The updated Transforming Episode Accountability Model (TEAM) rule, recently published by the Center for Medicare and Medicaid Innovation (CMMI), confirms the integral role bundled payment models will play in surgical care for seniors beginning January 1, 2026. Early preparation is critical for hospitals participating in TEAM to navigate the dual challenges of improving the efficiency of care delivery and meeting enhanced regulatory requirements.
Transforming Episode Accountability Model Overview
TEAM introduces a 30-day mandatory retrospective bundled payment model for Medicare fee-for-service (FFS) beneficiaries, designed to financially incentivize efficient, high-quality care across five high-volume surgical procedures. Scheduled to run for five years starting January 1, 2026, TEAM compares hospitals’ expenditures to target prices, which are determined using historical spending data, regional adjustments, risk factors, and a CMS discount. Hospitals will either receive incentive payments for cost-effective care or pay penalties for exceeding targets.
The surgical procedures included in TEAM are:
- Lower extremity joint replacement (LEJR), including fractures and non-fractures
- Surgical hip and femur fracture treatment (SHFFT)
- Coronary artery bypass graft (CABG)
- Spinal fusion
- Major bowel procedure
Lower acuity procedures for LEJR and spinal fusion will be assigned a site-neutral target price to incentivize their transition to more cost-effective surgical settings.
TEAM represents an evolution of prior bundled payment initiatives, providing an opportunity for hospitals to align their care delivery with the model’s emphasis on efficiency, coordination, and patient outcomes.
Alternative Payment Models in the Current Administration
Earlier this year, CMMI announced the early termination of four alternative payment models—Maryland Total Cost of Care, Primary Care First, End-Stage Renal Disease Treatment Choices, and Making Care Primary. Scheduled to end by December 31, 2025, these cancellations aim to save CMS $750 million while aligning with the administration’s broader strategy for Medicare savings and streamlined payment models.
This announcement raised concerns about the future of TEAM. Would it face similar delays or modifications? Thus far, the answer is no: the fiscal year (FY) 2026 Inpatient Prospective Payment System (IPPS) proposed rule displayed April 11, 2025 reaffirmed TEAM’s importance and detailed its impending implementation with minimal changes. In addition, a letter from members of the U.S. House Committee on Ways and Means encouraged CMMI to prioritize the development of payment models that enhance cost efficiency and promote greater transparency moving forward. As a savings-driven program, TEAM aligns with the administration’s and Congress’ priorities to produce meaningful savings and is expected to remain a cornerstone of bundled payment innovation.
Key Changes to TEAM in the FY 2026 IPPS Proposed Rule
The FY 2026 IPPS proposed rule confirmed the January 1, 2026 launch of TEAM and introduced several adjustments to enhance its effectiveness. These changes include:
- Extended Lookback Period for HCC Capture: The Hierarchical Condition Categories (HCC) risk adjustment lookback period has been clarified as 180 days. This shift allows providers to document beneficiaries’ complexities more comprehensively, resulting in improved accuracy for risk adjustment calculations and fairness in target pricing. Hospitals must now establish robust processes to capture relevant HCC data within this extended pre-surgical time frame.
- Transition to HCC Version 28: TEAM will now utilize HCC version 28, which offers greater granularity compared to version 22. This update increases the average number of applicable risk adjusters, including non-HCC risk adjusters, to approximately 30 per episode group from approximately 25, expanding opportunities for risk adjustment. Proper documentation of beneficiary acuity via HCC codes will be vital to increasing TEAM incentives and avoiding costly penalties.
- Other Adjustments: CMMI also proposed a few more minor adjustments. For example, beginning in performance year 3 (2028), TEAM will incorporate the Information Transfer patient-reported outcome-based performance measure (PRO-PM). Also, the Decarbonization and Resilience Initiative has been removed to align TEAM with the administration’s current priorities.
These updates—most importantly, the administration’s continued commitment to implementing TEAM on time in 2026—underscore the importance of thorough preparation and strategic planning. Providers must adapt their workflows and documentation practices to improve their performance under TEAM’s new regulations.
Why Early Preparation Matters
Success as a TEAM hospital requires careful planning and proactive adjustments to care planning to help ensure compliance, improve care delivery, and achieve favorable financial outcomes. Below are three critical areas where early preparation is most important:
1. Meeting Regulatory Compliance
TEAM includes several regulatory requirements that providers must adhere to. These include beneficiary notification during anchor procedures and primary care referral upon discharge, with the latter being a new addition to bundled payment models.
Beneficiary notification involves informing a beneficiary that the hospital or hospital outpatient department (HOPD) at which the surgery occurs is participating in TEAM. Given the elective nature of certain TEAM procedures, some beneficiaries may have shorter hospital procedures, making it crucial to identify and notify them promptly.
Primary care referrals must be tailored to patients’ preferences and documented accurately by the anchor procedure provider. These referrals are a mandatory component of TEAM’s compliance framework, emphasizing the need for streamlined processes and efficient care coordination.
By implementing systems to address these requirements before TEAM’s launch, providers can reduce operational bottlenecks and help ensure smooth adherence to program rules.
2. Increasing Financial Incentives
TEAM rewards hospitals with incentive payments for delivering cost-effective care while penalizing those with excess expenditures. Success hinges on understanding the factors that contribute to episode costs and implementing strategies to mitigate negative outcomes.
Active care management and early patient identification are critical components of this process. Providers must refine clinical pathways, adopt evidence-based practices, and closely monitor program beneficiaries to help reduce costs while maintaining or improving care quality.
In addition, hospitals should analyze their historical performance against relevant benchmarks to identify areas for improvement. This data-driven approach should guide the development of targeted interventions and operational enhancements, helping ensure providers are well prepared when TEAM launches.
3. Building Post-Acute Partnerships
A beneficiary’s setting and duration of post-discharge care significantly influences episode costs and patient outcomes. Hospitals should prioritize partnerships with high-quality post-acute providers, such as skilled nursing facilities (SNFs), home health agencies (HHAs), and inpatient rehabilitation facilities (IRFs).
Hospitals must evaluate discharge patterns, assess the quality and efficiency of care at post-acute providers, and collaborate with those that are willing to align their care practices with TEAM’s objectives. Establishing these partnerships can help enhance care coordination, reduce readmissions, and improve patient satisfaction. All Medicare FFS beneficiaries retain freedom of choice regarding their care, and such choice cannot be infringed by TEAM hospitals or aligned post-acute providers.
Early engagement with post-acute partners allows hospitals to set shared goals, establish best practices, and foster mutual understanding of TEAM’s requirements. This proactive approach helps achieve better outcomes for both beneficiaries and TEAM hospitals.
Preparing for TEAM: How Forvis Mazars Can Help
Preparing for TEAM should start with an in-depth current state analysis. This initial assessment should address:
- Benchmarking current performance against regional standards.
- Identifying regulatory compliance gaps and opportunities for process improvements.
- Mapping clinical pathways for beneficiaries undergoing TEAM surgeries.
Given the extensive effort required for this analysis, hospitals may benefit from professional support. At Forvis Mazars, we have extensive experience in bundled payment models and can help providers accelerate their preparation for TEAM.
Our deep experience with predecessor programs such as Bundled Payments for Care Improvement (BPCI), BPCI Advanced (BPCI-A), and Comprehensive Care for Joint Replacement (CJR) enables us to help shorten the time from analysis to action, improve operations, and develop tailored implementation plans. By collaborating with Forvis Mazars, hospitals can streamline their readiness efforts and position themselves for TEAM success.
Conclusion: The Time to Act Is Now
TEAM presents a unique opportunity for hospitals to enhance care coordination, reduce costs, and improve outcomes. However, achieving success in TEAM requires in-depth preparation, strategic planning, and operational adjustments.
Providers must take advantage of the remaining months before TEAM’s launch to address regulatory requirements, refine care delivery processes, and build collaborative relationships with post-acute providers. Early investment in these efforts will help ensure hospitals are ready to increase incentives and reduce penalties when the program begins.
Forvis Mazars has the knowledge and resources to support hospitals in this transition. By leveraging our deep experience with bundled payment models and data-driven strategies, providers can unlock the full potential of TEAM and position themselves for long-term success. Contact a professional on our team today to learn how we can help you navigate this transformative opportunity and achieve excellence in healthcare delivery.