June 2, 2025 1 min

New Blog Post: What You Need to Know About CMS’ Mandatory TEAM Model

Healthcare

A New Era of Accountability Begins in 2026

Hospitals, take note: A major shift in value-based care is on the horizon. On January 1, 2026, CMS will launch the Transforming Episode Accountability Model (TEAM), a five-year bundled payment model that will fundamentally reshape how hospitals are reimbursed for certain surgical procedures.

Unlike previous voluntary models like BPCI-A and CJR, TEAM is mandatory for select hospitals.

What Is the TEAM Model?

TEAM is an episode-based payment model focused on improving care coordination, reducing post-acute fragmentation, and controlling Medicare spending. Hospitals will be accountable for the total cost and quality of care from the time a patient undergoes surgery through the 30 days post-discharge.

This bundled approach shifts the focus from volume to value, with target pricing, quality score adjustments, and financial risk-sharing at the core.

Key Episodes Covered

TEAM applies to five high-volume, high-cost surgical procedures:

Lower Extremity Joint Replacement (LEJR)
Surgical Hip and Femur Fracture Treatment (SHFFT)
Spinal Fusion
Coronary Artery Bypass Graft (CABG)
Major Bowel Procedures

Hospitals must manage not just the surgery, but all related Medicare Part A and B services—including skilled nursing, home health, rehab, and readmissions—within the 30-day post-discharge period.

Participation Tracks and Risk Structure

TEAM introduces three distinct tracks with varying levels of risk and reward. All participating hospitals will start in Track 1 unless they choose to start in Track 3, but can only remain in Track 1 for the first year of the program:

Track 1: Upside-only risk in year 1 (through year 3 for safety net hospitals); hospitals will be rewarded for positive outcomes, but not penalized for poor cost performance.
- 10% positive quality score adjustment
- 10% stop-gain limit (applied after quality score adjustment)
Track 2: Moderate two-sided risk for qualified hospitals (5% stop-gain/stop-loss)
- 10% positive quality score adjustment OR
- 15% negative quality score adjustment
- 10% stop-gain and stop-loss limits (applied after quality score adjustment)
Track 3: Full two-sided risk (20% stop-gain/stop-loss) for all other participants
- 10% positive and negative quality score adjustment
- 20% stop-gain and stop-loss limits (applied after quality score adjustment)

Reconciliation payments from CMS depend on how well hospitals manage both costs AND quality.

Quality Measures That Matter

Performance in TEAM isn’t just about staying under budget—it’s also about outcomes. Key quality metrics include:

Readmission rates
Patient safety and adverse events
Patient-reported outcomes (for LEJR episodes)
Hospital harm (falls or post-operative respiratory failure)
Mortality rates for surgical patients with complications

These metrics directly affect your reconciliation payment. CMS converts your raw quality scores into scaled scores by comparing them to national hospital performance percentiles. Scores are then volume-weighted and factored alongside your cost performance to determine your final gain or repayment amount.

What’s Changing

TEAM tightens the loop between clinical care and financial accountability. Key implications include:

Hospitals bear full episode financial risk, including post-acute care costs
New coordination and documentation requirements, including mandatory primary care referrals
Increased pressure to reduce readmissions and improve care transitions
Broader inclusion of patient-level risk adjustment and equity considerations

This is a sharp pivot from earlier CMS initiatives and leaves little room for passive participation.

PULL QUOTE: "An organization could be undergoing transformation of their entire payment system under a hospital global budget while also implementing a mandatory bundled payment model and a mandatory transplant model in less than a year and a half, which is simply untenable," said Jennifer Holloman, senior associate director of policy at the American Hospital Association (AHA).

What Healthcare Leaders Should Prioritize

To succeed under TEAM, leaders must act now to avoid added operational and financial stress:

Build real-time data infrastructure and predictive analytics capabilities
Enhance care coordination and transition protocols
Standardize surgical pathways and post-acute plans
Train staff on model-specific workflows and reporting
Strengthen partnerships with SNFs, rehab centers, and PCPs

How Deacon Health Can Help

The challenges of TEAM are real, but so are the opportunities—if handled correctly, the TEAM model offers the potential for significant revenue gains.

At Deacon Health, our TEAM Method is designed to help health systems succeed under bundled payment models by combining dedicated care teams with real-time data to guide high-risk patients through the entire episode of care—before, during, and after surgery.

The TEAM Method in Action

We simplify the episode—and support your team—through four core TEAM pillars:

Triage high-risk patients before complications begin
Engage patients early to boost adherence and reduce avoidable utilization
Align hospital, provider, and post-acute care teams with real-time visibility
Manage recovery with nurse navigators who keep patients—and costs—on track

Hospitals partnering with Deacon have achieved:

13.5% average MLR reduction
4% 30-day readmission rate (compared to 10–15% national average)
Improved care coordination and surgical bundle performance
Scalable support that eases operational stra

We don’t just understand the TEAM model—we’re built for it.

Deacon shows up with people, data, and a plan—ready to integrate, ready to deliver, and ready to make TEAM easier for hospitals and ACOs navigating this new reality.

Because when the stakes are high, you don’t need another vendor. You need a partner.

January 1, 2026 Is Looming …

Let’s talk about your TEAM strategy—and how Deacon can help you navigate TEAM with clarity, compassion, and results that speak for themselves.