The Centers for Medicare and Medicaid Services (CMS) and Center for Medicare and Medicaid Innovation (CMMI) recently finalized the Transforming Episode Accountability Model (TEAM). With that rule, more than 700 hospitals were selected for mandatory participation in episodes of care effective in 2026. Financial risk, patient care, and compliance requirements each will change for selected hospitals.
Forvis Mazars has helped hospitals with alternative payment models like TEAM since 2012, building well-established tools and capabilities to help implement and monitor performance. Today, the firm serves as an episodic advisor to the majority of hospitals participating in Medicare voluntary bundles.
“We’ve seen that succeeding in episodes requires different management, different data than hospitals are traditionally accustomed to,” said Michael Wolford, principal at Forvis Mazars. “With this new mandatory model, we can leverage what we’ve learned to help the hundreds of selected hospitals prepare and succeed.”
CMS’ Perspective on TEAM
TEAM furthers CMS’ goal of having 100% of fee-for-service (FFS) beneficiaries receiving care in a value-based model by 2030. It replaces the voluntary Bundled Payment for Care Improvement Advanced (BPCI-A) model, which ends on December 31, 2025, as a vehicle to engage specialists in value-based care. BPCI-A saved Medicare an estimated $465 million in 2021, more than offsetting spending in prior years.1
“Given TEAM’s similar methodologies and growth in the number of covered hospitals, we anticipate further savings for CMS and CMMI,” said Chad Mulvany, director at Forvis Mazars. “Therefore, we expect the model to remain in effect even under a different administration.”
Key Details of the TEAM Model
Beginning January 1, 2026, TEAM is mandatory for hospitals in core-based statistical areas (CBSAs) selected by CMMI to participate. In total, 188 of 803 (23.4%) eligible CBSAs were selected, representing more than 700 hospitals nationwide. BPCI-A and Comprehensive Care for Joint Replacement (CJR) participants who remain in those models until their end date will also be allowed to opt into TEAM.
The model creates a retrospective 30-day bundled payment for five high-volume, procedures—lower extremity joint replacement (LEJR), surgical hip and femur fracture treatment (SHFFT), coronary artery bypass graft (CABG) surgery, spinal fusion, and major bowel procedure—that account for approximately 8% of Medicare discharges (15% of covered charges).2 Two of the bundles—LEJR and spinal fusion—include both inpatient and outpatient procedures, creating site-neutral prices for lower acuity cases.
The model’s target price includes almost all covered Part A and B services that occur from the date of the triggering procedure/admission through 30 days post-discharge/procedure. The target price is based on three prior years of regional spending data, incorporates patient-specific risk adjustment, and includes hospital-specific factors, trend and normalization factors, and a discount factor of either 1.5% (CABG, major bowel) or 2% (LEJR, SHFFT, spinal fusion) to generate CMMI savings.
All participating hospitals will be at-risk for repaying CMS if the actual spending on an episode exceeds the target price at some point during the model. The amount of savings paid to hospitals (or losses repaid to CMS) will be adjusted based on a composite quality score.
How to Prepare for TEAM Bundled Payments
Hospitals required to participate will have approximately 16 months to prepare. According to Stephen Kitterman, director at Forvis Mazars, “The time to prepare is now. Given the breadth of services included and number of people required to operate TEAM, 2026 will be here before we know it.” Successful participants should:
- Evaluate Current Performance: CMMI will not release baseline data to participating hospitals until late 2025, leaving very little time for analysis and planning. By contrast, firms like Forvis Mazars have analyzed Medicare claims data to give participant hospitals actionable, relevant, and detailed insights on financial performance and improvement opportunities. Preparation without this type of all-provider, claims-based analysis may fall short.
- Develop Implementation Plans: Based on current performance, which strategies should each hospital implement? TEAM hospitals will be required to implement new protocols for patient coordination, notification, and information collection. Beyond what TEAM requires, hospitals may pursue dozens of common optional strategies—informed by effective exploration of their current state—to improve performance.
- Engage Through Governance: Create a governance structure that includes and engages each necessary stakeholder in re-engineering care pathways for these procedures based on the data.
Opportunities Abound
TEAM presents an opportunity to align with physicians and post-acute care (PAC) providers to improve patient outcomes, offering potential benefits in acute throughput, surgical supply costs, discharge planning, and more. Perhaps the most significant opportunities for participating hospitals are the penalties avoided and performance-based gains achieved.
For CMMI, the benefit is straightforward: TEAM is expected to net CMS nearly $500 million over the five-year model by collecting back more TEAM penalties from hospitals than it pays out to hospitals in gains. “Our initial research suggests nearly two-thirds of participant hospitals would owe money back to CMS unless they change clinical practices,” said Wolford.
Learn more about TEAM and the opportunities it presents in the webinar from Forvis Mazars, “How to Prepare for CMS’ Transforming Episode Accountability Model.” If your hospital has been selected to participate and you would like to discuss the potential financial impact, reach out to the Healthcare Strategy & Finance team at Forvis Mazars.
1 “Bundled Payments for Care Improvement Advanced (BPCI Advanced) Model Evaluation of Model Year 4 (January 2021–December 2021),” cms.gov, May 29, 2024.
2 “Medicare Inpatient Hospitals - by Provider and Service,” data.cms.gov, 2022.