Transforming Episode Accountability Model (TEAM): A New Era in Healthcare Financial Management
The Centers for Medicare and Medicaid Services (CMS) finalized a 5-year mandatory bundle payment model called Transforming Episode Accountability Model (TEAM), aimed to address fragmented care experienced by Medicare beneficiaries pre/post-surgery, enhance care coordination, patient transitions, and reduce avoidable readmissions with potential to save $705 million over five years.
Timeline and Scope
- Duration: January 2026 - December 2030
- Coverage: Hospitals selected to participate are mandated to join
Bundles and Costs
Participating hospitals receive regional target prices in late 2025 to cover all costs for a 30-day episode of care for the following bundles:
| Bundle Name | Average National Cost | Number of National Episodes | MS-DRGs and/or HCPCS codes* |
| Coronary Artery Bypass Graft Surgery (CABG) | $48,905 | 28,088 | MS-DRG 231, 232, 233, 234, 235, 236 |
| Lower Extremity Joint Replacement (LEJR) | $21,063 | 215,957 | MS-DRG 469, 470, 521, 522 HCPCS 27447, 27130, 27702 |
| Surgical Hip and Femur Fracture Treatment (SHFFT) | $35,501 | 75,254 | MS-DRG 480, 481, 482 |
| Spinal Fusion (non-Cervical) | $46,326 | 65,968 | MS-DRG 402, 426-430, 447, 448, 450, 451, 471-473 HCPCS 22551, 22554, 22612, 22630, 22633 |
| Major Bowel Procedure | $29,184 | 59,983 | MS-DRG 329, 330, 331 |
* Note: Ambulatory Surgery Centers (ASCs) will not initiate an episode.
Accountability and Performance
Hospitals must ensure coordinated, high-quality care during the procedure and 30-days post-discharge. Providers will bill Medicare as usual, with annual reconciliation of actual costs against the target price. Bonuses or penalties will be applied based on performance.
Additional Program Elements
- Participation Tracks: The program offers graduated risk through different participation tracks to accommodate varying levels of risk and reward.
- Incentive Sharing: Participants can share incentives with physicians and providers.
- Quarterly Deliverables: Hospitals must provide updates to Medicare.
- Primary Care Referrals: Required to support long-term health outcomes.
- Health Equity Plans (HEP) and Environmental Reporting: Voluntary submission of HEP and greenhouse gas metrics.
Case Study and Preparation
Hospitals will receive historical spend information and target prices in late 2025. For example, a hospital's Lower Extremity Joint Replacement 30-day bundle may reveal significant cost insights:
| Facility Type | Cost/Episode Hospital | Cost/Episode Regional |
| All | $23,409 | $17,504 |
| Anchor Inpatient | $13,641 | $13,643 |
| Non-Anchor Inpatient | $1,099 | $1,084 |
| Skilled Nursing Facility | $8,206 | $1,896 |
| Home Health Agency | $382 | $674 |
| Outpatient | $81 | $207 |
Future Implications
Successful bundles will position hospitals for future success if CMS mandates this program for all hospitals, adds more bundles, or if hospitals pursue commercial and/or Medicaid bundle programs with a goal to manage the total cost of care while maintaining optimal quality and outcomes.
Request Your Complimentary Hospital Assessment
BDO has managed CMS bundle programs since 2014. We evaluate opportunities, redesign care plans, monitor costs, and implement improvements. To receive a complimentary assessment of your hospital’s historical spending and utilization, along with a comparison to regional benchmarks and identification of improvement opportunities, contact us and provide your 6-digit Medicare CCN#.
SHARE