TEAM Model from CMS: A Strategic Shift Toward Surgical Episode Accountability

The Centers for Medicare & Medicaid Services (CMS) has unveiled the Transforming Episode Accountability Model (TEAM), an ambitious, mandatory alternative payment model designed to transform surgical episode care across the Medicare landscape. Beginning January 1, 2026, and running through December 31, 2030, this initiative reflects CMS’s broader push to align payment models with outcomes, efficiency, and coordinated care.

For healthcare leaders, the TEAM Model CMS introduces both strategic challenges and operational opportunities. By holding acute care hospitals accountable for the quality and cost of care delivered during specific surgical episodes, CMS aims to drive measurable improvements in surgical outcomes, care transitions, and long-term patient health.

What Is the TEAM Model CMS?

The TEAM Model is a mandatory episode-based payment model that applies to select hospitals in Core-Based Statistical Areas (CBSAs). Each episode begins with a qualifying inpatient or outpatient surgical procedure and continues through 30 days post-discharge. Participating hospitals are financially responsible for nearly all Medicare Part A and B items and services provided during that episode.¹

The model builds on lessons learned from previous voluntary programs like the Comprehensive Care for Joint Replacement (CJR) and Bundled Payments for Care Improvement Advanced (BPCI Advanced) while introducing broader accountability and new requirements for care coordination with primary care providers and ACOs.²

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TEAM Model Objectives

The TEAM Model CMS is designed to address several systemic issues in traditional fee-for-service care, including fragmented care delivery, variability in outcomes, and rising costs. Its objectives are to:

• Improve care coordination: By assigning hospitals accountability for an entire surgical episode, the model incentivizes seamless coordination across care settings.

• Enhance patient outcomes: By prioritizing recovery success, reducing complications, and minimizing unplanned readmissions, the model supports safer recoveries and better long-term health.

• Lower Medicare spending: Through efficient care pathways and better alignment of clinical workflows with financial incentives.

• Promote primary care integration: By requiring hospitals to refer patients to primary care services post-discharge, the model reduces fragmentation and supports ongoing management of chronic conditions.³

For organizations looking to align TEAM Model readiness with proven bundled payment strategies, BPCI Advanced offers valuable insights. While TEAM introduces mandatory participation, many of its core principles—including coordinated care, episode-based reimbursement, and risk-sharing—were first advanced under BPCI-A. Review how BPCI Advanced sets the foundation for managing financial risk and improving outcomes.

Surgical Procedures Covered Under TEAM

In its first year, the TEAM Model includes the following five surgical episode categories:

1. Lower Extremity Joint Replacement (LEJR): Includes both inpatient and outpatient hip and knee replacements. LEJR procedures represent one of the highest volumes of surgical care for Medicare beneficiaries, creating substantial opportunities to standardize protocols and improve patient recovery outcomes.

2. Surgical Hip and Femur Fracture Treatment (SHFFT): Involves inpatient care for patients with acute hip or femur fractures. SHFFT carries high risks of morbidity, making effective perioperative management and strong discharge planning critical for reducing complications.

3. Spinal fusion: Covers both inpatient and outpatient fusion procedures. Spinal fusion often involves high variability in surgical approaches, highlighting the importance of clinical standardization and coordinated postoperative care.

4. Coronary Artery Bypass Graft (CABG): Represents a major cardiac surgical procedure performed in inpatient settings. CABG requires complex post-surgical management, positioning care coordination as a key factor in minimizing readmissions and supporting recovery.

5. Major bowel procedures: Encompasses inpatient surgeries involving substantial resection or repair of the bowel.¹ This procedure demands intensive postoperative monitoring, emphasizing the need for effective complication management and seamless care transitions.

Each hospital in a selected CBSA is required to participate in all applicable episode categories unless otherwise excluded. This broad inclusion ensures hospitals are accountable for some of the most complex, costly, and impactful surgical care areas within Medicare.

Financial Model: Target Pricing and Reconciliation

Hospitals in the TEAM Model are reimbursed based on a prospectively calculated target price for each episode. This price is based on:

• Hospital and regional historical spending.

• Adjustments for case mix and service location (e.g., inpatient vs. outpatient).

• Performance on select quality measures.

Target prices also include a CMS-defined discount factor to account for expected Medicare savings, set at one and one-half percent for CABG and major bowel procedures, and two percent for LEJR, SHFFT, and spinal fusion.^2,3 Target prices are further risk-adjusted based on patient demographics, clinical complexity, and hospital characteristics such as bed size and safety net status. CMS also applies a normalization factor to ensure fair comparisons across hospitals.

At the end of each performance year, CMS conducts a reconciliation process. If a hospital keeps total episode spending below the target price and meets required quality thresholds, it receives a positive reconciliation payment. If spending exceeds the target, the hospital may owe repayment to CMS.² This reconciliation process ensures hospitals remain accountable for both cost efficiency and care quality across all covered episodes.

Understanding TEAM Participation Tracks and Risk Levels

The TEAM Model features three participation tracks, each with varying levels of financial risk and reward. These tracks are designed to offer hospitals flexibility based on their capacity for risk and their role in supporting underserved communities.

• Track 1: Upside risk only, with no downside repayment to CMS. Positive reconciliation amounts are capped at 10 percent. This track is available to all participants in Performance Year 1 and extends through Performance Year 3 for safety net hospitals.

• Track 2: Moderate upside and downside risk, with stop-gain and stop-loss limits set at five percent. Eligible hospital types include Medicare-dependent hospitals, rural hospitals, safety net hospitals, sole community hospitals, and essential access community hospitals.

• Track 3: Higher risk and reward, with a stop-gain and stop-loss cap of 20 percent. This track is available to all participants for all five performance years.

Hospitals are required to select their participation track prior to the start of each performance year. If a selection is not made, CMS will automatically assign the hospital to Track 1 for that year.^2,3 By structuring the model with these distinct tracks, CMS aims to ease the transition to downside risk, especially for hospitals serving vulnerable populations.

Quality Measurement and Performance Standards

To ensure cost efficiency does not come at the expense of patient safety or outcomes, the TEAM Model links payment to quality performance. In Performance Year 1, hospitals are evaluated using the following metrics:¹

• Hybrid Hospital-Wide All-Cause Readmission (HWR) Measure.

• Patient Safety and Adverse Events Composite (PSI 90).

• THA/TKA Patient-Reported Outcome Performance Measure (PRO-PM).

These measures encompass both clinical safety and patient-reported outcomes. Starting in Performance Year 2, additional safety and quality indicators may be added to refine accountability further.

Integration with Primary Care and ACOs

A defining feature of the TEAM Model is its built-in requirement for hospitals to refer surgical patients to primary care services or an ACO post-discharge. This mandate reflects CMS’s ongoing emphasis on continuity of care, especially for patients with complex chronic conditions.³

By integrating episodic surgical care with longitudinal chronic care management, TEAM aims to reduce readmissions, promote holistic recovery, and support long-term wellness beyond the hospital setting. Hospitals participating in TEAM are also encouraged to align with ACOs and other accountable care initiatives, fostering collaboration to improve outcomes and manage costs. 

This integration goes beyond a single referral, establishing accountable care relationships that extend well beyond the surgical episode to support sustained patient health. By embedding these requirements, CMS is driving a more connected healthcare system that bridges the gap between acute surgical care and ongoing patient management.

Hospitals aligning with ACOs under the ACO REACH model may find additional synergies by integrating longitudinal care strategies that support sustained outcomes beyond surgical episodes.

Organizational Readiness: Key Opportunities and Challenges

Successfully navigating the TEAM Model requires both operational alignment and cultural readiness. Hospitals must assess their current capabilities and proactively adapt workflows to meet the demands of episodic care management and financial accountability.

Opportunities for Innovation

• Care pathway optimization: Standardize perioperative protocols, reduce unnecessary variation, and implement evidence-based discharge planning.

• Value-based partnerships: Establish or strengthen relationships with post-acute providers (e.g., SNFs, HHAs) and primary care teams.

• Patient-centered metrics: Leverage PROs and patient satisfaction data to improve experience and patient engagement.

Challenges to Anticipate

• Data infrastructure demands: Hospitals must be able to track performance in near real-time, integrating multiple data streams across care settings.

• Staffing and training needs: Multidisciplinary teams must be educated on the model’s implications, workflows, and clinical integration requirements.

• Financial risk exposure: Without strong cost controls, hospitals may face downside risk in reconciliation.²

Implementation Planning: Strategic Next Steps

Preparing for the TEAM Model requires not just early planning, but deliberate alignment of clinical, operational, and financial strategies to manage risk and seize performance opportunities. Healthcare leaders should:²

• Conduct a retrospective performance review on relevant DRGs and cost trends.

• Identify gaps in post-acute coordination and primary care handoffs.

• Build reporting capabilities for CMS quality metrics, including electronic capture of patient-reported outcomes.

• Align stakeholders—clinical, operational, and financial—under a unified transformation strategy.

As the January 2026 launch approaches, CMS will release further implementation guidance, rulemaking, and performance benchmarks. Organizations that take proactive steps now will be better positioned to lead under this evolving value-based landscape.

Positioning for Success Under TEAM

The TEAM Model CMS signals a significant evolution in how surgical episodes are managed, reimbursed, and measured. For healthcare organizations navigating these changes, success will depend not just on compliance—but on adopting scalable, patient-centered strategies that improve outcomes and reduce costs across the care continuum.

One area of growing opportunity lies in employer and worksite health, where innovative care delivery models are helping bridge the gap between acute care and long-term musculoskeletal (MSK) management. MedBridge offers solutions that align with TEAM’s goals by improving care access, accelerating recovery, and reducing unnecessary utilization.

By partnering with employers and leveraging digital MSK care pathways, providers can connect patients to the right level of care faster, boost functional outcomes, and enhance coordination across settings—all while managing financial risk under TEAM.

Explore Medbridge Employer & Worksite Health Solutions

These tools not only support success under TEAM—they also contribute to a broader transformation in how care is delivered and valued.

References

1. TEAM Model Overview. Centers for Medicare & Medicaid Services. https://www.cms.gov/priorities/innovation/innovation-models/team-model

2. TEAM Model Webinar Slide Deck. CMS Innovation Center. https://www.cms.gov/priorities/innovation/files/team-ovw-webinar-slides.pdf

3. TEAM Model Webinar Transcript. CMS Innovation Center. https://www.cms.gov/priorities/innovation/files/team-ovw-webinar-transcript.pdf