What is TEAM? An Overview of the CMS TEAM Model

The Transforming Episode Accountability Model (TEAM) is a new mandatory payment model proposed by CMS in the 2025 IPPS Proposed Rule. Its goal is to improve the care given to Medicare beneficiaries by holding hospitals accountable for specific episodes of care. The idea is to see if financial accountability can reduce Medicare costs while maintaining or even improving the quality of care provided to beneficiaries.

Why is CMS Doing This?

Well, Medicare beneficiaries often end up with scattered and expensive care. Patients can bounce between different doctors, clinics, and tests, leading to fragmented care. CMS believes that by aligning financial incentives, hospitals can improve care coordination and achieve better health outcomes.

CMS’s Goal:

Under the TEAM model, selected hospitals would be responsible for coordinating the care of Medicare beneficiaries who undergo certain surgical procedures, from the time of surgery until 30 days after the patient leaves the hospital. Hospitals are responsible for all items and services provided during an episode of care. This ensures a comprehensive and coordinated approach to patient care.

In the proposed rule, CMS said, if the proposed TEAM proves successful, it could pave the way for "managing episodes as a standard practice in Traditional Medicare." 

How TEAM Payments Work

Now, let's talk about how TEAM payments work. Hospitals will continue to bill Medicare as usual, but they will receive target prices for specific episodes of care. These target prices are based on 3 years of baseline data and adjusted for factors like region and the complexity of the episode.

Hospitals will be assessed based on their actual spending compared to the target price, as well as their performance on certain quality measures. If hospitals spend less than the target price and meet quality standards, they will receive a payment from Medicare. However, if they spend more than the target price, they will owe Medicare a repayment.

To encourage collaboration between hospitals and physicians, the TEAM model allows hospitals to share reconciliation payments with other providers involved in the care episode. This incentivizes them to work together to provide high-quality and cost-effective care.

TEAM Eligible Episodes

The TEAM model only includes five specific episodes.

1. Coronary Artery Bypass Graft (CABG)
2. Lower Extremity Joint Replacement (LEJR)
3. Major Bowel Procedure
4. Surgical Hip/Femur Fracture Treatment (SHFFT)
5. Spinal Fusion

These episodes represent high-expenditure, high-volume care delivered to Medicare beneficiaries.

TEAM Quality Measures

CMS selected quality measures that focused on care coordination, patient safety and, and patient-reported outcomes (PROs). You should note that in the proposed rule, CMS specifically said that they “plan to incorporate more PRO-PMs in the future of the model.”

1. (For all episodes) Hybrid Hospital-Wide All-Cause Readmission Measure
2. (For all episodes) PSI 90
3. (For LEJR episodes only) THA/TKA PRO-PM (Inpatient)

TEAM Model Performance Period

TEAM is a 5-year program that starts January 1, 2026, and ends on December 31, 2030. Final data submission of clinical data elements and quality measures in CY 2031.

5 Performance Years (Calendar Years) P1-P5

1. Performance Year (PY 1) = January 1, 2026 – December 31, 2026
2. Performance Year (PY 2) = January 1, 2027 – December 31, 2027
3. Performance Year (PY 3) = January 1, 2028 – December 31, 2028
4. Performance Year (PY 4) = January 1, 2029 – December 31, 2029
5. Performance Year (PY 5) = January 1, 2030 – December 31, 2030

TEAM Model Quality Measure Reporting

CMS made it so no additional submission is required. Hospitals must submit the Hybrid HWR and THA/TKA PRO-PM measures as they usually do under the Inpatient Quality Reporting (IQR) program. It follows the same performance period and submission schedule. The PSI 90 measure follows the HAC Reduction Program performance period.

Quality measures results will be publicly reported. CMS is creating a website that will be specific to TEAM.

TEAM Model Health Equity Reporting

In addition to quality measure submissions, hospitals are required to screen for Health-Related Social Needs (HRSNs) and develop a health equity plan.

Hospitals must screen for at least four of the five HRSNs starting in performance year 1. You must report the aggregated screening data and screened-positive data for each HRSN domain for each beneficiary. Additionally, hospitals must report on policies and procedures for referring beneficiaries to CBOs, social service agencies, or similar organizations that may support patients in accessing services to address their needs.

Right now, this is proposed as a separate submission, but they are seeking comment on whether they should use the IQR program SDOH measure submission to meet this requirement.

Hospitals must submit a health equity plan to CMS. The first year is voluntary, but every year after this is a requirement.

This plan must include:

• How you will identify health disparities
• How you will identify health equity goals with a description of how you will use them to monitor and evaluate progress in reducing the identified health disparities
• A description of the health equity plan intervention strategy
• How you will identify health equity performance measure(s), the data sources used to construct those measures, and an approach to monitor and evaluate those measures

In addition to your health equity plan, you must submit patient demographic data. It’s voluntary to submit this data in the first year and then mandatory after that. Data may include race, ethnicity, language, disability, sexual orientation, gender identity, and sex characteristics.

Calculating TEAM Model Reimbursement Amount

CMS will start by comparing your actual spending as compared to the finalized target price. Then they will convert your quality measure performance into a normalized score. They will use those two metrics to determine your final gain or loss amount. This is a little tricky, so let’s walk through it step by step.

Step 1: Convert Your Quality Measure Performance Into a Useable Score

CMS will first compare you against all other hospitals' performance on each measure. CMS will convert your raw quality measure scores into scaled quality measure scores by comparing the raw score to the distribution of raw score percentiles amount the national cohort of hospitals (not just TEAM-eligible hospitals).

Example: if a hospital’s raw quality hybrid measure score was 71% in PY 1 and that is equivalent to the 60^th percentile during the baseline period, their scaled quality measure score for that measure will be 60 in the performance year.

The baseline period is Calendar Year 2025 for the duration of TEAM.

Applying Volume Weighting

CMS will then apply a volume weighting to the score based on the volume of episodes for a hospital.

Calculate your Composite Quality Score (CQS)

Finally, CMS will multiply your quality score and weight to get your weighted score. Each score is added up to give you a Composite Quality Score (CQS).

Step 2: Calculate Your Hospital Reconciliation Amount

Those who provide items and services for the beneficiary included in the episode bill Medicare as they usually do. Six months after the end of each performance year, CMS determines the performance year spending for each episode a hospital has submitted. They use claims data that is available six months after the end of the performance year.

CMS then determines the final reconciliation target prices. This may be different from the preliminary target prices CMS gives you as a goal before the performance year.

CMS will calculate your individual hospital reconciliation amount. This is the dollar amount difference between the target price and your spending. They complete this step by determining the target price for each episode and calculating the difference between the hospital’s total spending and its aggregated target price for all episodes.

Step 3: Adjust Your Cost Amount Using Your Quality score

Now that we have our Composite Quality Score (CQS) and Reconciliation Amount, CMS will adjust that amount up or down based on your CQS.

CMS uses a formula to calculate a CQS Adjustment Percentage based on your CQS. They multiply your Reconciliation Amount times your CQS Adjustment Percentage to get a dollar amount. After that, they will (always) subtract the CQS adjustment amount from the positive or negative reconciliation amount to get the quality-adjusted reconciliation amount.

Note below that the TEAM model has three participation tracks, each with different financial risks and rewards. Track 1 has financial upside only, while Track 2 and Track 3 have two-sided financial risk.

Step 4: Finalize Your Net Payment Reconciliation Amount

Now that we’ve got your hospital’s Quality-Adjusted Reconciliation Amount, CMS will apply stop-loss or stop-gain limits based on which track you are in.

1. Track 1: 10% stop-gain limit (no loss)
2. Track 2: 10% stop-gain and stop-loss limit
3. Track 3: 20% stop-gain and stop-loss limit

And finally, CMS does a post-episode adjustment. If the average post-episode spending is greater than three standard deviations above the regional average post-episode spending amount, then you’ll get a post adjustment. They do this adjustment because they don’t want you to delay care for a beneficiary until they are out of their 30-day window.

Finally! Your hospital will either get a payment from CMS or you’ll owe CMS money.

TEAM Participation Tracks

Track 1 (only available in PY 1)

Track 1 has financial upside only. Hospitals will be rewarded for their work to improve quality and cost outcomes for their episodes, but not be held financially accountable for poor cost results. Everyone starts in Track 1 unless you elect to start in Track 3.

• 10% positive quality score adjustment
• 10% stop-gain limit (applied after quality score adjustment)

Track 2 (available PY 2-5) (limited participants)

Track 2 has two-sided financial risk:

• 10% positive quality score adjustment OR
• 15% negative quality score adjustment
• 10% stop-gain and stop-loss limits (applied after quality score adjustment)

Participants are limited to Safety Net Hospitals, Rural Hospitals, Medicare Dependent Hospitals (MDH), Sole Community Hospitals (SCHs) or essential access community hospitals.

Track 3 (available PY 1-5)

Track 3 has two-sided financial risk:

• 10% positive and negative quality score adjustment
• 20% stop-gain and stop-loss limits (applied after quality score adjustment)

How do episodes qualify under TEAM?

Episodes would include non-excluded Medicare Parts A and B items and services and would begin with an anchor hospitalization (an admission to an acute care hospital) or an anchor procedure (outpatient procedure at a hospital outpatient department) and would end 30 days after hospital discharge or anchor procedure.

Episodes in TEAM may be associated with multiple hospitalizations through readmissions or transfers. When more than one hospitalization occurs during a single episode, CMS will hold the hospital to which the episode is initiated accountable.

An episode begins on the day of admission or day of procedure unless the admission is the same day - or within three days of the procedure - for the same episode category. In that case, it’s the date of the procedure.

Specific Episode Information

LEJR

The Lower Extremity Joint Replacement (LEJR) episode category would include hip, knee, and ankle replacements, but exclude arthroplasty of the small joints in the foot, performed in either the hospital inpatient or outpatient setting.

SHFFT

The SHFFT episode category, called Hip and Femur Procedures, would include beneficiaries who receive a hip fixation procedure in the presence of a hip fracture (both open and closed surgical hip fixation) with or without fracture reduction, but excluding joint replacement.

CABG

The CABG episode category would include beneficiaries undergoing coronary revascularization by CABG.

Spinal Fusion

The Spinal Fusion episode category would include beneficiaries who undergo certain spinal fusion procedures (cervical, thoracic, or lumbar spinal fusion procedures) in either a hospital inpatient or outpatient setting.

Major Bowel Procedure

The Major Bowel Procedure episode would include beneficiaries who undergo a major small or large bowel surgery.

Which Hospitals are Required to Participate in TEAM?

A TEAM participant (hospital) is defined as:

• an acute-care hospital
• that initiates episodes
• paid under IPPS
• has a CMS Certification Number (CCN)
• has a primary address located in one of the geographic areas selected for participation in TEAM

CMS has set specific geographic areas that they define using CBSA areas. There are over 800 CBSA areas that were selected to participate. If your hospital is in one of the CBSA areas and you meet the other requirements here, you’re mandated to participate. To find out if your hospital is included, visit, https://go.medisolv.com/hospitals-eligible-for-team-model-1119-1132

Note: Maryland hospitals are excluded. Or if you have zero episodes for one episode category between January 1, 2022, and June 30, 2023.

Which Beneficiaries Are Included in TEAM?

Beneficiaries who meet all of the following criteria at the time of admission to the anchor hospitalization or anchor procedure:

• Have Medicare as their primary payer
• Enrolled in Medicare Part A and Part B
• Are not eligible for Medicare on the basis of end-stage renal disease
• Are not enrolled in any managed care plan (for example, Medicare Advantage)
• Are not covered under a United Mine Workers of America health plan

We hope this overview of the CMS TEAM model has provided you with a clear understanding of this new payment model. Remember, the goal is to improve care coordination, reduce costs, and enhance the overall care experience for Medicare beneficiaries.

Medisolv is always here to help answer your quality measure questions. We help your hospital measure and (importantly!) improve your performance on measures like the Hybrid HWR, THA/TKA PRO-PM and SDOH. Schedule a 1:1 call with us to discuss how our hospitals are excelling in quality measure performance.