Breaking down the new CMS proposed bundled payment model: TEAM

CMS has proposed a new mandatory bundled payment model to test if episode-based payments for select surgical procedures would lower Medicare spending and improve care quality.

The Transforming Episode Accountability Model (TEAM) is proposed to launch on January 1, 2026, and run for five years. The model aims to build upon the CMS Innovation Center’s previous work on episode-based alternative payment models, including the Bundled Payments for Care Improvement Advanced and Comprehensive Care for Joint Replacement models.

Traditional Medicare beneficiaries receiving surgical procedures in the hospital or as an outpatient may experience fragmented care, resulting in complications in recovery, avoidable hospitalization, and other expensive costs.

Instead of each provider receiving separate payments for each service and procedure, TEAM would provide acute care hospitals with a target price to cover all costs associated with an episode of care, including the cost of a hospital inpatient stay or outpatient procedure and services following discharge. Through the target price, individual providers would be held accountable for spending and quality performance.

TEAM would include five surgical procedures: lower extremity joint replacement, surgical hip femur fracture treatment, spinal fusion, coronary artery bypass graft, and major bowel procedure. Episodes would begin with an inpatient stay or hospital outpatient procedure related to one of the five surgeries and end 30 days after the patient leaves the hospital. Hospitals would be selected to participate in the model based on their geographic regions.

The proposed design includes a one-year glide path that allows participants to ease into full-risk participation and three participation tracks. Track 1 would have no downside risk and lower levels of reward for the first year. Track 2 would be associated with lower levels of risk and reward for certain hospitals, like safety-net hospitals, for years two through five. Track 3 would have higher levels of risk and reward for years one through five.

Participants would still bill Medicare fee-for-service, but payments may differ depending on performance and spending—the two areas that the model would assess. Hospitals would be evaluated on performance on three quality measures: hospital readmission, patient safety, and patient-reported outcomes. If hospital spending stays below the target price, they will earn a payment from CMS, subject to a quality performance adjustment. On the other hand, if hospitals spend more than the target price, they may owe CMS a repayment amount.

The proposed model aims to complement longitudinal care management and has policies that align with accountable care organizations (ACOs) and promote primary care. Patients receiving care from providers in an ACO would still be able to be in an episode in TEAM if they receive one of the five surgeries at a hospital participating in the model.

Additionally, participating hospitals would have to refer patients to primary care services to support continuity of care and positive long-term health outcomes.

The various track options in the model support CMS efforts to advance health equity. The flexibilities allow hospitals caring for higher shares of underserved individuals to participate in value-based care without the added financial burden often accompanying these models. In addition, the target pricing methodology would include a social risk adjustment to ensure prices accurately reflect the additional financial investment required to care for underserved individuals.

Participating hospitals must also submit health equity plans, report sociodemographic data to CMS, and screen individuals for health-related social needs to drive continuous quality improvement.

The model policies are subject to finalization through rulemaking ahead of TEAM’s launch date in 2026.