Transforming Episode Accountability Model: A New Era in Healthcare Financial Management
Published by
Cathryn Johnson
on
The Centers for Medicare and Medicaid Services (CMS) finalized a 5-year mandatory bundle payment model called Transforming Episode Accountability Model (TEAM), aimed to address fragmented care experienced by Medicare beneficiaries pre/post-surgery, enhance care coordination, patient transitions, and reduce avoidable readmissions with potential to save $705 million over five years.
Timeline and Scope
- Duration: January 2026 - December 2030
- Coverage: Hospitals selected to participate are mandated to join
Bundles and Costs
Participating hospitals receive regional target prices in late 2025 to cover all costs for a 30-day episode of care for the following bundles:
|
Bundle Name |
Average National Cost |
Number of National Episodes |
MS-DRGs and/or HCPCS codes* |
|
Coronary Artery Bypass Graft Surgery (CABG) |
$48,905
|
28,088
|
MS-DRG 231, 232, 233, 234, 235, 236 |
|
Lower Extremity Joint Replacement (LEJR) |
$21,063
|
215,957
|
MS-DRG 469, 470, 521, 522 HCPCS 27447, 27130, 27702 |
|
Surgical Hip and Femur Fracture Treatment (SHFFT) |
$35,501
|
75,254
|
MS-DRG 480, 481, 482
|
|
Spinal Fusion (non-Cervical) |
$46,326
|
65,968
|
MS-DRG 402, 426-430, 447, 448, 450, 451, 471-473 HCPCS 22551, 22554, 22612, 22630, 22633 |
|
Major Bowel Procedure |
$29,184 |
59,983 |
MS-DRG 329, 330, 331 |
* Note: Ambulatory Surgery Centers (ASCs) will not initiate an episode.
Accountability and Performance
Hospitals must ensure coordinated, high-quality care during the procedure and 30-days post-discharge. Providers will bill Medicare as usual, with annual reconciliation of actual costs against the target price. Bonuses or penalties will be applied based on performance.
Additional Program Elements
- Participation Tracks: The program offers graduated risk through different participation tracks to accommodate varying levels of risk and reward.
- Incentive Sharing: Participants can share incentives with physicians and providers.
- Quarterly Deliverables: Hospitals must provide updates to Medicare.
- Primary Care Referrals: Required to support long-term health outcomes.
- Health Equity Plans (HEP) and Environmental Reporting: Voluntary submission of HEP and greenhouse gas metrics.
Case Study and Preparation
Hospitals will receive historical spend information and target prices in late 2025. For example, a hospital's Lower Extremity Joint Replacement 30-day bundle may reveal significant cost insights:
|
Facility Type |
Cost/Episode Hospital |
Cost/Episode Regional |
|
All |
$23,409 |
$17,504 |
|
Anchor Inpatient |
$13,641 |
$13,643 |
|
Non-Anchor Inpatient |
$1,099 |
$1,084 |
|
Skilled Nursing Facility |
$8,206 |
$1,896 |
|
Home Health Agency |
$382 |
$674 |
|
Outpatient |
$81 |
$207 |
Future Implications
Successful bundles will position hospitals for future success if CMS mandates this program for all hospitals, adds more bundles, or if hospitals pursue commercial and/or Medicaid bundle programs with a goal to manage the total cost of care while maintaining optimal quality and outcomes.
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