What is TEAM?

The Centers for Medicare & Medicaid Services (CMS) is launching the Transforming Episode Accountability Model (TEAM) on January 1, 2026. TEAM is a bundled payment model focused on five high-cost procedural episodes: hip and femur fractures, major bowel procedures, coronary artery bypass grafts (CABG), spinal fusion, and lower extremity joint replacements. TEAM uses risk-adjusted benchmarks to evaluate total Medicare spending across a 30-day episode of care, including inpatient and outpatient services, post-acute care, durable medical equipment (DME), and other related costs.

TEAM introduces mandatory participation for hospitals in designated geographies, while offering optional participation to others. The financial implications are immediate and substantial. There is no mandatory downside risk for 2026, which means providers can take a “wait and see” approach for a few more months, but downside risk will start in 2027.

Optum Advisory¹ analysis shows that 56% of mandatory participants are projected to lose money under current criteria unless they meaningfully improve performance. These losses average $1.2 million per facility. Additionally, 50% of optional participants could see an estimated net savings of $429,000 per facility if they choose to participate and perform well.

With upside risk doubling in year two and CMS signaling future expansion into specialty bundles, hospitals should begin preparing now — whether participation is required or optional.