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Medicare’s Transforming Episode Accountability Model is projected to save $46.6 million by 2030, with safety-net hospitals potentially receiving the highest reconciliation payments.
The Transforming Episode Accountability Model (TEAM), which was launched in January 2026 by CMS, is a mandatory episode-based payment model for hospitals. The model builds upon previous initiatives, such as the Bundled Payments for Care Improvement Advanced (BPCI-A) and the Comprehensive Care for Joint Replacement (CJR) models. TEAM aims to improve the quality of care and reduce Medicare spending, with a focus on 5 major episodes of care: lower-extremity joint replacement, hip or femur fracture surgery, spinal fusion, coronary artery bypass grafting, and major bowel procedures.
As with previous bundled payment models, participating hospitals are assigned an episode-specific spending target for selected clinical conditions. Participants continue to receive Medicare fee-for-service payments, which are reconciled with the predetermined target price after each performance period. Participants receive bonuses if spending is below the target and incur penalties if spending exceeds the target. As with the BPCI-A model, TEAM incorporates quality performance measures by adjusting reconciliation payments based on the Composite Quality Score (CQS).
Nevertheless, there are differences between the 2 models. First, BPCI-A was a voluntary program, whereas TEAM is mandatory. All acute care hospitals in selected Core-Based Statistical Areas (CBSAs) are required to participate in TEAM (certain hospitals that participated in BPCI-A or CJR through the end of those models were given a 1-time opportunity to opt in to TEAM). Second, although TEAM evaluates spending in the 30-day postdischarge period, BPCI-A focused on the 90-day postdischarge period. Third, TEAM focuses only on the 5 surgical procedures mentioned above, whereas BPCI-A included a wider range of both medical and surgical episodes.
The mandatory nature of TEAM may address important limitations of voluntary participation models such as BPCI-A. In BPCI-A, voluntary participation limited its impact in 2 important ways. First, a relatively small share of eligible patient episodes were subject to the program. In Model Year 4, approximately 3.3 million hospital discharges and outpatient procedures were eligible for BPCI-A, but only 18.9% were under the model. The limited inclusion of episodes in BPCI-A had limited gross savings. Second, hospitals selectively participated in BPCI-A and chose episodes more likely to yield bonus payments. Although evidence suggests that BPCI-A reduced medical spending, bonus payments to hospitals exceeded these reductions, resulting in net losses to CMS. With mandatory participation in TEAM, hospitals cannot selectively choose episodes that maximize financial advantage. This design feature should limit excess bonus payments to participants.