CMS TEAM Model: A New Direction in Value-Based Surgical Care

Healthcare payment reform gets a major upgrade with the CMS TEAM Model, launching January 1, 2026. The Transforming Episode Accountability Model TEAM represents Medicare’s boldest move toward value-based surgical care, fundamentally changing how hospitals approach episode management. This mandatory payment model shifts focus from volume to value, holding acute care hospitals accountable for 30-day surgical episodes while improving patient outcomes and reducing costs.

What is the CMS TEAM Model?

The TEAM Model is a mandatory, episode-based alternative payment model where selected acute care hospitals coordinate care for Medicare beneficiaries undergoing specific surgical procedures. TEAM will be a mandatory, episode-based, alternative payment model, in which selected acute care hospitals will coordinate care for people with Traditional Medicare undergoing one of the surgical procedures included in the model (initiate an episode) and assume responsibility for the cost and quality of care.

The Medicare TEAM Model covers five surgical procedure categories:

• Lower extremity joint replacement
• Surgical hip/femur fracture treatment
• Spinal fusion
• Coronary artery bypass graft
• Cardiac valve procedures

Its goal is to improve the care given to Medicare beneficiaries by holding hospitals accountable for specific episodes of care. The idea is to see if financial accountability can reduce Medicare costs while maintaining or even improving the quality of care provided to beneficiaries.

How Does the TEAM Model CMS Work?

TEAM Model CMS operates through bundled payments covering surgery plus 30 days of post-acute care. CMS will provide hospitals participating in TEAM with a target price that will represent most Medicare spending during an episode of care, which will include the surgery (including the hospital inpatient stay or outpatient procedure) and items and services in the 30 days following hospital discharge.

Here’s how the process works:

• Episode Initiation: When a Medicare beneficiary undergoes one of the five covered surgical procedures, the hospital initiates a TEAM episode.
• 30-Day Accountability: Hospitals become responsible for coordinating all care during the surgical stay and 30 days following discharge.
• Target Pricing: CMS sets episode-specific target prices based on historical spending patterns and quality metrics.
• Financial Responsibility: Hospitals share in savings when actual costs fall below targets and face financial penalties when costs exceed targets.

Key Features of the Transforming Episode Accountability Model TEAM

Mandatory Participation

Unlike voluntary bundled payment programs, TEAM Model participation is mandatory for selected hospitals. TEAM is a five-year, mandatory episode-based payment model under which selected acute care hospitals will be responsible for coordinating and improving care for Medicare beneficiaries undergoing certain surgical procedures. TEAM will begin on January 1, 2026.

Quality Measurement Integration

The model emphasizes quality alongside cost control. Hospitals must meet specific quality thresholds to receive maximum shared savings.

Care Coordination Requirements

Hospitals must establish partnerships with post-acute care providers, ensuring seamless transitions and reducing readmissions.

Episode-Based Accountability

The TEAM model aims to address fragmented and costly care for Medicare beneficiaries by enhancing care coordination and health outcomes. If successful, the model could establish “managing episodes as a standard practice in Traditional Medicare”.

Benefits of the TEAM Model

For Hospitals

• Predictable Revenue Streams: Fixed episode payments provide financial predictability compared to traditional fee-for-service models.
• Quality Improvement Incentives: Hospitals receive financial rewards for maintaining high-quality outcomes and patient satisfaction scores.
• Care Coordination Enhancement: The model encourages hospitals to develop stronger relationships with post-acute care providers.

For Patients

• Improved Care Coordination: Patients experience better transitions between care settings and reduced communication gaps.
• Cost Predictability: Bundled payments eliminate surprise bills for covered services during the episode.
• Enhanced Outcomes: Focus on episode-wide quality metrics improves overall patient outcomes.

For Medicare

• Cost Reduction: Bundled payments create incentives for efficient care delivery and waste reduction.
• Quality Enhancement: Tying payments to quality metrics ensures beneficiaries receive appropriate care.
• Care Standardization: Episode-based payments encourage evidence-based treatment protocols.

Implementation Timeline and Hospital Selection

2026 Launch Date

The CMS TEAM model is designed to enhance the quality and cost-effectiveness of care provided to Medicare beneficiaries. Scheduled to commence on January 1, 2026, and run through December 31, 2030.

Hospital Selection Process

The Centers for Medicare & Medicaid Services Sept. 5 published a list of participants for the Transforming Episode Accountability Model. TEAM is a mandatory payment model that will bundle payment to acute care hospitals for five types of surgical episodes.

CMS selected hospitals based on:

• Historical volume of covered procedures
• Geographic distribution
• Hospital characteristics and capabilities
• Quality performance metrics

Challenges and Considerations

Financial Risk Management

Hospitals face significant financial exposure under the model. Episode costs exceeding targets result in repayment obligations to CMS.

Care Coordination Complexity

Successful implementation requires hospitals to establish robust partnerships with:

• Post-acute care facilities
• Home health agencies
• Skilled nursing facilities
• Rehabilitation centers

Quality Metric Compliance

Meeting quality thresholds requires investment in:

• Clinical protocol standardization
• Patient monitoring systems
• Outcome tracking capabilities
• Staff training programs

Technology Infrastructure

The model demands modern data analytics capabilities for:

• Episode cost tracking
• Quality measure reporting
• Care coordination communication
• Patient outcome monitoring

Preparing for TEAM Model Success

Strategic Planning

Hospitals should develop comprehensive episode management strategies addressing clinical pathways, care coordination, and financial risk mitigation.

Partnership Development

Building strong relationships with post-acute care providers becomes critical for episode success and cost control.

Technology Investment

Implementing robust data analytics and care coordination platforms enables effective episode management.

Staff Training

Clinical and administrative staff need training on episode-based care principles and quality improvement methodologies.

Impact on Healthcare Delivery

Care Standardization

The model encourages adoption of evidence-based clinical pathways and standardized care protocols across participating hospitals.

Post-Acute Care Integration

Hospitals must develop closer relationships with post-acute care providers, potentially leading to vertical integration or formal partnerships.

Quality Focus

The TEAM Model is a new episode-based alternative payment model (APM) for selected acute care hospitals that 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.

Financial Accountability

The model creates strong incentives for hospitals to manage episode costs effectively while maintaining quality standards.

Future Implications

Potential Expansion

If successful, CMS may expand the model to additional surgical procedures and hospital types, fundamentally changing Medicare payment methodology.

Industry Transformation

The model could accelerate the adoption of value-based care principles across the healthcare industry, influencing private payer contracts and delivery models.

Quality Improvement

Long-term success depends on hospitals’ ability to improve patient outcomes while controlling costs, potentially setting new standards for surgical care quality.

Bottom Line

The CMS TEAM Model represents a fundamental shift toward value-based surgical care, challenging hospitals to reimagine episode management and care coordination. Starting January 2026, this mandatory payment model will test whether financial accountability can simultaneously reduce costs and improve outcomes for Medicare beneficiaries.

Success requires hospitals to invest in care coordination infrastructure, develop strong post-acute care partnerships, and implement robust quality improvement programs. The model’s emphasis on episode-wide accountability demands a holistic approach to patient care that extends well beyond the hospital walls.

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