The Centers for Medicare & Medicaid Services (CMS) is introducing a new way to pay for specific surgical procedures: Transforming Episode Accountability Model (TEAM). This mandatory model, starting January 1, 2026, will hold hospitals accountable for the cost and quality of care for 30 days after five types of surgeries:
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- Lower extremity joint replacement
- Surgical hip and femur fracture treatment
- Spinal fusion
- Coronary artery bypass graft
- Major bowel procedures
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A Shift from Fee-for-Service
Traditionally, Medicare paid hospitals for each service provided (fee-for-service). TEAM changes this by setting a fixed price for the entire episode of care, incentivizing hospitals to coordinate care efficiently and reduce unnecessary costs. This approach has been in development for decades, and TEAM represents a significant step towards value-based care.
Expected Benefits
- Improved Patient Outcomes: Transforming Episode Accountability Model (TEAM) encourages seamless care transitions, reducing hospital readmissions and promoting long-term health.
- Reduced Costs: Hospitals can potentially save money by optimizing care delivery and minimizing waste.
- Environmental Impact: The program includes an optional initiative to reduce healthcare’s carbon footprint.
How TEAM Works
- Target Prices: CMS sets a target price for each surgery, covering hospital services, post-discharge care (e.g., rehab), and factoring in quality measures.
- Performance-Based Payments: Hospitals exceeding cost savings and quality targets may receive bonus payments from CMS. Conversely, hospitals exceeding target costs may owe CMS.
Considerations for Hospitals
- Financial Analysis: Healthcare accounting firms can help hospitals understand the program’s financial implications, including target price inclusions/exclusions, quality adjustments, and social risk factors.
- ACO Collaboration: TEAM aligns well with Accountable Care Organizations (ACOs), encouraging collaboration among providers for efficient care delivery.
Overall, Transforming Episode Accountability Model (TEAM) represents a major shift towards value-based care in Medicare. By focusing on cost-effective, high-quality care, TEAM has the potential to benefit hospitals, patients, and the environment.
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