Understanding the CMS Team Model: A Shift in Medicare Payment Reform

Healthcare is getting a major makeover, and the CMS Team Model is leading the charge. Starting January 1, 2026, hospitals across 797 regions will operate under new rules that fundamentally change how Medicare pays for surgical care. Instead of the traditional fee-for-service approach, hospitals will now be accountable for both the cost and quality of care for 30 days after surgery.

What is the CMS Team Model?

The CMS Team Model (Transforming Episode Accountability Model) is a mandatory payment system where hospitals take financial responsibility for surgical episodes. Hospitals receive a target price to cover all costs from surgery through 30 days post-discharge, including follow-up visits and skilled nursing care.

This model affects five major surgical procedures:

• Lower extremity joint replacement
• Surgical hip and femur fracture treatment
• Spinal fusion
• Coronary artery bypass graft
• Major bowel procedures

How Does the Team Model Work?

The team model cms operates through episode-based payments. Hospitals get a predetermined target price for each surgical episode. If actual costs fall below this target, hospitals keep the savings. If costs exceed the target, hospitals must pay the difference.

Each episode begins when a patient undergoes surgery and ends 30 days after hospital discharge. The model includes three participation tracks with different risk levels, giving hospitals flexibility based on their capabilities.

Who Must Participate?

Participation is mandatory for acute care hospitals in selected geographic areas. CMS chose approximately 25% of eligible regions using stratified random sampling. Hospitals currently in BPCI Advanced or CJR models can voluntarily opt in during January 2025.

Safety net hospitals and rural hospitals receive special considerations, including extended glide paths and reduced financial risk options.

What Are the Financial Implications?

The model aims to save Medicare $481 million over five years. Hospitals can earn payments when episode costs stay below target prices, but they face repayment obligations when costs exceed targets.

Quality performance directly affects payments. Hospitals must meet specific quality measures, including readmission rates and patient safety indicators. Poor quality performance can reduce payment rewards or increase repayment amounts.

Key Benefits for Healthcare Providers

The model encourages better care coordination between hospitals and post-acute care providers. Hospitals must now think beyond discharge, focusing on:

• Reducing readmissions
• Improving care transitions
• Connecting patients to primary care
• Coordinating with skilled nursing facilities

What This Means for Patients

Patients should expect more coordinated care throughout their surgical journey. Hospitals will invest in better discharge planning and follow-up care since they're financially responsible for 30-day outcomes.

The model also promotes primary care connections, helping patients establish long-term healthcare relationships beyond their surgical episode.

Preparing for Implementation

Hospitals have until January 2026 to prepare. CMS will provide baseline data and target prices at least one month before each performance year begins. Hospitals must select their participation track and establish data sharing agreements with CMS.

The model requires significant operational changes, from care coordination systems to financial risk management strategies.

Conclusion

The CMS Team Model represents a fundamental shift from volume-based to value-based healthcare payments. By holding hospitals accountable for surgical episode outcomes, this model aims to improve care quality while reducing Medicare spending.

Healthcare organizations need strategic guidance to navigate this transformation successfully. Persivia specializes in helping healthcare providers adapt to value-based care models like TEAM. Our expertise in Medicare payment reform and care coordination strategies positions healthcare organizations for success in this new era of accountability. Partner with Persivia to turn regulatory challenges into competitive advantages.