Introducing TEAM, Medicare’s newly proposed mandatory bundled payment model

By Kristin Oberfeld

Vizient, Principal, Value Transformation & Payer-Provider Alignment

On April 10, 2024, the Center for Medicare and Medicaid Innovation (CMMI) announced the Transforming Episode Accountability Model (TEAM), a proposed mandatory episode-based bundled payment model slated to begin in January 2026. This is the newest addition to an expansive list of alternative payment models supporting CMS's efforts to have all Medicare beneficiaries in an accountable care relationship by 2030. 

What is the new model?

The proposed five-year model will charge hospitals from select geographic areas with providing coordinated, high-quality care to traditional Medicare beneficiaries undergoing one of these five common, costly surgical procedures in a hospital inpatient or outpatient setting: 

• Lower extremity joint replacement
• Surgical hip femur fracture treatment
• Spinal fusion
• Coronary artery bypass graft
• Major bowel procedure

Selected hospital participants will be responsible for the cost and quality of care from surgery through the first 30 days after leaving the hospital. Performance will be assessed annually by comparing a hospital's actual Medicare fee-for-service spending to their region's target price, adjusted for both risk factors and quality performance in hospital readmissions, patient safety and patient-reported outcomes.  Quality performance on these measures will generate a composite quality score that potentially impacts the reconciliation payment or repayment amount by 10-15%.

CMMI believes these relatively homogeneous patient populations provide an opportunity to develop best practices and standardize care pathways across historically high-volume, high-cost acute care surgeries. Nationally, there are half a million annual discharges potentially eligible for TEAM with CMMI expecting the model to generate $705 million in Medicare savings over five years.

Who will be required to participate?

CMMI will be using a stratified random sampling of 803 core-based statistical areas (CBSAs), ultimately selecting 25% of them for mandatory participation in TEAM. Each CBSA will be grouped based on the average number of hospitals, the average number of safety net hospitals, the average spends and previous bundled payment model experience. A hospital's chances of being selected are 20 – 50% based on the characteristics of its CBSA. As CMMI is focused on expanding the reach of value-based care, they are opting to oversample CBSAs with a high number of safety net hospitals and limited previous bundled payment model experience. However, because they are looking to test the impact of different CBSA characteristics on outcomes and expenditures, the ultimate cross-section will be varied.  All acute care hospitals paid under the inpatient prospective payment system (IPPS) in the selected CBSAs will be required to participate. 

How is this different from previous models?

Although this model builds on key tenets of previous bundled payment programs such as the Comprehensive Care for Joint Replacement model (CJR) and the Bundled Payments for Care Improvement Advanced model (BPCI Advanced), TEAM's proposed structure highlights notable departures from its predecessors and emphasizes a clear evolution in the way that CMMI thinks about the role of bundled payments. 

1. Clearly delineating the roles of primary care and specialty care: Historically, CMMI has been plagued with overlapping payment models that have left ambiguity around which provider is ultimately responsible for a patient's care. TEAM's structure takes steps to mitigate this concern as CMMI has intentionally shortened the episode length to 30 days and focused on select surgical services only. This construct allows specialists to focus on what they can control and leaves chronic medical conditions and unrelated complications to be managed by primary care providers or accountable care organizations (ACOs) focused on population health.

   Defining these responsibilities more clearly is one step, but incentivizing connectivity across primary and specialty care is also required for optimal coordination of care. TEAM is the first bundled payment model to encourage longitudinal care relationships by requiring a transition from the acute surgical event back to a primary care provider.

   These mechanisms in TEAM come on the heels of CMMI beginning to provide specialty performance data to participants in ACOs and primary care models. This demonstrated commitment to coordination and transparency will continue to permeate all value-based payment models as integrating high-quality specialty care is a focus area not just for Medicare, but across all payers and employers.

2. Focusing on health equity: Advancing health equity through payment models is a key CMMI priority that supports person-centered care and increases access to high-quality care across all populations. TEAM furthers these efforts through numerous programmatic requirements and accommodations. First, all participants will be required to submit health equity plans, screen patients for health-related social needs and report socioeconomic data. Participants' target prices will be adjusted by a social need risk adjustment factor with metrics that have not been utilized in previous bundled payment models, including Area Deprivation Index (ADI) and whether a beneficiary qualifies for a Medicare Part D Low Income Subsidy. Safety net hospitals are more likely to be selected for participation, but they will have the option for reduced levels of risk. 

What should hospitals be doing to prepare?

We don't know which CBSAs will be selected for participation and the model will not be finalized until the FY2025 IPPS/LTCH PPS Final Rule is released later this year, but hospitals should consider what they can be doing to prepare. First, use publicly available Medicare data or your own ACO data to assess historical cost and utilization trends. It's critical to understand what drives costs in these episodes and to know how your hospital has performed historically compared to key benchmarks. Assess your physician landscape and consider how you can effectively partner with your orthopedic, neuro and general surgeons along with your primary care physicians to collaboratively redesign care and identify best practices.

We've learned through BPCI Advanced and CJR that bundled payment models can alter the national landscape when it comes to care delivery expectations, as we've seen with lower extremity joint replacements specifically. These care delivery models focused on better transitions of care and fewer readmissions/complications eventually become the new national standard. Payers, employers and advanced primary care providers are all looking to collaborate with experienced specialists who understand value and can deliver on cost and quality.

Regardless of whether you end up in a mandatory market, use this as an opportunity to develop an effective, coordinated and high-value specialty care strategy.