In recent years, the U.S. healthcare system has increasingly shifted its focus toward value-based care, moving away from traditional fee-for-service models. One of the most significant steps in this direction is the introduction of the Transforming Episode Accountability Model (TEAM) by the Centers for Medicare & Medicaid Services (CMS). Set to launch on January 1, 2026, and run through December 31, 2030, this innovative model aims to transform the way surgical care is delivered and reimbursed across the country.
What is the TEAM Model?
The Transforming Episode Accountability Model (TEAM) is a mandatory, episode-based alternative payment model that will apply to selected geographic areas across the United States. TEAM is designed to enhance care coordination, improve outcomes, and reduce costs for Medicare beneficiaries undergoing specific surgical procedures.
Unlike traditional fee-for-service models, which pay separately for each service, TEAM provides a single bundled payment for an entire episode of care. The “episode” could be something like a hip replacement, heart bypass surgery, or care for a chronic condition like diabetes for a defined period. This includes the surgical procedure itself and a 30-day post-discharge period, covering all related Medicare Part A and B services. All providers involved in that episode share the payment, and they profit by keeping the costs down. This ensures the delivery of high-quality and coordinated care by avoiding unnecessary services.
Where Will TEAM Be Implemented?
TEAM will be rolled out in selected geographic regions under Core-Based Statistical Areas (CBSAs). Approximately 741 acute care hospitals across 188 markets will be required to participate. The model’s mandatory nature highlights CMS’s commitment to accelerating the adoption of value-based care.
Surgical Procedures Covered Under TEAM
The TEAM model focuses on five high-impact surgical episodes:
- Lower extremity joint replacement (LEJR)
- Surgical hip and femur fracture treatment (SHFFT)
- Spinal fusion
- Coronary artery bypass graft (CABG)
- Major bowel procedures
These episodes were chosen due to their frequency, cost, and potential for quality improvement through better coordination and accountability.
How Does Payment Work?
Hospitals participating in TEAM will receive a target price from CMS for each surgical episode including items and services required after hospital discharge such as follow-up visits or stay in the nursing facility. This target represents the expected total Medicare spending for the episode. Providers are financially accountable for the cost and quality of care delivered within that episode timeframe. This will encourage providers for better quality care under reduced cost.
TEAM also introduces three different risk tracks, allowing hospitals to choose their level of financial risk and reward based on their readiness and capability to manage care efficiently. Track-1 includes lower level of rewards with no downside risk. Track-2 provides rewards for certain participants associated with low risk. Track-3 is with higher level of both rewards and risk.
Each episode will end after 30 days of hospital discharge. Participant providers will continue to bill Medicare FFS (Fee For Service) as usual but will receive target price prior to each performance year. Performance will be assessed by comparing actual FFS spending to the target price along with other quality measures. The quality performance payment from CMS will be paid to the participant providers if the total cost is below the target price. On the other hand, participants may have to repay the amount to the CMS if the actual cost surpass the target price.
The Role of TEAM-Based Care
TEAM isn’t just a payment model; it also reinforces the importance of team-based care delivery. That means effective collaboration among all healthcare professionals involved in a patient’s care—from surgeons and nurses to physical therapists and care managers.
By encouraging better communication and coordination, TEAM-based care ensures patients receive seamless treatment throughout their surgical journey, and better recovery experiences by preventing emergency visits and hospital readmissions, and unnecessary cost.
Hospitals are incentivized to manage resources efficiently to stay within the target price, aligning financial incentives with the delivery of high-quality care.
Benefits of the TEAM Model
The TEAM model is designed to:
- Improve patient outcomes by promoting evidence-based, coordinated care
- Reduce healthcare costs by bundling payments and holding providers accountable
- Encourage collaboration among multidisciplinary care teams
- Support hospitals in transitioning to value-based payment structures
Final Thoughts
The Transforming Episode Accountability Model (TEAM) represents a major milestone in the evolution of value-based healthcare in the United States. By focusing on surgical episodes and enforcing bundled payments, TEAM aims to drive higher quality care at lower costs. As the model rolls out in 2026, hospitals and providers in selected regions will play a crucial role in shaping the future of accountable, patient-centered surgical care.
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