Hospitals selected to participate in CMS’ Transforming Episode Accountability Model (TEAM) have until January 1, 2026 to prepare, but that day will be here faster than you think. Based on the experiences of participants in the previous Medicare bundled payment models, there is much for hospitals to do in that time. Because the first year of TEAM implementation will offer only financial upside for all hospitals with no threat of downside loss, participants may think they can use the first performance year to organize around the model. However, this overlooks three key facts.
Key Facts
First, the episodes included in TEAM are high-volume procedures1 accounting for 15% of all allowable Medicare fee-for-service inpatient charges. They span three or four different surgical service lines, complicating care transformation efforts. Hospitals should not underestimate the complexity of coordinating these efforts, which is greater than what the average Bundled Payment for Care Improvement Advanced (BPCI-A) participant managed.
Second, the model’s target prices are based on three years of claims data, updated annually on a rolling basis. The most recent year of baseline data is overweighted and disproportionately impacts the target price. Therefore, beginning in calendar year 2028 (Performance Year 3 of the model), participating hospitals will be competing against others in the region as target prices include data from Performance Year 1 (calendar year 2026).
Third, many markets selected to participate in TEAM include hospitals that participated in Comprehensive Care for Joint Replacement (CJR) and BPCI-A. These hospitals have valuable experience managing episodes of care and have already put downward pressure on the regional target price. The more hospitals in a market with prior experience in Center for Medicare and Medicaid Innovation (CMMI) episodic payment models, the greater the impact on target prices.
Hospital leaders who fail to appreciate these facts may inadvertently expose their organizations to significant financial risk. The amounts at risk range from six figures for small hospitals to eight figures for larger facilities. Those participants who take advantage of the year-plus period before the first performance year will position themselves to improve the efficiency of care delivery for selected bundles and outcomes for the patients involved, thereby managing the financial risk inherent in the model.
Where to Start – A Current State Assessment
Participating hospitals should perform a current state assessment of their TEAM financial performance, clinical pathways for the selected episodes, and readiness to meet the model’s compliance requirements. This assessment starts by understanding the baseline Medicare claims data for TEAM episodes, which requires access to the full Medicare claims data for the years included in the baseline. For a hospital starting from scratch, completing such an assessment would take years to first acquire claims access and then create utilization and financial models. Working with professionals like those at Forvis Mazars who have built precision TEAM models can help accelerate the process.
Analysis of historical claims data should include calculations of both regional target prices for each episode—adjusted for individual hospitals based on patient- and facility-specific characteristics—and the actual Medicare spending per 30-day episode. Calculating each unique beneficiary’s target price involves complicated regression models that are only valuable if compared against historical utilization and valid benchmarks.
Typically, organizations learn from this analysis that different episode types require different approaches to care re-engineering. Most claims costs in a surgical hip and femur fracture treatment (SHFFT) case, for example, occur after discharge. However, the opposite is true of coronary artery bypass graft (CABG) cases, for which the anchor admission accounts for most costs. A current state assessment provides insight into the variance between target prices and the hospital’s actual spending patterns.
This insight not only allows hospitals to understand their aggregate risk exposure but also to identify opportunities to improve care pathways2, address the specific needs of high-risk patient populations to improve outcomes, and reduce unnecessary spending. It also helps hospitals identify where physician alignment opportunities can further contribute to these goals.
What Data Will CMS Provide to TEAM Participants?
For TEAM, CMS will provide participants with three types of expenditure data. However, waiting on CMS to provide data means choosing to delay preparations until the first model year.
- Episode Target Prices: In the recent Inpatient Prospective Payment System (IPPS) final rule, CMS stated it will provide target prices for each episode “by the end of November” before each model performance year begins. This allows very little time to inform care transformation before the model’s start, and the target prices CMS provides do not drill down into spending by site of service. Hospitals that rely on data from CMS may know they have an opportunity to improve care delivery, but it may not be immediately apparent how to address it.
- Summarized Episode Data: CMS will provide summarized data for each episode before the model year begins and monthly thereafter. However, CMMI staff have not historically answered questions about the summarized data—such as why readmission rates for a certain procedure are higher than average—that can inform care transformation efforts. As with target prices, this data both (a) comes too late to make changes to care processes before the start of the model and (b) begets questions that require deeper study before committing to strategies. In short, this data will miss the mark for pre-risk preparation.
- Detailed Claims Data for Episodes in the Benchmark Period: Upon request, CMS will provide detailed claims data monthly. This detail is crucial for understanding opportunities to improve care delivery. However, effectively utilizing the data requires experience working with large data sets. Further, CMS historically has provided claims data shortly before the beginning of a program. This does not leave sufficient time to identify and act upon performance improvement opportunities until well into the first performance year.
TEAM Model Compliance Requirements
Beyond financial and clinical operations, the current state assessment also must consider a hospital’s readiness to comply with the model’s requirements. These requirements will not be phased in but will be effective immediately on January 1, 2026. Some requirements, like screening for health-related social needs and reporting patient-reported outcome measures for hip and knee replacements, were included in a previously finalized inpatient rule as part of the Inpatient Quality Reporting (IQR) program. Hospitals should review existing workflows to determine if these are capturing the necessary data.
Other requirements are new to TEAM. These include beneficiary notification and referral to primary care.
- Beneficiary Notification: Hospitals selected for TEAM are required to notify all beneficiaries in qualifying episodes of their participation in the model. Given that many beneficiaries have short lengths of stay, it is crucial to identify and notify them in a timely manner. Doing so may be complicated for some cases—particularly those that are not elective—as normal documentation procedures do not finalize the Medicare Severity Diagnosis Related Group (MS-DRG) or Healthcare Common Procedure Coding System (HCPCS) until days after discharge.
- Referral to Primary Care Provider: TEAM participants must include a referral to a primary care provider upon discharge for beneficiaries in qualifying episodes. In making the referral, hospitals also must respect the patient’s choice of provider. While many hospitals already connect patients with primary care at discharge, the practice may not be sufficiently hardwired.
To meet the new requirements, hospitals will need to develop processes to quickly identify TEAM beneficiaries, determine whether they have a primary care provider, and then provide notification and make a referral to primary care. Further, participating hospitals will need to monitor these processes to determine their sustained effectiveness.
Use the Current State Assessment to Create a TEAM Playbook
The current state assessment serves as the foundation for a TEAM participant’s implementation playbook—a road map used to manage the financial risk associated with the model and take advantage of opportunities to improve outcomes for Medicare beneficiaries. While executing against the playbook is an ongoing process, initial efforts typically take several months to yield results. Key activities to include in the playbook are:
- Re-Engineered Clinical Pathways: Improving outcomes in TEAM means simultaneously re-engineering processes for five high-volume episodes in three or four different surgical service lines. Managing this complexity will challenge even most BPCI-A participants, who averaged participation in fewer than two surgical episode categories in calendar year 2021. The implementation playbook will use the results of the claims data analysis to identify the highest leverage opportunities, helping hospitals allocate their limited resources to activities with the highest likelihood of improving patient outcomes.
- TEAM Governance: A successful current state assessment identifies stakeholders from the various functions that should be involved in TEAM governance. The playbook will define the structure, cadence, and activities necessary to provide effective oversight of activities related to TEAM.
- Physician Alignment & Value-Based Arrangements: Developing financial arrangements with key community physicians is crucial for engaging them in TEAM activities. Given that all IPPS hospitals in selected markets are required to participate, it is important to create a differentiated opportunity for the surgeons involved that both supports their practice and rewards them for their contributions to re-engineering processes in compliance with TEAM and Medicare fraud and abuse requirements.
- Performance Monitoring: Re-engineering clinical care pathways is an ongoing process. The playbook will identify the dashboards necessary to monitor performance and support their development. These dashboards help provide the knowledge to implement the Plan-Do-Study-Act cycles necessary to sustain continuous performance improvement.
- Post-Acute Partnerships: As with BPCI-A and CJR, most of the savings in TEAM will come from optimizing the initial post-discharge care site. Using insights from the assessment, the playbook can help participants develop a high-value network of home health agencies that are better able to manage complex cases and skilled nursing facilities (SNFs) that are aligned with the hospital’s care pathways.
- Hardwired Compliance With Model Requirements: As discussed above, TEAM includes additional compliance requirements for participants. The playbook will provide processes for monitoring adherence to these new requirements.
If your hospital has been selected to participate and you have questions or need assistance conducting a TEAM current state assessment and developing a playbook for your hospital, please reach out to our professionals at Forvis Mazars.
- 1Coronary artery bypass graft, lower extremity joint replacement (inpatient and outpatient cases), major bowel surgery, spinal fusion (inpatient and outpatient cases), and surgical hip femur fracture treatment.
- 2For example, improve care coordination, discharge planning, site of service selection, and pre-habilitation.