Preparing for 2026: What Healthcare Providers Should Know About the CMS Team Model

Healthcare providers across 797 regions need to gear up for a major payment shift. Starting January 2026, the Centers for Medicare & Medicaid Services will roll out a mandatory episode-based payment system that changes how hospitals get paid for surgical procedures. What is cms team model exactly? It's a five-year accountability program that bundles payments for entire surgical episodes, making hospitals responsible for both costs and quality outcomes from surgery through recovery.

What Does the CMS TEAM Model Actually Mean?

The Transforming Episode Accountability Model (TEAM) replaces fee-for-service payments with bundled episode payments. Hospitals receive one payment covering the entire surgical episode - from pre-op through post-discharge care.

Cms team model operates differently from traditional Medicare payments. Instead of billing separately for each service, hospitals get paid upfront for the complete episode. If actual costs exceed the target price, hospitals pay the difference. If they spend less while maintaining quality, they keep the savings.

Which Hospitals Must Participate?

TEAM participation is mandatory for hospitals in selected metropolitan areas. CMS identified 797 core-based statistical areas where hospitals must join the program.

This isn't optional like previous bundled payment models. Hospitals in these regions cannot opt out of TEAM participation.

What Surgical Episodes Are Covered?

The model focuses on high-volume surgical procedures where care coordination makes the biggest impact:

• Orthopedic surgeries - joint replacements, spine procedures • Cardiac procedures - bypass surgery, valve replacements
• General surgery - gallbladder removal, hernia repairs • Specialty surgeries - selected procedures based on volume and standardization

How Should Hospitals Prepare Right Now?

Start with data analysis. Review your current performance on these surgical episodes. Look at historical costs, readmission rates, and length of stay patterns.

Build post-acute partnerships. Since episodes extend beyond hospital discharge, establish relationships with skilled nursing facilities, home health agencies, and rehabilitation centers.

Assess your care coordination systems. TEAM requires seamless communication between surgical teams, discharge planners, and post-acute providers.

What Are the Key Deadlines?

CMS will release baseline data to participating hospitals in late 2025. This gives hospitals roughly 17 months to prepare before the January 2026 start date.

2024-2025: Assessment and planning phase Late 2025: Baseline data release from CMS January 2026: TEAM model implementation begins

What Financial Risks Should Hospitals Expect?

Hospitals face both upside and downside financial risk. Poor performance means paying back money to Medicare. Strong performance allows hospitals to keep savings from efficient care delivery.

The model includes quality measures focusing on patient safety, care coordination, and patient-reported outcomes. Hospitals must meet quality thresholds to earn shared savings.

How Will Success Be Measured?

TEAM uses a combination of cost and quality metrics:

• Cost performance - actual episode costs versus target prices 

• Quality measures - patient safety indicators, readmission rates 

• Patient outcomes - functional improvement, patient satisfaction 

• Care coordination - communication between providers’

Conclusion

The CMS TEAM model represents healthcare's shift toward value-based care. Hospitals that start preparing now will be better positioned to succeed when mandatory participation begins in 2026. Focus on data analysis, care coordination, and post-acute partnerships to build a foundation for episode-based success.

Ready to navigate the complexities of healthcare transformation? Persivia helps healthcare organizations prepare for value-based care models like TEAM through strategic planning, data analytics, and operational optimization. Our healthcare experts understand the nuances of episode-based payments and can guide your organization through successful implementation. Partner with us to turn regulatory challenges into competitive advantages.