On April 10, 2024, the Centers for Medicare & Medicaid Services (“CMS”) announced its plan to implement the Transforming Episode Accountability Model (“TEAM”), a new mandatory alternative payment model unveiled as part of the 2025 Hospital Inpatient Prospective Payment System proposed rule. TEAM is an episode-based payment model in which selected acute care hospitals would be responsible for coordinating and improving care for Medicare beneficiaries undergoing certain surgical procedures. Hospitals participating in TEAM will be required to assume responsibility for the cost and quality of surgical episodes beginning on the day of admission or surgery and ending 30 days after the Medicare beneficiary leaves the hospital. TEAM is scheduled to begin on January 1, 2026, and continue for five years, ending on December 31, 2030. Comments on the TEAM proposed rule must be submitted to CMS by 5:00 PM EDT on June 10, 2024.
Model Purpose
TEAM is the latest iteration of episode payment models developed by the Centers for Medicare and Medicaid Innovation (“CMMI”), and in many respects follows the parameters of the mandatory Comprehensive Care for Joint Replacement (“CJR”) model and the voluntary Bundled Payments for Care Improvement Advanced (“BPCI Advanced”) model, two predecessor CMMI models currently set to expire in 2024 and 2025, respectively. TEAM aims to improve cost, quality, and patient experience related to surgical episodes by promoting care coordination across the provider continuum. As was the case with the CJR and BPCI Advanced models, CMS hopes that participation in TEAM provides hospitals with incentives to improve accountability for spending, quality performance and coordination of care across all settings. CMS plans to evaluate the effects of TEAM through (1) comparing a participating hospital’s actual Medicare fee-for-service (“FFS”) spending to a target price established by CMS; and (2) reviewing a participating hospital’s performance on quality measures such as hospital readmissions, patient safety and patient-reported outcomes.
Model Design and Episode Components
CMS proposes including the following five surgical procedures in TEAM:
- Lower extremity joint replacement
- Surgical hip femur fracture treatment
- Spinal fusion
- Coronary artery bypass graft
- Major bowel procedure
Each TEAM episode would begin on the date of the patient’s hospital admission or outpatient procedure and continue for 30 days after the patient leaves the hospital. The 30-day TEAM episode encompasses all services provided to a covered beneficiary, including:
- Physicians’ services, including certain Part B professional services provided within the three days prior to the hospital admission or outpatient procedure
- Inpatient and outpatient hospital services (including hospital readmissions)
- Other inpatient services provided by long-term care hospitals and inpatient psychiatric facilities
- Services of post-acute providers, such as inpatient rehabilitation facilities, skilled nursing facilities, home health agencies, outpatient therapy providers and hospices
- Clinical laboratory services
- Durable medical equipment
- Part B drugs and biologicals
However, the TEAM episodes exclude certain high-dollar items and services unrelated to the TEAM procedure, such as hemophilia clotting factors; low-volume, high-cost drugs and biologicals; and inpatient hospital admissions for oncology, trauma or organ transplants.
CMS proposes three separate participation tracks for TEAM, each with a different level of risk and reward:
- Track 1: No downside risk and lower levels of reward for year 1
- Track 2: Lower levels of risk and reward for certain hospitals, such as safety net hospitals, for years 2 through 5
- Track 3: Higher levels of risk and reward for years 1 through 5
TEAM allows participants to select a one-year glide path to allow participants to ease into a full financial risk. This includes the option to participate in Tracks 1 and 2 of TEAM, which have lower financial risks and rewards as compared to Track 3.
Selection of Participants
Mandatory participation in TEAM will be based on a hospital’s geographic location. Although CMS has not yet identified the relevant geographic locations, all acute care hospitals located within the selected Core-Based Statistical Areas (“CBSAs”) will be required to participate. A CBSA consists of the county or counties associated with at least one core urban area of at least 10,000 individuals, plus adjacent counties having a high degree of social and economic integration with the core as measured through commuting ties. CMS anticipates that approximately 25% of the eligible CBSAs will be selected. CMS proposes to oversample CBSAs that have had limited exposure to CMS’s prior bundled payment models (e.g., CJR and BPCI Advanced), as well as CBSAs with a higher number of safety net hospitals. However, CMS stated in the proposed rule that it does plan to include some CBSAs that have had significant prior exposure to bundled payment models. This stratification will allow CMS to assess how TEAM’s impacts vary by past regional exposure to bundled payment models. A list of eligible CBSAs may be found in the proposed rule.
Health Equity Strategy
CMS hopes to use TEAM to support efforts to promote health equity and ensure all populations can achieve optimal health outcomes through access to quality care. TEAM would offer certain flexibilities designed to reduce financial burdens associated with value-based model participation for safety net hospitals and other hospitals that care for a larger percentage of underserved individuals. This includes offering flexible participation tracks with lower risk/reward structures for safety net hospitals (as discussed above), as well as a target pricing methodology that includes a social risk adjustment to ensure that target prices accurately reflect the additional financial investment needed to care for underserved individuals. In order to address disparities and support continuous quality improvement, CMS also proposes requiring participating hospitals to screen individuals for health-related social needs and to submit health equity plans and report sociodemographic data to CMS.
Additionally, as part of an optional Decarbonization and Resilience Initiative, participating hospitals can voluntarily report greenhouse gas emissions to receive feedback and recognition for their efforts to promote environmental sustainability. Participating hospitals would also have access to technical assistance and learning systems to help enhance organizational sustainability, support care delivery methods that may lower greenhouse gas emissions and identify tools to measure emissions. This initiative is in keeping with a broader trend towards environmentally responsible health care practices, and CMS will likely include similar initiatives in future alternative payment models.
Billing and Reconciliation
CMS will continue paying hospitals and other providers and suppliers for services provided to beneficiaries during a TEAM episode of care according to the usual Medicare FFS payment methodology. At the end of each performance year, CMS will compare the aggregate Medicare FFS expenditures for all items and services included in a TEAM episode against the participant’s target price established by CMS for that episode. CMS will use this calculation to determine whether the participant is eligible to receive an incentive payment from CMS or is required to pay a “repayment amount” to CMS. CMS’s reconciliation calculations will also be tied to the participant’s performance on certain quality measures.
Financial Sharing Arrangements
Similar to the CJR and BPCI Advanced models, TEAM participant hospitals will have the opportunity to enter into written arrangements under which they may share financial upside or downside with other individuals and entities, including physicians, other providers or suppliers and Accountable Care Organizations (“ACOs”) involved in TEAM episodes of care. In the proposed rule, CMS discussed the possibility of issuing fraud and abuse waivers specific to financial sharing arrangements under TEAM, but also indicated that it may rely on existing Stark Law exceptions and anti-kickback safe harbors applicable to CMS-sponsored model arrangements.
Overlap with ACO Participation
Consistent with CMMI’s strategy to promote accountable care and ensure that episodic and longitudinal population-based incentives are not in conflict, TEAM is designed to complement longitudinal care management through policies that align with ACOs and promote cooperation between participants in different alternative payment models. For example, CMS proposes to allow a beneficiary aligned to a Medicare Shared Savings Program (“MSSP”) ACO to also be attributed to an episode in TEAM and proposes to allow any savings generated on an episode in TEAM and any contribution to savings in the MSSP for the ACO to be retained by each respective participant. CMS believes allowing this overlap and allowing both participants to retain savings will foster a more cooperative relationship between accountable care and TEAM participants.
If you would like additional information about TEAM or assistance with submitting comments to CMS, please contact:
- Jennifer Skeels at (317) 977-1497 or jskeels@hallrender.com;
- Scott Strickland at (919) 447-4965 or sstrickland@hallrender.com;
- Regan Tankersley at (317) 977-1445 or rtankersley@hallrender.com;
- Liliann Stoll at (303) 557-2119 or lstoll@hallrender.com; or
- Your primary Hall Render contact.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot give legal advice outside of an attorney-client relationship.
