The discourse around the provision of healthcare has evolved. The conventional fee-for-service model is no longer viable. Additionally, hospitals and providers are always under pressure to demonstrate their worth and excellence. The Transforming Episode Accountability Model can help with that. CMS is making a structural change that has significant ramifications for patient outcomes, operational supervision, financial risk, and care delivery. This is not merely a policy update.
At this time, CMS is not requesting that hospitals opt in. This paradigm, which is required, is changing the standards for accountability, performance, and reporting. If you are a provider, the stakes are high; if you do not meet expectations, you risk financial ruin. Reach the goals, and opportunities will present themselves. Only for those who are ready to monitor, evaluate, and adjust. This page explains the complete concept, including why it is important, how it operates, and what to do next.
What’s Driving the Shift?
Healthcare organizations have historically had difficulty striking a balance between controllable costs and high-quality results. Maintaining long-term value has become practically impossible due to fragmented care and a lack of accountability across the episode lifespan. To refocus healthcare professionals toward full-episode responsibility, CMS created TEAM after realizing this.
The goal is to link compensation to results rather than volume. to cut down on variance, stop wasteful spending, and guarantee that patients receive consistent, high-quality treatment from surgery to the point of discharge.
Core Components of the TEAM Model
TEAM applies to certain hospitals in designated geographic areas and formally starts on January 1, 2026, with a five-year term. The model is defined as follows:
Targeted Surgical Episodes
Episodes that begin with these expensive, inpatient surgical procedures are the responsibility of hospitals:
- Lower extremity joint replacement
- Surgical treatment of hip/femur fractures
- Spinal fusion
- Coronary artery bypass graft
- Major bowel procedures
Every episode covers all Medicare Part A and Part B services and lasts for 30 days after discharge. Hospitals are responsible for reimbursement if the real cost of care is above the benchmark. They could earn a positive reconciliation payout if they fulfill quality targets and spend less than the benchmark.
Quality Metrics
Cost is not the sole factor in performance. CMS assesses hospitals according to:
- Readmission rates
- Patient safety events
- Patient-reported outcomes for THA/TKA procedures
These parameters directly affect payment adjustments by forming a Composite Quality Score (CQS).
Glide Path and Risk Phases
TEAM presents a model of phased risk assumption:
- Years 1-2: Lower-risk stage with restrictions on debt repayment
- Years 3-5: Participating hospitals assume full risk
In order to manage longitudinal patient tracking and outcome reporting, CMS anticipates that providers will assess cost structures, build up infrastructure, and react early.
Risk Adjustment and Equity
TEAM incorporates demographics and socioeconomic determinants of health into its risk-adjustment model. This prevents unjust penalties for providers that treat underprivileged or difficult populations.
Additionally, hospitals are required to submit a health equity strategy detailing their approach to addressing gaps and screening for socioeconomic needs.
Strategic Priorities for Providers
Healthcare companies must make investments in improved infrastructure, care coordination, and performance tracking if they want to thrive under TEAM.
Data and Performance Monitoring
Companies need to estimate risk-adjusted benchmarks, find leaks and inefficiencies, and examine historical cost data.
It is essential to have a robust digital health platform. It makes it possible:
- Monitoring episodes from admission to post-acute care
- Dashboards for real-time performance
- Models of risk stratification
- Integration of quality measures
Care Continuum Integration
Discharge is not the end of care. Hospitals must make a concerted effort to decrease readmissions and episode costs by:
- Facilities for skilled nursing
- Services for home health
- Follow-up outpatient care
It will be crucial to establish communication channels and shared care procedures with post-acute partners.
Patient Engagement and Social Factors
It is possible to prevent problems and readmissions by having a thorough understanding of social requirements, including housing, food security, and transportation.
Hospitals need to:
- Check for health-related socioeconomic factors.
- Make ties to local resources
- Care teams should coordinate to overcome obstacles.
This change brings patient outcomes into the real-world setting of care, outside of the hospital.
What’s at Risk: Financial Penalties and Operational Strain
Hospitals that fall short of TEAM standards run the risk of losing their income and reputation:
- If real expenditure exceeds budgetary goals, reconciliation payments turn into clawbacks.
- Failure to meet quality measures eliminates financial rewards.
- Public reporting facilitates the visibility of operational deficiencies.
More urgently, these fines are linked to compelled involvement. Opting out will not be an option for hospitals
TEAM vs. Other CMS Models
| Feature | TEAM | Other CMS Models |
| Mandatory Participation | Yes | Often voluntary |
| Target Procedures | 5 high-cost surgeries | Broader or disease-specific |
| Episode Duration | Hospitalization + 30 days post-discharge | Varies |
| Quality Measure Weight | High | Moderate to variable |
| Risk Sharing Start | Begins Year 1, ramps up Year 3 | Gradual or provider-selected |
| Equity Focus | Required health equity plan | Optional or limited |
Operational Must-Haves to Prepare
Passive adaptation has limited space. Providers need to be proactive in these crucial areas:
Pre-Implementation Planning
- Model internal finances utilizing TEAM’s framework.
- Examine the results of recent episodes and readmission rates.
- Start discussing packaged collaboration with post-acute partners.
Technology Integration
Data access and quality will make or break TEAM performance. A strong platform for digital health can:
- Automate the mapping of episodes
- Alert groups to outliers based on risk
- Real-time centralization of CQS data
Clinical and Administrative Buy-in
Although wide alignment is essential for success, leadership must spearhead change:
- Surgeons require insight into performance.
- Protocols are necessary for case managers.
- Administrators must get payment education.
Everyone needs to be aware of the relationship between their job and clinical and financial performance.
Tension and Pushback: What Critics Say
Groups such as the American Hospital Association have expressed concerns:
- Provider flexibility is limited by mandatory participation.
- Financial risks are very high, particularly in safety or rural areas. -net hospitals
- Time constraints prevent adequate planning.
These worries are legitimate. In actuality, however, TEAM is progressing. Businesses that put off investing will probably fall behind quickly.
Takeaway
There is no pilot or trial for the Transforming Episode Accountability Model. Hospital reimbursement for some of the most costly treatments in contemporary healthcare is permanently changing. The evaluation of performance will begin in January 2026 and will be based on three criteria: equal access, quality results, and cost mitigation. It is also required.
Hospitals may enhance treatment and maintain their financial viability by embracing change, investing in care coordination, utilizing data, and integrating throughout the continuum. Waiting or ignoring the signs puts one at risk for long-term relevance in addition to margin loss.
Why Partnering Matters
Clinical understanding and technology must coexist. This is where Persivia is useful. Its AI-powered technology integrated digital health platform helps hospitals with risk profiling, real-time episode tracking, and thorough reporting throughout care.
This solution is a great ally in getting hospitals ready for the demands of TEAM because of their dedication to providing them with useful information. Explore more now!
