Negotiating power with Medicare Advantage (MA) plans may become easier as nursing homes explore participation in bundled payment options such as the Transforming Episode Accountability Model (TEAM), which enables following patients through an entire episode of care.
It’s a lever available to participants and collaborators to forge new contracting strategies with their MA plan and other health plan partners, said Brian Fuller, managing director of value-based care design and delivery at ATI Advisory.
And, post-acute care is very important in most episode-based care models, he said. It’s going to be the key to success for the TEAM model.
“This is the opportunity to continue along the journey of value-based care, investing in infrastructure, building capabilities and having a revenue stream that creates some return for that investment,” Fuller said of TEAM.
With TEAM in particular, conditions selected indicate significant reward for serving vulnerable populations in nursing homes and focusing on quality, he added. But nursing home providers will need to be proactive with outreach to hospitals in order to be a preferred partner and get a favorable contract structure. TEAM models are primarily between hospitals and CMS, with other care settings being “collaborators,” Fuller said.
“This is the most significant mandatory bundled payment model ever introduced by CMS,” noted Fuller. Bundled payments in health care, which is a single payment to multiple providers for a patient’s care, allow the various health care entities to work together to bring down costs, quality and coordination of care. “[TEAM] does target Medicare fee for service, and it’s intended to cover a surgical procedure, if that is in an outpatient setting or discharge from the inpatient acute care hospital and then 30 days following all of the covered services under Medicare Part A and Part B.”
There will be a composite quality score calculated as part of the TEAM model, Fuller said, and performance on those quality measures will increase savings or reduce losses for participants. There’s a social risk adjustment applied as well for those serving more vulnerable populations across the care continuum.
An evolved episode-based model
One of the biggest lost opportunities with episode-based models that came before TEAM was a failure to take experience and investments and extrapolate them to Medicare Advantage and other payer contracts.
“That is a lever that is available to participants here to learn what they learn inside of TEAM and then try to forge new contracting strategies with their MA plan and other health plan partners,” Fuller said.
The Centers for Medicare & Medicaid Innovation (CMMI) has historically faced challenges with overlapping payment models, which created confusion over which provider was ultimately responsible for a patient’s care. For nursing homes, this often meant unclear responsibilities and potential gaps in care management.
TEAM’s new structure aims to address these issues by shortening the episode length to 30 days and focusing specifically on certain surgical services. This approach allows specialists to concentrate on their area of expertise while leaving the management of chronic conditions and unrelated complications to primary care providers or accountable care organizations (ACOs) that specialize in population health.
Clarifying these responsibilities is also crucial to incentivizing better coordination between primary and specialty care providers, and TEAM is the first bundled payment model to address a gap that previously existed.
TEAM’s benefits aside, hospital partners have wondered whether there would be enough savings with the TEAM model, Fuller said, given the short duration of an episode of care spent at the hospital before discharge.
However, about 70% of episode spending, depending on the condition, occurs within the first 30 days so there is still opportunity for hospitals to generate savings and reduce total cost of care, he said.
Spending in the post-acute care setting for TEAM-approved conditions between 2021 and 2023 has been as low as 18% for coronary artery bypass grafting procedures, to 52% for hip and femur fractures.
CMS will be using a three-year baseline period to determine spending targets for TEAM participants, Fuller said.
The agency sets the target price for each episode in each region, also taking into account a discount factor, risk adjustment, normalization and trend factors, Godlove said. Savings for participants and their collaborators will fall between the target price amount and actual spend, meaning leveraging smart data tools will help maximize savings.
“CMS will be releasing data to TEAM participants for use during the model just before the start of TEAM going live in January 2026,” Godlove added, anywhere between one month to six months prior to launch.
Next steps for nursing homes
While hospitals are the only TEAM participant, in that the contract is between CMS and the hospital system, post-acute care partners can come to the table and share in quality or cost alignment with neighboring hospitals as collaborators so long as they are a licensed Medicare provider.
“It’s going to be natural for hospitals to partner with physicians, but in order to forge partnerships with post-acute providers, it might be more incumbent upon the post-acute providers to be proactive,” said Fuller. “Put something on the table in terms of a partnership structure, so that hospitals have something to react to that is tangible.”
Fuller said that conveners have been eliminated from TEAM, which is a good thing for nursing homes and hospitals trying to get a bigger piece of the pie. Such intermediaries have in the past stepped in between CMS and participants.
Hospitals may be thinking of high and low cost partners, as well as their own assets, and how they might best fit in with the TEAM model. Fuller believes this model will challenge historical thought processes and practice patterns among hospital systems, in how they think about post-acute care assets and partners.
“How do [hospitals] think about those assets differently? How do they leverage them, and how does that look different, depending on what their portfolio of assets are? Understanding how they use their lower cost assets, perhaps in a different way and/or through partnerships, is another important dynamic,” said Fuller.
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