Cut through the noise, find the signal: Intelligence for serious healthcare leaders
Analysis updated November 9, 2026
The Transforming Episode Accountability Model (TEAM) is a mandatory, episode-based payment model administered by the CMS Innovation Center (CMMI) under the authority of Section 1115A of the Social Security Act. TEAM holds acute care hospitals financially accountable for the total cost and quality of care delivered to Original Medicare fee-for-service beneficiaries undergoing one of five high-expenditure, high-volume surgical procedures — from the moment of hospitalization or outpatient procedure through 30 days post-discharge.
The five surgical episode categories are:
TEAM's core diagnosis of market failure is well-grounded: under traditional fee-for-service (FFS) payment, providers bill independently for each service and procedure, creating structural incentives for fragmented care, duplicated resource utilization, and avoidable hospitalizations. Surgical patients are particularly vulnerable — care coordination gaps during the 30-day post-discharge window drive complications, readmissions, and unnecessary emergency department utilization, all at significant cost to Medicare. TEAM addresses this by collapsing the economic accountability for all Medicare Parts A and B items and services across the full episode window into a single target price borne by the acute care hospital.
TEAM represents the most consequential episode-based mandatory model since the Comprehensive Care for Joint Replacement (CJR) model, and in structural scope, it exceeds CJR significantly — covering five procedure categories across the full national CBSA landscape rather than a single procedure type. With 716 acute care hospitals currently enrolled and operating across the United States, TEAM is not a pilot; it is a system-wide test of whether mandatory episode accountability at the hospital level can generate durable savings and quality improvement in surgical care.
Critically, TEAM is designed to function as a complement to longitudinal ACO infrastructure rather than a competing accountability structure. CMS explicitly permits beneficiary dual-enrollment: an Original Medicare beneficiary aligned to an ACO may simultaneously be included in a TEAM episode if they receive a qualifying surgery at a TEAM participant hospital. This design choice — refusing to force a zero-sum choice between episode and longitudinal accountability — signals that CMMI views TEAM as a node in a broader value-based care ecosystem, not a standalone program. Hospitals that are TEAM participants may also participate in the AHEAD Model, reinforcing integration with population health infrastructure.
The primary care referral requirement embedded in TEAM's discharge planning mandate further reflects this longitudinal orientation. TEAM hospitals are required to refer every TEAM beneficiary to an established supplier of primary care services at or before discharge, maintaining beneficiary freedom of choice. This provision directly advances CMMI's goal of creating accountable care relationships that persist beyond the 30-day episode window.
The scope of included services within each episode is comprehensive: physician services, inpatient hospital stays (including readmissions), inpatient rehabilitation facility (IRF) services, long-term care hospital (LTCH) services, skilled nursing facility (SNF) services, home health agency (HHA) services, outpatient therapy, durable medical equipment (DME), clinical laboratory services, hospice services, and Part B drugs and biologicals (with enumerated exclusions for high-cost/low-volume drugs, hemophilia clotting factors, new technology add-on payments, and select unrelated inpatient admissions). This breadth means that hospital performance under TEAM is a direct function of the quality of care coordination across the entire post-acute ecosystem — making post-acute care provider relationships a core strategic asset for participating hospitals.
TEAM was finalized by CMS under the Biden administration in the FY 2025 IPPS Final Rule (August 2024) and represents a significant exercise of mandatory model authority. The model launched on January 1, 2026 — during the first year of the Trump administration — and CMS under Administrator Dr. Mehmet Oz and CMMI Director Abe Sutton has continued the model, with the FY 2027 IPPS Final Rule (published July 31, 2026) including updated TEAM policies. The model page was last modified November 6, 2026, and participant-facing documents (overview slides, the Custom Export Tool user guide, the SNF and telehealth waiver billing fact sheets) were updated through October–November 2026, indicating active model management under the current administration.
Mandatory model authority is a politically sensitive instrument. The Trump administration's posture toward CMMI has been a subject of significant market attention, particularly given DOGE-driven scrutiny of federal health programs. However, TEAM's continued operation, the issuance of a FY 2027 IPPS update to the model, and the release of PY2 preliminary target prices in November 2026 collectively indicate that TEAM is not among the models facing operational disruption under the current administration. Hospital executives should interpret continued regulatory engagement with TEAM as a signal of durable model commitment, though the landscape warrants ongoing monitoring.
TEAM has three structural implications for the broader healthcare market that extend well beyond the 716 currently enrolled hospitals.
First, TEAM generates a mandatory market test of episode-based accountability across a heterogeneous hospital landscape — including safety net hospitals, rural hospitals, sole community hospitals, and large academic medical centers — that CMMI's voluntary models were structurally unable to produce. The evaluation methodology, which uses regression and multivariate methods appropriate to stratified randomized experiments, is designed to generate evidence sufficient to inform the HHS Secretary's decision regarding potential expansion of episode-based payment beyond CMMI authority. CFOs and health system strategists should assume that TEAM performance data will directly inform future mandatory payment policy.
Second, TEAM restructures the financial relationship between hospitals and their post-acute care networks. Because SNF costs, IRF costs, home health costs, and physician follow-up costs are all included in the episode, TEAM participant hospitals bear direct financial exposure to PAC provider efficiency. This will accelerate preferred PAC provider networks, gainsharing arrangements with high-performing PAC partners, and data-driven SNF and home health tiering based on readmission and episode cost performance.
Third, the SNF 3-Day Rule Waiver and Telehealth Waiver embedded in TEAM create significant care delivery optionality. Hospitals can now discharge surgical patients directly to qualified SNFs (rated three or more stars for at least 7 of the most recent 12 months on the CMS Five-Star Quality Rating System) without meeting the standard three-day inpatient stay requirement — including to swing bed providers (which are not subject to the star rating requirement). The telehealth waiver eliminates geographic and originating site requirements for the 30-day post-episode window, enabling home-based follow-up for rural and underserved patients.
Mandatory participants are acute care hospitals paid under both the Inpatient Prospective Payment System (IPPS) and Outpatient Prospective Payment System (OPPS) with a CMS Certification Number (CCN) primary address located in one of the selected Core-Based Statistical Areas (CBSAs) published in the FY 2025 IPPS Final Rule. Indian Health Service (IHS) and tribal hospitals are explicitly excluded. Maryland hospitals are excluded from TEAM participation. Hospitals in selected CBSAs that open or newly qualify after December 31, 2024 must participate after a minimum one-year deferment period.
Voluntary opt-in was available to two discrete hospital populations: (1) hospitals that participated in the CJR Model through its last performance year (December 31, 2024), and (2) hospitals participating in BPCI Advanced (either as participant or downstream episode initiator) through the last day of its last performance period (December 31, 2025). The voluntary participation election period ran from January 1, 2025 through January 31, 2025, requiring submission of a written voluntary participation election letter.
Beneficiary inclusion criteria (per 42 CFR §512.535(a)) require that the beneficiary: (1) be enrolled in Medicare Parts A and B; (2) not be eligible for Medicare based on end-stage renal disease; (3) not be enrolled in any managed care plan including Medicare Advantage; (4) not be covered under a United Mine Workers of America health plan; and (5) have Medicare as their primary payer. Episodes are canceled upon beneficiary death during the anchor stay, loss of inclusion criteria eligibility, or qualification for the extreme and uncontrollable circumstances policy (requiring both a federal emergency declaration under Section 1135 of the Act and a Stafford Act major/emergency disaster declaration for the hospital's county, parish, or tribal government, with anchor admission occurring during or within 30 days before the emergency period).
TEAM and CJR-X overlap: TEAM episodes exclude any episode that overlaps with the mandatory Comprehensive Care for Joint Replacement Expanded (CJR-X) model, and TEAM participants are excluded from CJR-X participation.
Episodes are initiated by either an inpatient anchor hospitalization (paid under a qualifying MS-DRG) or an outpatient anchor procedure (billed under a qualifying HCPCS code). Episodes end on the 30th day following the date of anchor procedure or discharge from the anchor hospitalization.
MS-DRG and HCPCS Episode Triggers by Category:
| Episode Category | Setting | MS-DRGs / HCPCS Codes |
|---|---|---|
| CABG | Inpatient only | MS-DRG: 231, 232, 233, 234, 235, 236 |
| Major Bowel Procedure | Inpatient only | MS-DRG: 329, 330, 331 |
| LEJR | Inpatient and outpatient | MS-DRG: 469, 470, 521, 522; HCPCS: 27447, 27130, 27702 |
| SHFFT | Inpatient only | MS-DRG: 480, 481, 482 |
| Spinal Fusion | Inpatient and outpatient | MS-DRG: 402, 426–430, 447, 448, 450, 451, 471–473, 523*, 524*, 525*; HCPCS: 22551, 22554, 22612, 22630, 22633 |
*MS-DRGs 523, 524, and 525 added as spinal fusion triggers beginning October 1, 2026.
| Feature | Track 1 | Track 2 | Track 3 |
|---|---|---|---|
| Risk Type | Upside only | Upside and downside | Upside and downside |
| Stop-Gain Limit | 10% | 5% | 20% |
| Stop-Loss Limit | N/A | 5% | 20% |
| CQS Adjustment – Positive Reconciliation | Up to 10% | Up to 10% | Up to 10% |
| CQS Adjustment – Negative Reconciliation | N/A | Up to 15% | Up to 10% |
| Eligibility – PY1 | All participants | Not available | All participants |
| Eligibility – PY2–PY3 | Safety net hospitals only | Safety net, rural, MDH, SCH, EACH | All participants |
| Eligibility – PY4–PY5 | Not available | Safety net, rural, MDH, SCH, EACH | All participants |
| Default if no selection made | Auto-assigned for PY1 | — | Auto-assigned for PY2–5 |
Track 2 eligibility requires hospital classification as one of the following: safety net hospital (exceeding the 75th percentile for dually eligible Medicare/Medicaid patients or Medicare patients eligible for Part D low-income subsidies, using all IPPS acute care hospitals over a 3-year rolling baseline period); rural hospital (located in a rural area per 42 CFR §412.64 or rural census tract per 42 CFR §412.103(a)(1)); Medicare Dependent Hospital (MDH) (contingent on program renewal beyond its October 1, 2025 scheduled expiration); Sole Community Hospital (SCH); or Essential Access Community Hospital (EACH). Eligibility status is re-evaluated annually and can change year to year.
Track 2 and Track 3 participants using Certified Electronic Health Record Technology (CEHRT) and attesting to its use may qualify as Advanced Alternative Payment Model (AAPM) participants. Track 1 participants and Track 2/3 participants not attesting CEHRT use qualify under the Non-AAPM option.
TEAM participants continue to bill Medicare FFS as usual. CMS separately provides each participant with a preliminary target price prior to each performance year, which is then finalized at year-end using updated data. The target price construction has two distinct forms:
DRG-Region Preliminary Target Price:
Benchmark Price × Prospective Trend Factor × (1 – CMS Discount Factor)
Hospital-Specific Preliminary Target Price:
Benchmark Price × Prospective Trend Factor × Prospective Normalization Factor × Risk Adjustment Multiplier × (1 – CMS Discount Factor)
Key pricing parameters:
At year-end, CMS compares each participant's total performance year FFS spending across all attributed episodes in each episode category against their final reconciliation target price for that category. The sequence of adjustments:
TEAM uses a Composite Quality Score (CQS) ranging from 0 to 100 (100 = best performance) to adjust reconciliation amounts. Quality measure data is drawn directly from existing CMS reporting programs — no additional reporting burden is imposed on TEAM participants. If a participant lacks sufficient data for a raw measure score, CMS assigns a neutral scaled score of 50.
Quality Measure Evolution by Performance Year:
| Measure | CMIT ID | Program | PY1 | PY2 | PY3 | PY4 | PY5 | Applicable Episodes |
|---|---|---|---|---|---|---|---|---|
| Hospital-Wide All-Cause Readmission (HWR) – Claims only (PY1); Hybrid (PY2+) | 356 | IQR | ✓ | ✓ | ✓ | ✓ | ✓ | All inpatient |
| THA/TKA Patient-Reported Outcome-Based Performance Measure (PRO-PM) | 1618 | IQR | ✓ | ✓ | ✓ | ✓ | ✓ | Inpatient LEJR |
| CMS Patient Safety and Adverse Events Composite (PSI 90) | 135 | HAC | ✓ | — | — | — | — | All inpatient |
| Hospital Harm – Falls with Injury | 1518 | IQR | — | ✓ | ✓ | ✓ | ✓ | All inpatient |
| Hospital Harm – Postoperative Respiratory Failure | 1788 | IQR | — | ✓ | ✓ | ✓ | ✓ | All inpatient |
| Failure-to-Rescue (30-day Risk-Standardized Death Rate) | 134 | IQR | — | ✓ | ✓ | ✓ | ✓ | All inpatient |
| Information Transfer PRO-PM | 1797 | OQR | — | — | ✓ | ✓ | ✓ | Outpatient LEJR, Spinal Fusion |
CQS Construction: Raw measure scores are converted to percentile-based scaled scores using a national distribution of all TEAM-eligible hospitals (not just participants) during a fixed baseline period. Scaled scores are then volume-weighted based on each participant's proportion of applicable TEAM episodes across all measures. The sum of weighted scaled scores = CQS.
CQS Financial Impact Examples (using $10,000 reconciliation amounts):
Positive Reconciliation — All Tracks:
Negative Reconciliation — Track 2 (up to 15% relief):
Negative Reconciliation — Track 3 (up to 10% relief):
| Milestone | Date |
|---|---|
| TEAM finalized (FY 2025 IPPS Final Rule) | August 2024 |
| Voluntary opt-in election period | January 1 – January 31, 2025 |
| Early preliminary baseline data available (Q2 2025) | April/May 2025 |
| Updated preliminary PY1 target prices released | September–December 2025 |
| Model launch / PY1 begins | January 1, 2026 |
| PY1 monthly performance data begins | February 2026 (released March 2026) |
| FY 2027 IPPS Final Rule (TEAM policy updates) | July 31, 2026 |
| First quarterly dashboard and interim reconciliation target price reports | September 2026 |
| PY2 preliminary target prices released | November 2026 |
| PY1 ends / PY2 begins | January 1, 2027 |
| Model end (PY5) | December 31, 2030 |
TEAM participants may enter into voluntary financial sharing arrangements with downstream collaborators under a structure protected by the Federal Anti-Kickback Statute Safe Harbor for CMS-sponsored model arrangements:
A gainsharing payment flows from the hospital to a collaborator and may consist of CMS reconciliation payments received, internal cost savings, or both. An alignment payment flows from a collaborator back to the hospital when the hospital owes CMS a repayment amount. PAC providers do not bear financial risk under TEAM unless they opt into these voluntary risk-sharing arrangements.
TEAM participants may also provide in-kind patient engagement incentives (including technology-based incentives, subject to monetary value conditions and care-relevance requirements) under the Anti-Kickback Safe Harbor for CMS-sponsored model patient incentives.
CMS provides participants with layered data access through the TEAM Custom Export Tool (CET) within the Innovation Support Platform (ISP) Expanded Data Feedback Reporting (eDFR) application. Access requires completion of a Data Request and Attestation (DRA) Form and Data Sharing Agreement (DSA) (renewed annually), designation of two Data Custodians, and an Authorized Signatory. Available data includes: raw Medicare Parts A and B baseline and monthly performance year episode and claims data (8 CSV file types covering inpatient, outpatient, carrier/Part B, DME, SNF, home health, and hospice); baseline period spending summary; preliminary and final target price reports; monthly hospital-specific and regional spending summaries; and quarterly dashboards with interim reconciliation target price reports (first released September 2026). All data sourced from CMS's Integrated Data Repository (IDR).
Records retention requirement: TEAM participants must maintain relevant records for 6 years.
Contact: CMMI_TEAM@cms.hhs.gov | TEAM Help Desk: 888-734-6433