By Ela Matters Staff 
Healthcare is entering a new era of payment accountability. The CMS TEAM Model represents the most significant mandatory bundled payment shift Medicare has introduced, fundamentally changing how hospitals approach surgical care coordination and financial planning. Starting January 2026, selected hospitals must participate in this five-year episode-based payment model covering five major surgical procedures. This transition affects everything from CFO budgeting strategies to care team workflows, making understanding the TEAM Model essential for healthcare organizations preparing for the future of Medicare reimbursement.
What Is the CMS TEAM Model?
The CMS TEAM Model stands for the Transforming Episode Accountability Model. This mandatory five-year episode-based payment model starts in January 2026 and aims to address fragmented and costly care for Medicare beneficiaries by enhancing care coordination and health outcomes.
The model focuses on five specific surgical procedures:
- Hip and knee replacement surgeries
- Spinal fusion procedures
- Coronary artery bypass graft operations
- Major bowel procedures
- Cardiac valve replacements
The goal is to improve care given to Medicare beneficiaries by holding hospitals accountable for specific episodes of care, testing whether financial accountability can reduce Medicare costs while maintaining or improving care quality.
How Does the Medicare TEAM Model Work?
The Medicare TEAM Model operates through bundled payments that cover entire episodes of care. The TEAM Model builds on existing CMS Innovation Center APMs, including the Bundled Payments for Care Improvement (BPCI) Advanced model and the Comprehensive Care for Joint Replacement (CJR) model.
Here’s how the payment structure works:
- Episode Definition: Each episode begins with the hospital admission and extends through 90 days post-discharge. Hospitals receive a predetermined payment amount covering all services during this period.
- Financial Risk: Hospitals assume financial responsibility for patient care costs during the entire episode, including complications and readmissions.
- Quality Measures: Payment adjustments link to specific quality metrics and patient outcomes, not just cost management.
What Are the Key Components of the TEAM Model CMS Structure?
The TEAM Model CMS structure includes several critical components that differentiate it from previous payment models:
- Mandatory Participation: Unlike voluntary programs, selected hospitals must participate based on geographic location and procedure volume.
- Risk Adjustment: Payment amounts adjust based on patient complexity and regional cost variations.
- Quality Reporting: Hospitals must track and report specific quality measures throughout each episode.
- Data Requirements: Enhanced data collection and reporting requirements ensure transparency and accountability.
The model runs from January 1, 2026, through December 31, 2030, giving hospitals a five-year implementation period.
What Does This Mean for Hospital CFOs?
CFOs face significant financial planning challenges with the TEAM Model implementation. The shift from fee-for-service to bundled payments requires comprehensive financial restructuring.
Budget Planning Changes:
- Revenue forecasting becomes more complex due to bundled payment structures
- Cost accounting systems need updates to track episode-based expenses
- Cash flow patterns change with upfront bundled payments
Risk Management: CFOs must develop strategies for managing financial risk associated with patient complications and extended care needs.
Investment Priorities: Technology investments become crucial for tracking patient outcomes and managing care coordination across multiple providers.
Performance Monitoring: New financial metrics focus on episode costs rather than individual service revenues.
How Should Providers Prepare for the TEAM Model?
Provider preparation involves clinical workflow changes and care coordination improvements. Hospitals with previous experience in bundled payment models will likely find the shift to TEAM as a relatively small lift, as many already collect required data and meet regulatory requirements.
Care Team Integration:
- Establish clear communication protocols between surgeons, nurses, and post-acute care providers
- Develop standardized care pathways for each covered procedure
- Create patient education programs to reduce complications
Technology Implementation: Providers need robust data systems for tracking patient outcomes and managing care coordination.
Partnership Development: Building relationships with skilled nursing facilities, home health agencies, and rehabilitation centers becomes essential for successful episode management.
What Are the Quality Requirements?
Quality requirements include specific metrics for each surgical procedure:
Patient Safety Indicators:
- Infection rates
- Readmission rates within 90 days
- Mortality rates
Patient Experience Scores: Regular patient satisfaction surveys and outcome reporting requirements.
Care Coordination Metrics: Measures tracking smooth transitions between care settings and provider communication effectiveness.
Financial Implications
The Transforming Episodic Accountability Model TEAM creates substantial financial implications for participating hospitals. CMS’ TEAM has been described as “the most significant mandatory bundled payment model we’ve ever seen.”
- Revenue Impact: Hospitals face potential revenue gains or losses based on their ability to manage episode costs effectively.
- Cost Management: Success requires precise cost tracking and management across all care settings during the 90-day episode.
- Capital Investment: Hospitals must invest in technology, staff training, and care coordination systems to succeed under the new model.
How Does TEAM Differ from Previous Models?
The TEAM Model represents an evolution from previous bundled payment programs. TEAM is the logical progression from the Comprehensive Care for Joint Replacement (CJR), ending December 31, 2024, and the Bundled Payments for Care Improvement (BPCI), ending December 31, 2025.
Key differences include:
- Mandatory participation rather than voluntary enrollment
- Expanded procedure coverage beyond joint replacements
- Enhanced quality reporting requirements
- Longer episode duration with more comprehensive care coordination
Implementation Challenges
Healthcare organizations face several implementation challenges:
Data Integration: Combining data from multiple care settings and providers requires advanced technology systems.
Staff Training: Care teams need extensive training on new workflows and quality requirements.
Partner Coordination: Managing relationships with post-acute care providers becomes more complex under bundled payments.
Financial Planning: CFOs must develop new budgeting and forecasting methods for episode-based revenues.
Expected Outcomes
If successful, the model could establish “managing episodes as a standard practice in Traditional Medicare.” Expected outcomes include:
- Cost Reduction: Medicare expects overall cost savings through improved care coordination and reduced complications.
- Quality Improvement: Enhanced patient outcomes through better coordinated care and reduced readmissions.
- System Transformation: Fundamental changes in how hospitals approach surgical care and post-acute coordination.
How Can Organizations Prepare Now?
Organizations should begin preparation immediately, even if not selected for initial implementation:
Assessment Phase:
- Evaluate current care coordination capabilities
- Analyze historical episode costs and outcomes
- Identify technology gaps and improvement opportunities
Planning Phase:
- Develop care pathways for covered procedures
- Establish partnerships with post-acute care providers
- Create staff training programs
Implementation Phase:
- Deploy necessary technology systems
- Begin tracking episode-based metrics
- Establish quality improvement processes
Takeaway
The CMS TEAM Model represents a fundamental shift in Medicare payment methodology that will reshape healthcare delivery for surgical procedures. Success requires comprehensive preparation across clinical, financial, and operational domains. Organizations must begin planning now to ensure successful implementation when the model launches in 2026.
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