The Centers for Medicare & Medicaid Services (CMS) is once again at the forefront of healthcare innovation with the introduction of the Transforming Episode Accountability Model (TEAM). This groundbreaking initiative, part of the fiscal year 2025 Hospital Inpatient Prospective Payment Systems (IPPS) rule, aims to drive value-based care through a mandatory, episode-based payment model. Here’s a closer look at what the CMS TEAM model entails and what it means for the future of healthcare.
What is the TEAM Model?
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, this model focuses on holding hospitals accountable for the cost and quality of care during specific episodes of care. Here are the key components of the model:
Episode Initiation and Duration
- Procedures Covered: The model includes lower extremity joint replacement, surgical hip femur fracture treatment, spinal fusion, coronary artery bypass graft, and major bowel procedures.
2. Episode Length: Each episode begins with the surgical procedure or hospital admission and continues for 30 days post-discharge. This timeframe aims to keep the model focused on costs and care quality that hospitals can directly influence.
Participants
- Eligible Participants: The model is limited to acute care hospitals paid under the IPPS.
2. Selection Methodology: Hospitals in selected Core Based Statistical Areas (CBSAs) must participate, with CMS using stratified random sampling to choose roughly a quarter of eligible CBSAs.
Financial Risk and Incentives
The CMS TEAM model introduces a tiered approach to financial risk through three distinct tracks:
Track 1:
First-Year Introduction: For the initial year, all participants will start in Track 1, which carries upside risk only, allowing hospitals to familiarize themselves with the model without the threat of financial losses.
Track 2:
Special Provisions: From year two onwards, Track 2 is available for safety net hospitals, rural hospitals, Medicare dependent hospitals, sole community hospitals, and essential access community hospitals. This track offers lower stop-loss and stop-gain limits and greater flexibility in reducing repayments to CMS.
Track 3:
Increased Risk: Hospitals that do not qualify for Track 2 will transition to Track 3 after the first year, facing higher financial risks and rewards.
To incentivize cost control, CMS sets price targets for each episode. Hospitals that spend below these targets can receive additional payments, while those exceeding the targets may face recoupments. Payments and recoupments are adjusted based on the hospital’s performance on quality measures, ensuring that both cost and care quality are prioritized.
Quality Measures and Composite Quality Score (CQS)
Central to the TEAM model is the integration of quality performance into payment calculations. Initially, three quality measures will be used, all of which are already part of existing CMS programs:
• Hybrid Hospital-Wide All-Cause Readmission Measure
• CMS Patient Safety and Adverse Events Composite
• Hospital-Level Total Hip and/or Total Knee Arthroplasty Patient-Reported Outcome-Based Performance Measure
The Composite Quality Score (CQS) combines these measures, weighted by episode volume, to determine a hospital’s quality performance. The CQS then adjusts the financial reconciliation amounts, rewarding hospitals that achieve high quality scores and reducing the financial burden on those that do not.
Future Directions
CMS aims to use the TEAM model to build on the lessons learned from previous episode-based models like the Comprehensive Care for Joint Replacement (CJR) and Bundled Payments for Care Improvement Advanced (BPCI Advanced). If successful, TEAM could set a new standard for managing episodes of care within Traditional Medicare.
To protect safety net hospitals, CMS is exploring adjustments to regional target prices, ensuring these hospitals are not disproportionately penalized. The agency is actively seeking feedback on these adjustments to refine the model before its implementation.
Conclusion
The Transforming Episode Accountability Model (TEAM) represents a significant step forward in CMS’s efforts to promote value-based care. By aligning financial incentives with quality performance, TEAM aims to improve patient outcomes while controlling healthcare costs. Hospitals and healthcare providers should prepare for this new model, which promises to reshape the landscape of Medicare payment and care delivery in the coming years.