CMS’ New TEAM Payment Model Covers Nursing Home Stays, But Hospitals Are in the Driver’s Seat

The Centers for Medicare & Medicaid Services (CMS) is testing out a payment model that would cover all costs associated with an episode of care, including a skilled nursing stay, but it appears that select hospitals would be in the driver’s seat if approved.

Certain surgical procedures will fall under the new model and include recovery at a nursing home. Operators could be part of the new episode-based proposed mandatory payment model, designed to coordinate care for patients who undergo some surgical procedures under traditional Fee-for-Service Medicare (FFS). 

The Transforming Episode Accountability Model (TEAM) was issued on Thursday by CMS and is due to launch on Jan. 1, 2026; it will run for five years. The model was borne from the Innovation Center’s Bundled Payments for Care Improvement Advanced (BPCIA) and Comprehensive Care for Joint Replacement models.


Participating hospitals will need to match a “target price” that represents most Medicare spending during an episode of care and funding would be doled out from CMS just like a typical Medicare FFS stay in a skilled nursing facility or provider follow-up visit.

CMS hopes that holding providers accountable for all the costs of care involved in an episode will incentivize care coordination, improve patient care transitions, and decrease avoidable readmission.

Brian Fuller, managing director for ATI Advisory’s value-based care design and delivery practice, said the model will impact skilled nursing operators, but they’ll have to be proactive with area hospitals to really get in on the risk and reward associated with the model.


And, this model is different from other care models in that it will be mandatory if approved this summer.

“It will be a requirement for every hospital in the [Core-Based Statistical Areas (CBSA)]. “Historically, in BPCI and BPCIA, those models were voluntary. A skilled nursing facility in a market might have one of a number of their referral hospitals participating, but they likely did not have 100% participating,” said Fuller.

On the other hand, TEAM requires all hospitals to participate, or at least those that are part of CBSA.

“[TEAM] will be magnified or accelerated, because it’s going to be all hospitals in your market area that are subject to this model,” he added.

Performance under the TEAM model

Under TEAM, select acute care hospitals would coordinate care for Medicare FFS beneficiaries who undergo certain surgical procedures, or episodes, and assume responsibility for the cost and quality during that episode. That’s from surgery through the first 30 days after the Medicare beneficiary leaves the hospital, CMS said in a memo.

Performance under TEAM will be assessed by comparing the hospitals’ actual Medicare FFS spending and their target price, CMS said. There will also be an assessment of performance based on three quality measures: hospital readmission, patient safety and patient-reported outcomes.

“People with Traditional Medicare who undergo surgery may experience fragmented care, which can lead to complications, prolonged recovery, or potentially avoidable care,” CMS said in its memo.

Hospitals might get more in payments from CMS if the total Medicare costs are below the target price. Conversely, hospitals could owe a repayment amount subject to the quality performance measures mentioned and if the total Medicare costs are above the target price.

Given the risk and reward associated with this model, hospitals will think differently about who they collaborate with if it’s finalized.

“[Hospitals] may have, for example, high quality SNF networks. Maybe they had them in the past, but they’re just accelerating their efforts as part of this participation now because they have financial risk involved,” said Fuller.

Certain clinical capabilities, particularly around TEAM performance metrics, will be critical. Hospitals may require nursing homes to send data on their clinical and operational performance more so than in the past, among other expectations.

Hospitals will be chosen based on geographic regions, or Core-Based Statistical Areas, across the country and can choose one of three participation tracks. Of these, Track 1 has no downside risk and lower levels of reward for the first year. Track 2 is associated with lower levels of risk and reward for certain hospitals like safety net hospitals. Track 3 offers higher levels of risk and reward for all five years of the model.

Particularly with Medicare FFS, fragmented care, avoidable utilization and duplicate resources may be a reality for patients as providers and suppliers are paid separately for each service and procedure, according to CMS.

The TEAM model and ACOs

As a way of taking responsibility for cost and quality during the episode, hospitals would need to connect with primary care services to establish accountable care relationships, and support optimal, long-term health outcomes, the agency said.

This mandatory connection with primary care aligns with Accountable Care Organizations (ACOS), CMS said, and promotes primary care referrals.

“Under TEAM, a person receiving care from (aligned to) providers in an ACO would still be able to be in an episode if they receive one of the surgeries included in TEAM at a hospital that is selected to participate in TEAM,” CMS said. “Allowing a person with traditional Medicare to be included in both TEAM and ACO initiatives would help to promote provider collaboration to find opportunities to improve quality of care and reduce Medicare spending.”

Surgical procedures covered under TEAM include: lower extremity joint replacement, surgical hip femur fracture treatment, spinal fusion, coronary artery bypass graft, and major bowel procedures.

The TEAM model also includes a proposed voluntary decarbonization and resilience initiative; this initiative would assist staff along the way to address threats to patient health and the health care system as a result of climate change.

Health equity would be a priority for the model as well, offering certain flexibilities like allowing safety net hospitals to participate in a track with lower levels of risk and reward, and a pricing methodology that includes adjustments to account for underserved individuals, CMS said.

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