replacement, surgical hip femur fracture treatment, spinal fusion, coronary artery bypass graft and major bowel procedure. Under TEAM, the total cost to Medicare for the procedure and the subsequent 30 days of care after the Medicare beneficiary is discharged from an acute care hospital will be compared to a three-year average target price. Acute care hospitals in TEAM will have the opportunity to receive a percentage of the episode’s total cost savings or they could be required to repay CMS for costs that exceed their target price.
TEAM is similar to two existing episode-based models, the voluntary Bundled Payment for Care Improvement Advanced (BPCI Advanced) Model, which ends in December 2025 and the mandatory Comprehensive Care for Joint Replacement (CJR), which ends in December. Acute care hospitals currently enrolled in CJR or BPCI Advanced are the only hospitals that can voluntarily opt in to TEAM for calendar year 2026.
3 Tracks
Mandatory TEAM acute care hospitals should assess their involvement in TEAM and evaluate how to best proceed. One key element to consider is the CMS target price data that will be released later. Hospitals experienced with CJR, the BPCI Advanced, or the older BPCI model will have an advantage over hospitals that have been slow to adopt episode-based models. This advantage will include having an existing operational infrastructure and having developed sufficient administrative acumen to implement episode-based care with quality controls to achieve cost savings below the target price.
To help address this disparity, CMMI has offered participants three tracks. Some hospitals may find it advantageous to enroll in Track 1 (the so-called one-year glide path) with no downside risk and a smaller upside gain in 2026. Meanwhile, Tracks 2 and 3 offer different opportunities for downside risk and upside gains for eligible hospitals, including a track with less downside risk reserved for hospitals that qualify as safety net or rural hospitals.
CMMI is moving quickly to implement TEAM, having moved from an initial request for information in summer 2023 to final regulations embedded within a 1,061-page Hospital Inpatient Prospective Payment System Final Rule for 2025 released in August. Additional TEAM program requirements will be published later, and TEAM hospitals will need to be mindful that CMMI may release information directly to them, release information globally through the CMMI TEAM website or possibly release information through the Federal Register through formal rule making.
Voluntarily Join TEAM?
Existing CJR and BPCI Advanced hospitals that are not on the TEAM facility list should also consider voluntarily joining TEAM after evaluating both their current performance under CJR/BPCI Advanced and their anticipated results under TEAM. CMS has suggested that the voluntary enrollment period will occur in January, which may not give CJR participants, whose model ends in December, sufficient time to fully evaluate whether to join TEAM. Additionally, BPCI Advanced hospitals will not complete their model until December 2025 and may not be able to commit to TEAM early next year without evaluating their final performance year. It is unclear if CMS will give these hospitals additional flexibility on deciding to voluntarily enter TEAM, although it would be beneficial to Medicare beneficiaries, CMMI and these hospitals to allow them a more flexible on-ramp should they decide to enter the program voluntarily.
Many commenters to the proposed TEAM regulations were concerned about CMMI’s unique approach to acute care hospitals located in All-Payer Health Equity Approaches and Development (AHEAD) model states. Currently, acute care hospitals in Maryland, Vermont, Connecticut and Hawai’i will participate in the AHEAD model. Maryland hospitals that are currently under the Total Cost of Care model will be exempt from TEAM. In contrast, acute care hospitals located in other AHEAD states will not be exempt from TEAM, meaning that those hospitals will have to comply with both models, a scenario that could end up with incentivizing conduct in ways not originally intended by either model.
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