On August 1, 2024, the Centers for Medicare & Medicaid Services (“CMS”) released the Fiscal Year 2025 Hospital Inpatient Prospective Payment System Final Rule (“Final Rule”), finalizing the proposed Transforming Episode Accountability Model (“TEAM”). TEAM is a five-year, mandatory episode-based payment model under which selected acute care hospitals will be responsible for coordinating and improving care for Medicare beneficiaries undergoing certain surgical procedures. TEAM will begin on January 1, 2026. For a more detailed discussion of the original proposed rules for TEAM, please see our previous article here.
Model Design and Episode Components
CMS finalized a number of elements of the proposed rule, including selection of the following five surgical procedures:
- Lower extremity joint replacement
- Surgical hip femur fracture treatment
- Spinal fusion
- Coronary artery bypass graft
- Major bowel procedure
CMS also finalized its proposals related to episode duration and covered services. Each episode will 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 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; and
- Part B drugs and biologicals.
Participation Tracks
Under the Final Rule, CMS extended Track 1 for safety net hospitals to up to three years, allowing such hospitals to remain eligible for Track 1 for Performance Years 1 through 3. For Performance Year 1, any TEAM Participant may choose to participate in Track 1 or Track 3.
CMS finalized the TEAM Participation Tracks as follows:
- Track 1 will have no downside risk and lower levels of reward for the first year, or up to three years for safety net hospitals.
- Track 2 will be associated with lower levels of risk and reward for certain TEAM participants, such as safety net hospitals or rural hospitals, for years 2 through 5.
- Track 3 will be associated with higher levels of risk and reward for years 1 through 5.
Discount Factor
Under the Final Rule, CMS lowered the discount factor to 2% for lower extremity joint replacement, surgical hip/femur fracture treatment and spinal fusion episodes, and to 1.5% for coronary artery bypass graft and major bowel procedure episodes. CMS had originally proposed a discount factor of 3% for all episodes.
Mandatory CBSAs Selected for Participation in TEAM
CMS finalized the Core-Based Statistical Areas (“CBSAs”) for mandatory TEAM participation. A list of the mandatory CBSAs can be found here. CMS is also allowing a one-time voluntary opt-in opportunity for hospitals that are still participating in the Bundled Payments for Care Improvement Advanced model or the Comprehensive Care for Joint Replacement model on the last day of such models.
If you would like additional information about TEAM, 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—outside of an attorney-client relationship—answer specific questions that would be legal advice.
