In a healthcare system already stretched thin by rising costs, staff burnout, and fragmented post-acute care, the Centers for Medicare & Medicaid Services (CMS) is upping the ante.
Beginning January 1, 2026, the Transforming Episode Accountability Model (TEAM) will become mandatory for hospitals in 797 core-based statistical areas (CBSAs) across the U.S.
This isn’t another pilot or voluntary alternative payment model. It’s the latest in a series of CMS efforts to tie reimbursement to value. This time hospitals and their care partners will be held accountable for the total cost and quality of care throughout an episode.
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Despite its scope and implications, TEAM has flown somewhat under the radar. But with 2026 just a few short months away, now is the time for education, planning, and partnership.
What Is the TEAM Model?
TEAM is a five-year mandatory bundled payment model focused on five surgical episodes:
- Lower extremity joint replacement (LEJR)
- Surgical hip and femur fracture treatment
- Spinal fusion
- Coronary artery bypass graft (CABG)
- Major bowel procedures
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Hospitals in selected CBSAs will be held financially responsible for all Medicare Part A and B costs associated with these procedures – from the initial hospital stay through 30 days post-discharge. That includes skilled nursing, rehab, home health, physician visits, and readmissions.
Depending on the participation track, hospitals may face up to 20% downside risk based on whether their total episode spending exceeds CMS’s target price and how they perform on defined quality measures.
Why TEAM matters
Many hospitals have experience with bundles like BPCI Advanced and CJR, but TEAM adds complexity by tightening the timeline and deepening accountability. It also introduces new expectations around primary care referrals, equity reporting, and post-discharge care coordination.
Hospitals that don’t prepare risk falling behind – not only financially, but operationally and clinically. Fortunately, there are clear actions health systems can take now to set themselves up for success.
1. Understand your episode risk
Hospitals should begin by analyzing their historical performance across the five TEAM episodes. Which procedures drive the most post-acute spend? Where are readmissions or complications highest? What’s your baseline for patient-reported outcomes?
Hospitals that participated in BPCI-A or CJR may already have this data. Others will need to rely on internal claims analysis or work with external partners to simulate potential gains and losses under TEAM’s pricing model.
Understanding how your performance compares to national benchmarks (and how quality scores are normalized) is critical for forecasting financial exposure.
2. Map your post-acute network
One of TEAM’s central aims is reducing post-acute fragmentation, particularly in the transition from hospital to home. Hospitals must get a better handle on what happens after discharge.
This means mapping your referral patterns, assessing outcomes across post-acute providers, and identifying where the biggest gaps exist. Which SNFs, home health agencies, or rehab facilities are consistently delivering quality outcomes? Which ones drive avoidable utilization or readmissions?
Consider establishing preferred provider relationships that include data sharing and outcome expectations. In short, treat post-acute partners less like vendors and more like extensions of your care team.
3. Build (or buy) episode-level visibility
You can’t manage what you can’t see. Success under TEAM will depend on hospitals’ ability to monitor patient progress in real time – through surgery, discharge, and recovery.
Hospitals should prioritize episode tracking infrastructure that pulls together EHR data, claims activity, and real-time patient interactions. This includes the ability to flag risk factors, prompt care interventions, and spot delays or deviations from care pathways.
It’s also important to note that TEAM isn’t just about cost containment. It’s about quality.
Your system should capture and report on TEAM’s core quality metrics, including readmission rates, patient safety indicators, and patient-reported outcomes for LEJR episodes.
4. Align and train your care teams
TEAM introduces new workflows and accountability standards that extend beyond the hospital walls. Clinical and administrative teams alike must understand:
- The scope and implications of TEAM
- Their role in documenting and delivering high-quality care throughout the episode
- How primary care referrals and care coordination affect reimbursement
Hospitals should also prepare discharge planners, case managers, and navigators for more active roles in managing patients through care transitions.
5. Don’t wait to engage partners
Finally, while the first performance year includes an upside-only track for many hospitals, that cushion will fade quickly. Health systems that wait until late 2025 or early 2026 to implement changes risk missing the opportunity to course-correct.
Whether you partner with care coordination vendors and/or integrated post-acute networks, look for solutions that enhance your internal capabilities.
Your goal should be to create a connected, patient-centric approach that spans clinical, financial, and operational needs.
The future of payment reform
CMS has made it clear: payment reform is here to stay. TEAM is a signal that bundled care is no longer a test bed.
For hospitals and health systems, the challenge is steep, but so is the opportunity. TEAM offers a framework to deliver more coordinated, cost-effective, and patient-focused care. Those who prepare now will be far better positioned to thrive in a value-based future.
If you haven’t started your readiness planning, now is the time. TEAM is coming. Will you be ready?
Photo: gustavofrazao, Getty Images
Kyle Cooksey is Chief Executive Officer of Deacon Health, leading the company’s growth as a value-based care platform focused on specialty care cost containment and improved patient outcomes. With over two decades of healthcare experience, Kyle is a seasoned executive known for driving innovation in high-cost, high-need areas. He specializes in aligning operational strategies with customer needs to deliver measurable results. At Deacon, he is scaling a proven, human-centered navigation model to meet the expanding demand for specialty value-based care solutions.
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