CMS TEAM Model & Its Impact On Surgical Episode Reimbursement

The CMS TEAM Model fundamentally alters how Medicare pays for surgical care, replacing traditional fee-for-service with episode-based bundled payments starting January 1, 2026. This mandatory program affects 741 hospitals across 76 metropolitan areas, bundling all surgical costs into single payments that cover 30 days post-discharge. Hospitals face financial risk as they become accountable for both costs and quality outcomes during these episodes.

How Does the CMS TEAM Model Change Surgical Reimbursement?

The TEAM Model CMS replaces individual service billing with predetermined episode payments. The bundled payment will cover all items and services covered under Medicare Part A and B during the 30-day episode period.

CMS sets target prices for each surgical episode based on historical data and regional factors. Hospitals receive this fixed amount regardless of the actual services provided during the episode.

TEAM covers these five procedures:

• Coronary artery bypass grafting
• Hip and femur fracture repairs
• Lower extremity joint replacement
• Spinal fusion
• Dialysis shunt procedures

What Are Episode-Based Payments?

Episode-based payments bundle all costs related to a surgical procedure into one payment. Participating hospitals would receive a target price to cover all costs associated with a 30-day episode of care from admission through discharge, plus 30 days.

This includes:

• Hospital facility costs
• Physician services
• Post-acute care
• Readmissions
• Complications

How Are Target Prices Calculated Under the TEAM Model CMS?

CMS calculates target prices using historical Medicare spending data for each procedure type. Hospitals that meet the quality threshold can receive up to a 10% increase in any positive NPRA earned or a reduction of up to 15% in any negative NPRA based on their quality performance.

Target price factors include:

• Regional wage adjustments
• Hospital case mix
• Historical episode costs
• Quality performance scores

CMS updates these prices each year using Medicare cost data and economic factors.

What Financial Risks Do Hospitals Face?

Hospitals lose money when episode costs exceed target prices. A single complicated case can wipe out profits from multiple successful episodes. If hospitals spend less than the target price and meet quality standards, they will receive a payment from Medicare. However, if they spend more than the target price, they will owe Medicare a repayment.

Financial outcomes depend on cost management:

• Under target spending: Shared savings payments
• Over target spending: Repayment obligations to CMS
• Quality failures: Reduced payments or increased penalties

Poor quality scores can eliminate shared savings entirely.

How Do Quality Measures Affect Reimbursement?

The Medicare TEAM Model directly ties payments to quality performance through composite quality scores (CQS). Under the TEAM program, participant performance on quality measures will influence their composite quality score (CQS), which in turn directly affects payment reconciliation at the end of each performance year.

Quality measures include:

• Care coordination metrics
• Patient safety indicators
• Patient-reported outcomes
• Readmission rates
• Complication rates

Perhaps the most unique update in this proposed model is the direct tying of reimbursement to quality measures as reported by patients themselves via PROs. This patient feedback directly impacts hospital payments.

Implementation Challenges

Hospitals will experience the most direct impact. Through the hospitals' required participation in the TEAM model, they will assume financial responsibility for "episodes" and may have to facilitate physician change management and make operational updates as a result.

Major challenges include:

• Care coordination across multiple providers
• Post-discharge monitoring systems
• Quality data collection and reporting
• Physician alignment and engagement
• Technology system integration

How Can Hospitals Profit from TEAM?

Hospitals that control episode costs while maintaining quality earn shared savings. The key is preventing complications and readmissions.

Benefits include:

• Reduced unnecessary services
• Better care coordination
• Improved patient satisfaction
• Shared savings opportunities
• Enhanced quality metrics

Final Call

The CMS TEAM Model eliminates fee-for-service billing for surgical episodes. Hospitals now get paid once per episode, not for each service provided. Preparation is critical. Hospitals need episode tracking systems, care coordination protocols, and quality monitoring tools before January 2026.

Transform your surgical episode management with confidence. 

Persivia offers comprehensive healthcare analytics platforms that help hospitals optimize episode-based care delivery and maximize performance under the CMS TEAM Model. Our solutions provide real-time episode cost tracking, quality measure monitoring, and care coordination insights that drive better outcomes and financial performance.

Don’t navigate episode-based payments alone. Partner with Persivia and turn the CMS TEAM Model into a competitive advantage for your hospital.

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All You Need To Know About The CMS Team Model

Healthcare organizations struggle daily with delivering better care while watching the bottom line. The CMS Team Model marks a major change in Medicare payments, pushing providers away from charging for each service toward being paid for overall value. This mandatory program hits hospitals, doctors, and after-hospital providers who must quickly adapt or lose money.

Behind The CMS Team Model

The Team Model (Transforming Episode Accountability Model) changes how providers get paid for certain surgeries. This mandatory model makes selected hospitals responsible for coordinating care from the operating room through a month after discharge. Financial responsibility now extends outside hospital walls, forcing new working relationships with doctors, nursing homes, home health agencies, and outpatient providers.

Hospitals in the Team Model receive single payments covering entire treatment periods instead of billing for each service. This basic change puts the financial risk on providers who now must control both costs and quality results to stay profitable.

Surgeries Under The Program

The CMS Team Model targets common, expensive surgical procedures where better coordination can make a difference:

• Hip and knee replacements
• Hip fracture surgical treatments
• Back fusion operations
• Heart bypass surgeries
• Major intestinal procedures

These surgeries typically involve multiple providers across different settings, creating numerous handoff points where care often becomes fragmented. The Team Model CMS approach requires active management of these transitions to help patients recover better.

Money Matters That Worry Leaders

Hospital executives have good reason to worry about the financial impacts of the Team Model. The program creates real money risks:

• Hospitals spending too much face payment cuts
• After-hospital providers may get fewer patients if their costs run high
• Patients coming back to the hospital directly hit the bottom line
• Complications push costs beyond what the bundled payment covers

Organizations not ready for these financial changes face serious revenue problems. Successful hospitals build strong data tracking systems to watch spending patterns and find improvement opportunities before penalties hit.

Operational Hurdles Needing Quick Action

Putting the TEAM in place demands fundamental operational changes:

• Care Coordination Staff: New roles focused on managing patient transitions
• Provider Partnership Building: Strategic relationships with good, cost-effective after-hospital providers
• Information Sharing Systems: Technology enabling data flow between organizations
• Patient Support Resources: Tools helping patients actively participate in recovery

Many hospitals lack these capabilities and must build them quickly while keeping normal operations running. This implementation challenge puts significant pressure on both clinical and administrative resources.

Quality Measures Driving Results

The Team model CMS program evaluates performance across several quality areas:

• Complication rates after surgery
• How often do patients return within 30 days
• Patient-reported outcome scores
• Death rates for applicable procedures
• Patient satisfaction ratings

Organizations performing poorly on these measures face payment cuts beyond the cost targets. This dual accountability for both money and quality forces careful balancing between efficiency and patient outcomes.

Winning Approaches That Work

Forward-thinking organizations use several tactics to succeed under the CMS Team Model:

• Standard care paths reducing unwanted variation
• Preferred provider networks based on quality and cost results
• Early spotting of high-risk patients needing extra support
• Remote monitoring extends clinical oversight after discharge
• Regular doctor performance feedback with specific improvement suggestions

These approaches require investment but typically pay off through better clinical outcomes and lower episode spending.

Timeline Creating Pressure

The TEAM follows an aggressive schedule:

• Selection notification period
• Data gathering and baseline setting
• Initial performance period start
• First payment adjustments

This tight timeline leaves little room for planning. Organizations must adapt quickly or face financial consequences affecting their broader operations.

Tech Tools For Team Model Success

Persivia offers complete solutions specifically designed for CMS Team Model participants. Our platform brings together clinical, financial, and operational data to deliver practical insights driving performance improvement. With Persivia, hospitals gain the tools needed to coordinate care effectively, track spending patterns, and spot improvement opportunities before they hurt financial performance.