Preparing for CMS's New Mandatory Bundled Payment Model

CMS recently announced the mandatory Transforming Episode Accountability Model (TEAM). Largely informed by lessons learned from prior models, including the Bundled Payments for Care Improvement Model (BPCI), the subsequent Bundled Payments for Care Improvement Advanced Model (BPCI-A), and the Comprehensive Care for Joint Replacement (CJR) Model, TEAM is designed to advance episode-based alternative payment models to help drive a continued transition to value-based care.

TEAM will launch on January 1, 2026, and run for five years, concluding on December 31, 2030. For participating hospitals, this corresponds to a final submission of clinical data and quality measures in 2031.

ECG has been supporting hospitals and network providers as they prepare their clinical processes, operational protocols, and financial analytics for participation. Based on this work, we have created the following guide to help your organization successfully participate in the new model.

Model Overview

How are bundles structured in TEAM?

1. Hospitals will be responsible for coordinating care for Medicare beneficiaries who undergo one of the following surgical procedures:
   • Coronary artery bypass graft
   • Lower extremity joint replacement (LEJR)
   • Major bowel procedure
   • Surgical hip/femur fracture treatment
   • Spinal fusion
2. Hospitals will be financially responsible for a majority of items and services provided during a defined episode of care, as shown in the figure below.

How is payment calculated for the episodes?

Hospital billing for Medicare services will not change, in that participating hospitals will continue to bill Medicare under current processes. However, participating hospitals will receive preliminary target prices for each included episode of care. These target prices will be calculated by CMS based on three years of baseline episode spending for each episode type, with adjustments for factors such as geographic region and episode complexity.

At the end of each performance period, a reconciliation process will then take place to evaluate a given hospital's performance against the established target prices. An overview of this process is shown in the figure below.

What quality metrics are included?

Compared to prior programs, CMS has focused on a smaller, more discrete set of quality metrics. Specifically, two quality measures will be included across episodes and conditions, with one additional metric included for LEJR episodes, as follows:

• For all episodes: (1) hybrid hospital-wide all-cause readmission measure and (2) patient safety indicators (PSI 90)
• For LEJR episodes only: total hip arthroplasty and/or total knee arthroplasty, a patient-reported outcome performance measure (PRO-PM) (inpatient)

 How much risk are hospitals required to assume?

TEAM will have three participation tracks, ranging from no assumed financial risk to significant levels of financial risk. Eligibility varies by hospital type and time in program, as shown below.

What markets are included?

TEAM will cover 188 geographic regions, which is equivalent to approximately 25% of all core-based statistical areas in the US. Selected geographic regions span both urban and rural areas. For instance, major urban areas such as Connecticut, New York City/New Jersey, Northern Virginia, and Washington, DC, are included in the program.

Preparing for Participation

How should participating hospitals prepare? 

Participating hospitals should begin a series of internal preparations as soon as possible. Generally, ECG advises hospital preparations follow two main phases:

While specific needs can vary significantly by hospital, ECG recommends considering the tasks below within each phase of preparation.

Phase One Tasks:

1. Assess Historical Financial Performance
   • Evaluate Medicare cases for the five included procedures over the last three to five years, and calculate metrics such as average monthly and annual volume, average total spending, spending by care setting and code category, average length of stay (LOS), and number of readmissions. 
   • Conduct trending of this information over time to understand changes in performance by condition. 
   • Identify outlier cases to determine any common drivers of above-average spend or LOS. 
   • Seek support to access market data and understand average spending of other hospitals in the market for included conditions, as CMS will adjust target prices based on regional performance to ensure they accurately capture the cost of care in a given market. 
2. Understand Discharge Trends
   • Review historical case volume to determine the discharge destination for episode patients, both by care setting (LTCH, IRF, SNF, HHA, etc.) and provider (i.e., who is being most utilized). 
   • Once the hospital's main referral partners have been identified, evaluate the performance of these facilities relative to others in the market, using metrics such as readmission rates, quality scores, and star ratings (where applicable). 
     • These considerations can help the hospital drive operational efficiencies within the model. For example, a hospital may want to access the SNF three-day stay waiver, but it can only do so if the SNF receiving the referral has three or more stars under the CMS Five-Star Quality Rating System.  
3. Analyze Quality Performance
   • Assess the hospital's current performance on the three TEAM quality metrics and its ability to drive improvement over time. 
   • Similar to spending, performance should be evaluated by condition both over time and in comparison to other hospitals in the market to gain a full understanding of performance opportunity and risk.

Phase Two Tasks:

1. Conduct Scenario Modeling
   • Develop a set of financial models to understand potential financial performance within the program. This should include an evaluation of the hospital's anticipated performance at its current state as well as a sensitivity analysis to understand the impact of any future variations in clinical or quality performance. 
   • For example, the hospital may want to consider modeling changes in case volume, an increase or decrease in readmissions, changes in quality scores, or the impact of outlier cases.   
2. Evaluate Risk-Sharing Opportunities and Partnership Approach
   • Determine the organization's willingness to bear downside financial risk and the level of risk tolerance it would consider in the short and medium term.
   • Determine potential options to share financial risk with downstream provider partners. In doing so, the hospital would share a degree of downside risk (i.e., any recoupment payments owed to CMS) with the downstream providers, as well as any upside bonus or reward payments received from CMS. Separately, these agreements can be very beneficial in supporting provider alignment or strategies within a health system. 
   • If the hospital elects to participate in risk sharing, it will need to identify ideal partners (whether through a review of existing relationships or market research on high-performing market providers) and draft a proposed partnership structure, including the degree of shared risk, any escalation in the amount of risk shared over time, and any applicable quality or volume thresholds. 
   • Once any agreements are finalized, the providers will need to evaluate care coordination capabilities, such as data sharing and discharge/admission processes. 
3. Develop Clinical and Operational Improvement Protocols
   • Based on improvement opportunities identified in phase one, the hospital should craft strategies and associated action plans to further develop, deploy, and implement protocols for clinical and/or operational improvements to support program performance.  
     • This may include readmission or LOS reduction efforts, cost containment strategies, care coordination technologies and/or processes, expansion of clinical/administrative staff, and clinical pathways for specified conditions. 
   • The hospital should carefully consider how and when to implement these improvement efforts, as the structure of TEAM rewards consistent improvement over time, meaning hospitals will continuously be compared to historical and peer performance.

Is there a role in TEAM for other care providers in the market?

TEAM allows participating hospitals to share reconciliation payments with other providers involved in the care episode. Therefore, downstream providers in the market (e.g., post-acute care providers) should be considering their willingness and ability to assume risk on behalf of partner hospitals. For participating hospitals to offer downstream providers the potential to share in generated savings, they may require that providers also share in any recoupment payments owed to CMS in the event an episode exceeds target spending.

To prepare for this opportunity, downstream providers will need to generate a value offering to share with potential hospital partners. This should include care pathways for included conditions, readmission rates, and outcome measures. Internally, these providers will also need to evaluate whether they have the financial and operational capabilities to track patients, assume financial risk, and coordinate care effectively.

Other Considerations

Based on ECG's past work across a variety of CMS demonstrations as well as commercial value-based programs, some additional lessons learned for consideration include the following:

1. Importance of a Multidisciplinary Strategy: Preparing for participation in a value-based program should involve all departments of an organization, and all levels of staff. For instance, in order to be successful, a hospital will need meaningful participation from not only physicians, but also practice managers, billing staff, and nurses. The organization will also need to ensure its ability to work effectively across functions, as roles throughout information technology (IT), quality, and care planning will become interdependent. 
2. Streamlining Data Capture and Quality Metrics:For hospitals that elect to enter into downstream risk-sharing agreements, quality metrics and thresholds will need to be defined. When identifying these metrics, hospitals should consider: 
   • Metrics that are already being tracked internally to promote efficiency.
   • Which metrics the hospital's IT system can accurately define, capture, and track.
   • Which quality metrics will have the most material impact on outcomes and spending within the program. 
3. Impact of Proactive Care Planning: While the role of post-discharge providers is often appreciated, hospitals should also consider the impact of care and care planning that occurs immediately preceding, or very early on, in the episode; this can have a significant impact on patient recovery. For instance, hospitals may consider utilizing preoperative physical therapy (often referred to as "prehab"), employing detailed recovery and postoperative instruction plans, and/or conducting home safety assessments to ensure the patient has a conducive recovery environment. By creating these care plans proactively and involving the full care team, hospitals can increase provider alignment, improve patient engagement, and more accurately predict care needs and costs.  

Immediate Next Steps

Step One: Verify your participation in TEAM by checking the list of acute care hospitals (XLSX) published by CMS on September 5, 2024.

Step Two: If your hospital is included in the participation list, identify the staff member(s) who will oversee CMS communication and manage hospital participation in the model.

Step Three: Complete the online TEAM Primary Point of Contact Identification Form to ensure the right individuals receive all future TEAM-related communications from CMS.

ECG is closely monitoring actions of the new Trump administration and CMS leadership for any potential modifications or delays to TEAM; however, no such changes have been announced as of publication. Note that as a mandatory model, any and all changes would be made through the proposed and final rulemaking process.

Edited by Emily Johnson

Published February 26, 2025