Overview
Medicare’s new mandatory bundled payment model, the Transforming Episode Accountability Model (TEAM), begins in 2026. Under TEAM, approximately 741 acute care hospitals in 188 markets will be required to assume financial risk for five surgical episodes from admission to 30 days post-discharge. These covered episodes include: Major joint replacement of the lower extremity (LEJR), surgical hip and femur fracture treatment (SHFFT), spinal fusion, coronary artery bypass graft (CABG), and major bowel procedure.
Hospital target prices are based on average risk-adjusted spending per episode in each of the nine US census regions during the three-year baseline period, with an adjustment for quality. Analyses show two-thirds of hospitals will lose an average of $1,350 in revenue per case based on current spending.1 Succeeding in bundled payment requires actively managing the continuum of care.
The Surgeon’s Role
Surgeons have an important role to play in improving efficiency and quality.
Improving processes: TEAM hospitals will need to invest in clinical redesign for internal efficiencies, including coordination for greater pre-surgical care (e.g., physical therapy, primary care coordination) to prepare patients for a successful procedure and recovery.
Collaborating for post-acute care: Improving transitions for post-surgical care management, with partner providers and accountable care organizations, will also be needed.
Monitoring outcomes: TEAM will be a MIPS APM2 for all participation tracks, and the model allows for gainsharing opportunities with clinicians.
How to prepare for TEAM
If you determine that you will be caring for surgical patients at one of the mandatory TEAM participating sites there are several things that you can do now to be prepared in 2026.
- Learn the model. In addition to this document and other ACS materials, the Institute for Accountable Care (IAC) has summary resources3 with more details on how the model works.
- Learn about surgeries within your hospital/system, including both quality and efficiency metrics.
- IAC has developed opportunity analysis reports that summarize episode cost and utilization data across many levels, including by region, market, hospital, care setting, DRG, and surgeon. Contact IAC at analytics@institute4ac.org for a complimentary briefing with policy experts.
- Familiarize yourself with ACS quality programs that your hospital may already have in place.
- Begin developing clinical redesign strategies with care teams that manage surgical episodes across the care continuum, including primary and post-acute care. This redesign will serve not only as a means of improving performance on current TEAM episodes, but also as a strong foundation for potential expansion of this model or future payment models from CMS or other payers that could include additional episodes and DRGs.
How TEAM Could Impact Revenues
Initial analysis from the IAC indicates that the way TEAM target prices are structured will likely result in significant revenue loss for some hospitals if they fail to take appropriate action to prepare. While the majority of cases will fall below the target price, the average overage of cases that exceed the target will outweigh these savings for up to two-thirds of hospitals.
