CMS Proposes Mandatory Payment Model for 5 Types of Surgical Procedures

The Centers for Medicare and Medicaid Services (CMS) announced the Transforming Episode Accountability Model (TEAM) on April 10, 2024. This proposed mandatory model will provide episode-based payments for five types of surgical procedures for five years.

TEAM aims to hold hospitals accountable for the quality, cost, and outcomes of care for Medicare beneficiaries undergoing certain high-cost and high-volume surgical procedures in both inpatient and outpatient settings. Acute care facilities will be responsible for the total cost of care during and for 30 days following the procedure.

TEAM participants will be expected to coordinate the patient’s care by referring patients to primary care providers, improving patient care transitions, and reducing avoidable readmissions. This will help ensure better and more equitable outcomes for all patients by decreasing fragmentation of care, as well as reducing duplicative use of resources and avoidable utilization of services.

CMS is soliciting feedback on the proposed fiscal year (FY) 2025 Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital Prospective Payment System (LTCH PPS) rule, which includes TEAM.

Model Requirements and Participation

CMS will determine which acute care hospitals will participate in the model based on selected geographic regions, Core-Based Statistical Areas (CBSA), from across the United States. Hospitals located within the selected CBSAs will be required to participate in TEAM. The model will run from January 1, 2026, through December 31, 2030.

The following surgical procedures will initiate an episode included in the model:

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

TEAM participants will be responsible for ensuring any Medicare fee-for-service (FFS) beneficiaries who undergo the above procedures receive coordinated care across all care settings, and coordinated communication with the patient and the family. An episode can include multiple types and settings of care:

  • Skilled nursing facilities
  • Outpatient therapy services
  • Home health services
  • Medications
  • Durable medical equipment
  • Hospice
  • Clinical laboratory services

The hospital will assume responsibility for the cost and quality of care across these settings through the first 30 days after the Medicare beneficiary leaves the hospital.

Per the FAQ, TEAM won’t overlap with similar existing CMS models such as the Comprehensive Care for Joint Replacement (CJR) Model and the Bundled Payments for Care Improvement Advanced (BPCI-A) Model, as these will end before TEAM’s January 2026 start date.

TEAM would allow overlap with most existing CMS alternative payment models, including advanced primary care models and accountable care organization (ACO) initiatives.

Model Approach

Participating hospitals will continue to bill Medicare FFS as usual, but CMS would determine target prices for included episodes prior to each performance year. These target prices will be based on all non-excluded Medicare Parts A and B items and services included in an episode, and be risk-adjusted based on beneficiary-level factors.

The target pricing methodology will include a social risk adjustment to ensure target prices properly reflect the additional financial investment needed to care for underserved individuals.

The target price will also include a 3% discount, meaning that participants need to exceed this minimum savings rate to earn a payment from CMS.

Participants will be assessed by comparing the total Medicare FFS spending for the episode to their target price, as well as performance on three quality measures:

  • Hybrid Hospital-Wide Readmission Measure
  • CMS Patient Safety and Adverse Events Composite Measure for all episodes
  • Risk-Standardized Patient-Reported Outcomes Following Elective Primary Total Hip and/or Total Knee Arthroplasty

Hospitals may earn a payment from CMS, subject to a quality performance adjustment, if the total Medicare costs for the episode are below the target price. Conversely, hospitals may owe CMS a repayment, depending on the quality performance adjustment, if the total Medicare costs for the episode are above the target price.

Currently, the proposed TEAM design will have three tracks, with varying levels of risk and reward:

  • Track 1. No downside risk and lower levels of reward: +10% stop-gain limit for the first year.
  • Track 2. Associated with lower levels of risk: -10% stop-loss and reward +10% stop-gain for certain hospitals, such as safety net hospitals, for years two through five.
  • Track 3. Associated with higher levels of risk: -20% stop-loss and reward +20% stop-gain for years one through five.

The model will offer some flexibility to hospitals that see a higher proportion of underserved individuals, such as safety net hospitals, by reducing the financial burden associated with value-based model participation. This includes the option to participate in Tracks 1 and 2 of TEAM, which have lower financial risks and rewards as compared to Track 3.

TEAM participants in Tracks 2 and 3 that attest to meeting the Certified Electronic Health Record Technology (CEHRT) criteria may qualify as an Advanced Alternative Payment Model (APM).

Health Equity Requirements

TEAM participants will be required to submit health equity plans and report sociodemographic data to CMS. Participants will also be required to screen individuals for health-related social needs.

Climate Change Reporting Option

Additionally, TEAM will support CMS and the Department of Health and Human Services (HHS) efforts to bolster health system climate resilience and sustainability by giving participating hospitals the option to voluntarily report metrics related to greenhouse gas emissions.

CMS will provide individualized feedback reports as well as public recognition of participation. Participating hospitals will have access to technical assistance and learning systems to help enhance organizational sustainability, support care delivery methods that may lower greenhouse gas emissions, and identify tools to measure emissions.

Next Steps

If finalized, TEAM will be a mandatory payment model, with impacts on acute care hospitals as well as primary care and other Medicare-enrolled providers. If your region is selected to participate, it will be important to understand your organization’s role in providing care to Medicare patients—during and after surgical procedures—and how you can integrate as a care team to provide high-value care.

CMS has opened a 60-day comment period on the FY 2025 IPPS/LTCH PPS proposed payment rule, including the proposed TEAM model, and expects to release a final rule on this later this summer.

You can submit comments electronically by navigating to and searching for CMS-1808-P by June 10, 2024. Stay tuned for the final rule confirming the details of the TEAM model, including the selected geographic regions.

We’re Here to Help

For guidance in understanding the TEAM model, financial projections, and strategic, operational, and compliance planning help, contact your Moss Adams professional.

Contact Georgia Green, Senior Manager, at or (916) 503-8251.

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