On August 1st, the Centers for Medicare and Medicaid Services (CMS) shared final details for the Innovation Center’s new Medicare mandatory, episode-based alternative payment model, the Transforming Episode Accountability Model (TEAM). This model represents one of several 2024 initiatives the Center for Medicare and Medicaid Innovation (CMMI) is launching to accelerate value-based care. Details the agency has released to date suggest new bundled payment design features that could significantly disrupt how hospitals operate outpatient and specialty departments, as well as owned post-acute care assets and external networks.
The main thing health system leadership needs to know is that CMS has designed TEAM to incentivize post-acute care management and specialty care integration into primary care post-hospital discharge. The model mandates that hospitals in selected Core-Based Statistical Areas (CBSAs) assume financial responsibility for a hospital inpatient stay or outpatient procedure plus 30 days post-discharge for all Medicare Part A and B costs for key high-cost, high-volume surgical procedures. These procedures include lower extremity joint replacement (LEJR), Coronary Artery Bypass Graft (CABG), Major Bowel Surgery (MBP), Surgical Hip/Femur Fracture Treatment (SHFFT), and Spinal Fusion (SF).
Although TEAM will not allow hospitals to defer actuarial risk to third-party convener organizations, it offers them multiple risk-tracks and an opportunity to partner with Collaborators as well as to harness substantial savings. Like other bundled payment models, payment will adjust for risk and quality. Therefore, success under TEAM will require investments in clinical models and quality improvement, care coordination, and high-quality care networks. Making these investments will produce returns far beyond TEAM performance. They will help solve pernicious throughput challenges, improve negotiations and opportunities with commercial and Medicare Advantage payers, and lay the groundwork for additional value-based care initiatives.
TEAM will begin in January 2026, giving hospitals a little more than a year to prepare. The work ahead for hospitals in selected CBSAs will cross-cut data analytics, finance, and clinical operations. We recommend the following framework for guiding operational preparation. The goal of preparation should be four-fold:
- Identify and incentivize high quality, efficient, coordinated post-acute care provider and specialty physician networks,
- Optimize lower cost post-acute care settings, including owned outpatient rehabilitation and home health assets,
- Implement and maintain high-quality, effective clinical processes and operational systems,
- Iteratively adjust the network, processes, and systems based on quality outcomes and data feedback.
Achieving these goals requires a multi-disciplinary approach across five phases.
Diagnostics and Preparatory Phase.
The first phase in preparing for any new payment and delivery model is to diagnose the current state relative to key capabilities, readiness, and performance. In this phase the health system should be primarily performing research — data analytics, modeling, and qualitative data gathering — to answer the following questions:- How does our system perform on cost and quality performance for the TEAM procedures? How does this compare to Census region performance?
- How do external post-acute care providers perform against these metrics?
- How do our competitors perform relative to our performance?
- What do we have to influence in our patients’ clinical journey to improve costs and quality? By how much? What are the best levers for improvement opportunities? How well are we prepared to do that now?
- What is our inventory of current capabilities for managing episodic risk (electronic connectivity, clinical operations, business operations, network development, data and analytics, quality performance, and patient engagement)?
The Network Creation Phase.
Strong performance under TEAM will require health systems to create a high performing network that crosscuts the acute inpatient setting, outpatient surgical setting, outpatient rehabilitation, and the traditional post-acute care provider continuum of inpatient rehabilitation facilities, skilled nursing facilities (SNF) and home health. Importantly, clinical workflows will need to be able to efficiently and effectively identify the most appropriate lowest cost setting for both the surgical procedures and rehabilitation and recovery. Workforce challenges in the SNF setting will pose challenges that hospitals must address to ensure access to appropriate clinical care for some patients.Building on diagnostics that identify strengths and weaknesses, work in this phase should include additional modeling and provider assessment so hospital leaders can answer the following questions:
- What are the quality and cost performance metrics and goals we need to hit in each care setting to succeed under TEAM?
- Which providers most closely perform to these standards today and how can we incentivize performance going forward?
- Who are the providers we want to work closely with, as part of a network, and how do we engage them and build relationships with them? Who will be our Collaborators (if any)?
- If the hospital owns its own home health company, what can be done to optimize its performance clinically and financially?
- What are innovative new care delivery options we should be considering in our market for optimizing home-based recovery?
Physician Alignment Phase.
The TEAM model will require much greater alignment between physicians and care settings, particularly in directing patient referrals and participating in clinical workflows that ensure coordination and communication. Hospitals will need to engage specialty groups in discussions that seek to answer the following questions:
- Are physicians aware of and in agreement with the necessary quality and cost initiatives to ensure strong performance?
- Do financial incentives support alignment with cost and quality initiatives?
- How will the hospital leadership monitor cost and quality performance and communicate the performance with physicians?
- What are our physicians’ roles, if any, in post-acute care settings today? How do we optimize care delivery to support post-acute care continuity and seamless hand-offs to primary care?
Design and Implementation Phase.
Given the number of procedures, types of providers integrated into the network and the necessary engagement of specialty physicians, a crucial phase includes designing, building and implementing the systems and processes to coordinate and deliver high quality, efficient care. The work in this phase focuses on mapping the workflows and processes. Key questions to ask include:
- How does our discharge process need to change?
- What systems and technology do we need to acquire or build?
- How do we design clinical workflows and systems to ensure seamless care delivery and communication across settings?
- What are processes we need around oversight, management and integration?
- What training is necessary and how do we ensure system adherence?
Monitoring and Optimization Phase.
The rubber hits the road when the program is live. Hospitals will need to monitor performance and adjust, answering questions such as:
- What data analytics should I be tracking regularly to ensure provider performance against expectations?
- What forums and protocols (e.g., escalation) do I need to create to ensure ongoing alignment, issues identification and performance improvement across my care delivery system and partnerships?
- Can I align my other payer contracts (e.g., Medicare Advantage) to improve efficiencies and return on investment?
- What adjustments should I be considering throughout?
ATI TEAM Services and Expertise
ATI Advisory offers an analytics and consulting solution that delivers this plan. We combine deep expertise in episodes of care design and participation including working directly with more than one thousand hospitals, physicians, and post-acute providers and directly with CMMI on BPCI, BPCI-A, CJR and Medicare Advantage bundled payment implementations. We deploy data analytics with access to an extensive array of CMS data to outline opportunities and risks in the program, inform your decision on risk paths, and develop a roadmap for planning and implementation. Our analytics also form the basis of our work to educate and align clinical and non-clinical leaders in your organization.
