TEAM is a mandatory five-year bundled payment program that begins on January 1, 2026, with CMS’ intent to improve quality and reduce costs by promoting care coordination throughout the episode, ending 30 days after discharge from the initial anchor stay or procedure.¹ Under the model, selected acute-care hospitals would coordinate care for Medicare beneficiaries who undergo one of the episodes included in the model. Specifically, TEAM would apply to episodes including lower extremity joint replacement, surgical hip femur fracture treatment, spinal fusion, coronary artery bypass graft, and major bowel procedures.¹

Each hospital participating in TEAM will be required to refer patients to primary care services to support continuity of care and positive long-term health outcomes.

According to the Center for Medicare and Medicaid Innovation (CMMI), TEAM will be mandatory for over 700 select hospitals based on core-based statistical areas (CBSAs), covering over 200,000 episodes annually.² Other hospitals will be able to voluntarily participate in TEAM if they are current participants in BPCI-A or CJR Medicare models.

TEAM will have three possible risk tracks¹:

• Track 1, which will have no downside risk and a 10% stop-gain limit for year one followed by 20% stop-gain and stop-loss limits for years two through five.
• Track 2, which will have no downside risk and a 10% stop-gain limit for year one, followed by a 5% stop-gain and stop-loss limits for years two through five. This track will only be available to certain hospitals, including safety net hospitals.
• Track 3, which have 20% stop-gain and stop-loss limits for the entire five-year length of the model.

CMS’ introduction of TEAM represents a significant shift in how hospitals will engage with value-based care. Unlike previous voluntary programs, the model requires participation from approximately one in ten U.S. hospitals, with the potential for expansion in the future. This is especially important given CMS’ plan to have 100% of all Medicare fee-for-service beneficiaries in value-based care by 2030.³

One of the most significant aspects of TEAM is its mandatory nature, which eliminates the option for hospitals to selectively participate based on their anticipated profitability. Instead, hospitals must engage in all five designated episodes of care, which include both medical and surgical procedures. This comprehensive approach aims to standardize care delivery and ensure that all participating hospitals are equally accountable for their performance across these episodes.

The model also introduces significant financial implications. In the first year, hospitals can earn a maximum 10% upside for those participating in Track 1, but in subsequent years, the risk increases to 20% upside and downside.⁴

This risk structure creates a substantial financial incentive for hospitals to improve their operational efficiency and patient outcomes. The mandatory nature of the program, combined with the financial risks and rewards, underscores the importance of the model in driving systemic changes in healthcare delivery.

Hospitals must take several steps to prepare to participate in TEAM.

First, hospitals should conduct a thorough financial assessment of historical performance data. By applying the program's rules to past data, hospitals can identify areas where they performed well and areas needing improvement. This assessment will provide a baseline for understanding the potential financial impact and help prioritize areas for transformation, such as better management of readmission and other post-acute care.

Once the assessment is complete, it is best for an organization to think of its TEAM strategy through multiple lenses: the patient journey, partnerships, incentive alignments, and data and monitoring. The patient journey falls into three broad buckets: the pre-operative experience, the peri-operative to operative experience, the post-operative experience, and finally, the post-acute experience.

In early surgical bundles, engaging patients so that they never required post-acute services was a tried-and-true technique. When services were needed, the most appropriate partners were identified to determine what types of post-acute enablement the hospital should consider supporting. Once TEAM is in place, however, hospitals will need to go beyond a strong post-acute care strategy and evaluate their relationships and alignment with any clinical engagement during the episode of care.

This begins with investing in analytics and change management processes to support continuous improvement, and monitoring episode performance, financial metrics, and clinical outcomes to identify opportunities for optimization. Hospitals should also consider adopting enhanced recovery after surgery protocols, which have been shown to improve patient outcomes and reduce costs by streamlining the perioperative process.

Next, hospitals must be prepared for the financial implications of the model, including understanding the potential risks and rewards associated with the program and developing strategies to mitigate financial losses. Hospitals should also be aware of the broader market dynamics, such as the impact of Medicare Advantage rate negotiations and the potential for changes in payer behavior.

Ultimately the model represents a significant shift in how hospitals will engage with value-based care. By understanding the significance of the model and taking proactive steps to prepare, hospitals can position themselves for success in this new era of healthcare delivery.

Do you need help implementing these suggestions or evaluating how your organization can prepare for TEAM? Optum Advisory can help you assess your TEAM readiness, implement improvement strategies to comply with requirements, and support program participation.