Hospitals & Health Systems

CMS has accelerated structural reform in hospital payment with the rollout of the Transforming Episode Accountability Model (TEAM), marking a return to mandatory bundled payments for major surgical episodes—including LEJR, SHFFT, spinal fusion (2% discount), CABG, and major bowel (1.5% discount)—raising stakes for hospitals to optimize episode management and achieve strong composite quality scores. This aligns with a proposed 2.4% inpatient and long-term care hospital rate increase from the Trump administration, but the shift to episodes means financial upside or risk will increasingly hinge on care coordination, efficiency, and discharge planning rather than simple volume growth. The re-emergence of bundled payments, paired with small but meaningful regulatory openings for physician-owned hospitals, signals a lasting trend away from fee-for-service reliance and toward outcome-driven models, creating new strategic imperatives for hospitals, ACOs, and payers to build episode management and population health capabilities. See bundled payments and TEAM insights and inpatient rate policy details.