Healthcare leaders face unprecedented changes as CMS prepares to launch the CMS TEAM Model in January 2026. This mandatory payment model will fundamentally reshape how hospitals coordinate care and manage costs for Medicare beneficiaries undergoing surgical procedures. Healthcare executives must understand the TEAM Model CMS requirements now to prepare their organizations for successful implementation. The Transforming Episodic Accountability Model TEAM represents a significant shift toward episode-based payments that will affect hundreds of hospitals across 188 geographic regions.
What is the CMS TEAM Model?
The TEAM Model is a five-year mandatory episode-based payment model starting January 1, 2026. TEAM will be a five-year, mandatory episode-based payment model that will start in January 2026. Under this model, selected acute care hospitals coordinate care for Medicare beneficiaries undergoing specific surgical procedures and assume financial responsibility for both costs and quality outcomes.
What is CMS TEAM Model in simple terms? Well, it’s a bundled payment system where hospitals receive a fixed payment for an entire episode of care, from surgery through 30 days post-discharge. The model covers payment for episodes of care initiated when a patient is admitted to a hospital or undergoes a qualified operation in the outpatient setting and extends 30 days after discharge.
Key Features of the TEAM Model:
- Episode-based payments covering surgery plus 30 days post-discharge
- Mandatory participation for hospitals in selected geographic areas
- Focus on care coordination between primary and specialty providers
- Quality metrics tied to financial performance
- Health equity requirements and social needs screening
Which Hospitals Must Participate in the Medicare TEAM Model?
Hospital participation in the Medicare TEAM Model is mandatory for acute care facilities in designated Core-Based Statistical Areas (CBSAs). The rule covers 188 geographic regions, or nearly one-quarter of all Core-Based Statistical Areas (CBSAs)
CMS selects hospitals based on geographic regions rather than individual facility characteristics. Acute care hospitals within the chosen CBSAs will be required to participate in the model, with limited exceptions. Hospitals that previously participated in BPCI Advanced and CJR models can voluntarily opt into TEAM.
Hospital Selection Criteria:
- Located in one of 188 designated CBSAs
- Acute care facility status
- Performs covered surgical procedures
- Meets CMS safety and quality standards
Surgical Procedures TEAM Model Covers
The TEAM Model CMS covers five specific surgical procedures that generate significant Medicare costs and complications. These procedures were selected based on volume, cost variability, and potential for improved coordination.
Covered Procedures Include:
- Lower extremity joint replacements (LEJR)
- Surgical hip and femur fracture treatments
- Spinal fusion procedures
- Coronary artery bypass graft (CABG)
- Major bowel procedures
Each procedure has distinct episode definitions and risk adjustments. Episodes are identified using Medicare Severity Diagnosis-Related Groups (MS-DRGs) for inpatient procedures and Healthcare Common Procedure Coding System (HCPCS) codes for outpatient procedures. Hospitals must coordinate all Medicare Part A and B services during the episode period, including post-acute care services.
How Does TEAM Model Payment Work?
The TEAM Model uses target prices based on historical spending for each procedure type. The target price calculation follows a complex methodology starting with benchmark prices for specific DRG/HCPCS episode types in the census region, based on a three-year baseline.
Payment Structure:
- Target prices set using regional benchmark data with risk adjustments
- CMS discount factors: 1.5% for CABG and major bowel procedures, 2.0% for LEJR, SHFFT, and spinal fusion
- Site-neutral targets for certain HCPCS/DRG combinations
- Risk adjustments for patient complexity, hospital bed size, and safety net status
- Shared savings when actual costs fall below targets
- Shared losses when costs exceed targets
- Quality performance affects final reconciliation amounts through Composite Quality Score (CQS)
The financial reconciliation process directly links quality performance to payment outcomes, ensuring hospitals focus on both cost reduction and quality improvement.
What Are the 3 TEAM Model Tracks?
The TEAM Model CMS offers three participation tracks with different risk levels and potential rewards. TEAM participants are required to notify CMS of their track selection prior to the start of Performance Year 1 on January 1, 2026.
Track Options:
- Track 1: Lower risk, lower reward potential with limited downside
- Track 2: Moderate risk sharing with balanced upside and downside
- Track 3: Higher risk, higher reward with significant shared savings potential
Safety net hospitals receive special considerations and may qualify for different track requirements based on their patient populations and financial status.
Key Implementation Timeline for 2025
Healthcare leaders must complete several preparation steps before the January 2026 launch date. CMS will provide additional guidance throughout 2025 to help hospitals prepare.
2025 Preparation Milestones:
- Q1 2025: Initial hospital notifications and eligibility confirmations
- Q2 2025: Track selection guidance and safety net determinations
- Q3 2025: Health equity plan development requirements
- Q4 2025: Final track selections and system testing
CMS will provide TEAM participants with additional information about the track selection process and deadline, as well as safety net hospital status, in 2025.
Care Coordination Requirements
The Transforming Episodic Accountability Model TEAM emphasizes coordination between primary care and specialty providers. hospitals would be responsible for coordinating the care of Medicare beneficiaries who undergo certain surgical procedures, from the time of surgery until 30 days after the patient leaves the hospital.
Coordination Elements:
- Pre-operative optimization and planning
- Inpatient surgical care management
- Post-acute care transitions
- 30-day follow-up and monitoring
- Readmission prevention strategies
The 30-day post-hospitalization period requires fast-tracked care coordination and advanced healthcare analytics tools to identify high-risk patients.
Health Equity and Social Needs Requirements
The Transforming Episodic Accountability Model TEAM includes comprehensive health equity requirements that reflect CMS’s commitment to addressing healthcare disparities. All participants must screen each beneficiary for at least four health-related social needs (HRSNs).
Equity Requirements:
- Screen for food insecurity, housing instability, transportation needs, and utilities difficulties
- Develop and submit voluntary health equity plans
- Report demographic data including race, ethnicity, language, disability status
- Implement interventions to address identified social needs
- Track outcomes across different patient populations
The model emphasizes improving health equity and access to high-quality care for people in underserved areas, ensuring that value-based care initiatives benefit all patient populations equitably.
Quality Metrics and Performance Measures
Quality performance directly impacts financial reconciliation under the TEAM model through the Composite Quality Score (CQS). Hospitals must meet specific quality thresholds to receive full shared savings payments.
Quality Measures Include:
- Hybrid All-Cause Readmission Measure
- CMS Patient Safety Indicator 90 (PSI-90)
- Lower Extremity Joint Replacement Patient-Reported Outcome-Based Performance Measure
- Hospital Harm and Failure to Rescue Measures (beginning Performance Year 2)
The CQS combines these measures, weighted by episode volume, to determine quality performance. Poor quality performance can reduce shared savings or increase shared losses, making quality improvement essential for financial success under the model.
Technology and Data Requirements
Successful TEAM implementation requires robust technology infrastructure for care coordination and data reporting. Hospitals need systems that can track patients across the entire episode continuum.
Technology Needs:
- Electronic health record integration
- Care coordination platforms
- Population health analytics
- Quality reporting systems
- Financial tracking capabilities
Advanced analytics help identify high-risk patients and optimize care pathways to improve outcomes while controlling costs.
Financial Impact and Risk Management
The TEAM Model creates new financial risks and opportunities for participating hospitals. Leaders must develop strategies to manage both clinical and financial performance.
Risk Management Strategies:
- Develop episode-based cost accounting
- Implement care pathway standardization
- Create post-acute care partnerships
- Establish quality improvement programs
- Build financial monitoring systems
Understanding patient complexity and risk factors helps hospitals predict episode costs and optimize resource allocation.
Preparing Your Organization for Success
Healthcare leaders should begin preparation immediately, even though implementation starts in 2026. Early preparation provides competitive advantages and reduces implementation risks.
Preparation Steps:
- Assess current surgical volumes and outcomes
- Evaluate care coordination capabilities
- Review post-acute care partnerships
- Develop quality improvement initiatives
- Create cross-functional TEAM implementation teams
If successful, the model could establish “managing episodes as a standard practice in Traditional Medicare” making early preparation crucial for long-term success.
Post-Acute Care Partnership Strategy
Successful TEAM performance requires strong relationships with post-acute care providers including skilled nursing facilities, home health agencies, and rehabilitation centers.
Partnership Elements:
- Standardized discharge protocols
- Shared quality metrics
- Coordinated care transitions
- Real-time communication systems
- Outcome tracking across settings
Building these partnerships takes time, making 2025 preparation essential for 2026 success.
Takeaway
The CMS TEAM Model represents a fundamental shift in Medicare payment that will reshape healthcare delivery for surgical episodes. Healthcare leaders must act now to prepare their organizations for this mandatory model launching in January 2026. Success requires careful planning, strong care coordination, robust technology infrastructure, and strategic partnerships across the care continuum.
Organizations that begin preparation early will be better positioned to manage the financial risks while capturing the quality and efficiency opportunities the TEAM model creates. The next 12 months are critical for building the foundation needed for long-term success under episode-based payment models.
About Persivia
Persivia CareSpace® platform offers the comprehensive AI-driven technology solutions healthcare leaders need to excel in the CMS TEAM Model. Our proven track record includes helping Healthcare Organizations achieve $17 million in savings with a 15% reduction in readmissions and 7% reduction in skilled nursing facility length of stay across ~200 episodes.