All You Need To Know About The CMS TEAM Model?

Hospitals in nearly 200 areas across the country must follow new Medicare payment rules starting in 2026. The CMS TEAM Model isn't optional. If your hospital is in one of these areas, you have to participate.

This change affects how Medicare pays for five common surgeries. Instead of paying for each service separately, hospitals get one payment that covers everything from surgery to recovery.

The TEAM runs from 2026 to 2030. Hospitals that spend more than their set payment lose money. Those who spend less can keep the savings.

What Surgeries Does TEAM Cover?

TEAM applies to these five procedures:

• Hip and knee replacements
• Broken leg surgeries
• Spine fusion operations
• Heart bypass surgery
• Major bowel procedures

Each surgery gets a set payment amount. This payment must cover the operation, hospital stay, doctor visits, rehabilitation, and any problems that happen within 30 days.

Which Hospitals Must Join?

CMS picked 188 geographic areas for TEAM. All hospitals in these areas must participate unless they qualify for very limited exceptions. CMS chose these areas based on their past experience with bundled payments and the mix of different hospital types. About one-quarter of all U.S. regions are included.

Hospitals found out their status when CMS released the final rule. There's no way to opt out if you're in a selected area.

How Payment Works

Old way: Medicare paid the hospital for surgery, paid doctors separately, paid for rehab separately, and paid for any readmissions separately.

New way: Medicare gives hospitals one payment that covers all costs for 30 days after surgery.

If total costs exceed the set payment, hospitals lose money. Early estimates suggest hospitals could lose an average of $500 per case, though this varies widely by location and hospital type.

What Hospitals Need to Do Now

Start preparing even though the TEAM doesn't begin until 2026. 

• Build associations with nursing homes and rehabilitation centers. When patients leave your hospital, they need to get good care somewhere else. If they end up back in your ER, you pay for it.
• Train your staff on the new payment model. Everyone from surgeons to discharge planners needs to understand how TEAM affects their work.
• Track outcomes better. You'll need to know which patients develop complications and why. This data helps you prevent problems before they cost money.
• Improve care coordination. Patients need clear instructions when they go home. Follow-up appointments must happen on time. Communication between providers has to be seamless.

The Financial Reality

Some hospitals will make money under the TEAM Model CMS. Others will lose money. Success depends on how well you coordinate care and prevent complications.

Hospitals that already participate in bundled payment programs have an advantage. They understand how to manage episode-based payments and coordinate care across multiple providers.

Rural hospitals and safety net hospitals face bigger challenges. They often have fewer resources to invest in care coordination systems.

Timeline

The CMS TEAM Model launches January 1, 2026. You have roughly two years to get ready. The model runs for five years, ending December 31, 2030. CMS might extend it if the results are good.

Performance gets measured yearly, but payments happen throughout the year based on your spending compared to target amounts.

Start planning now. Two years sounds like a long time, but building partnerships and changing workflows takes time.