It’s easy to feel a bit overwhelmed when the Centers for Medicare & Medicaid Services (CMS) rolls out a new initiative, especially one as complex as the Transforming Episode Accountability Model (TEAM). When I first heard about it, my initial thought was, 'Are they trying to make it so complicated that we'll just give up and move to a single-payer system?' It’s a bit of a dramatic thought, I know, but the sheer volume of acronyms and intricate formulas in the documentation can certainly feel that way.
TEAM, set to launch in January 2026, is a mandatory episode-based payment model designed to span five years. It zeroes in on five key procedure categories: lower extremity joint replacement (LEJR), surgical hip/femur fracture treatment (SHFFT), spinal fusion, coronary artery bypass graft (CABG), and major bowel procedures. These aren't minor procedures; they represent a significant chunk of hospital Medicare inpatient volumes nationwide – about 6%, according to Advisory Board’s Daniel Kuzmanovich. What’s surprising, he notes, is how little hospital executives seem to be discussing it.
So, what does this mean for hospitals? Under TEAM, hospitals will be measured against a 'target price' for their fee-for-service expenditures within 30-day episodes. But it’s not just about cost. Quality measures are front and center, including readmissions, patient safety, and, specifically for LEJR episodes, the CMS total hip and knee arthroplasty patient-reported outcome-performance measure (THA/TKA PRO-PM). This PRO-PM requirement is already a reality for many, having become mandatory for inpatient CMS patients in April 2024 as part of the hospital inpatient quality reporting program.
The challenge, particularly for smaller, rural hospitals, is immense. Dr. Michael Meneghini, CEO of the Indiana Joint Replacement Institute and incoming 2025 AAHKS President, voiced this concern. He pointed out the vast range of hospitals included, from tiny critical access facilities to major metropolitan centers. For a rural hospital operating on razor-thin margins, perhaps even at a loss (the average margin for Indiana hospitals in 2023 was -2%), taking on downside risk for readmissions or other quality metrics is a daunting prospect. "I just don't know how a little tiny rural access hospital takes on downside risk if they're operating at a margin that’s 0.2% or if they’re already underwater," he remarked.
What’s the path forward? Dr. Meneghini suggests that these hospitals will likely need significant help. The infrastructure required to manage this kind of risk isn't simple. He drew a parallel to the Comprehensive Care for Joint Replacement (CJR) model, which was mandatory for 13 large markets five years ago. Those hospitals, he explained, had the resources to manage the risk, and the model was successful in driving down costs. But for TEAM, the risk is amplified, especially for smaller markets.
Managing this risk effectively hinges on three critical elements:
- Accurate Cost Accounting: Many hospitals, Dr. Meneghini noted, lack a clear understanding of their true costs. Diving deep into cost management to effectively handle risk requires substantial time, effort, money, and personnel.
- Collecting Patient-Reported Outcome Measures (PROMs): This is where organizations like Force, pioneers in PROM collection, play a crucial role. As mentioned, this is now mandatory for inpatient CMS patients, and many are already leveraging platforms to meet this requirement.
- Analytical Capabilities: Having the right analysts in place to interpret data and manage the complexities of the model is essential. Hospitals in larger markets might already have these resources, but for others, it means hiring new staff or outsourcing.
With TEAM set to begin in January 2026, there are about 16 months on the clock. That’s a tight timeline for many facilities to get ready, to build the necessary infrastructure, and to truly understand the financial and quality implications. It’s a complex landscape, but one that requires proactive engagement and strategic planning to navigate successfully.
