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One of the largest and most significant changes to specialty care payments in Medicare commences in January. TEAM (Transforming Episode Accountability Model) is poised to put hospitals at risk for total costs of care for the highest cost Medicare surgical episodes, including Coronary Artery Bypass Graft (CABG), Lower Extremity Joint Replacements (LEJR), major bowel procedures, surgical hip femur fracture repair (SHFFT), and spinal fusion.
Granting one year’s grace on assuming risk to meet an average cost formula, the model will force shifts in the way hospitals and physicians have typically handled surgical cases. Hospitals, which will be at risk for all episode costs for the procedure itself and the next 30 days, will need to collaborate with their surgical teams and primary care physicians on methods of lowering costs.
Failure to achieve cost levels below the targeted levels will mean that hospitals that don’t meet the cost target will have to pay back CMS. In simplistic terms, the formula targets an average cost that is patient-risk- and geography-adjusted. Over time, this calculation has the potential to lower the average cost target every year. Hospitals will compete to drive toward lower benchmarks. As their cost performance will most likely be made public, it will affect hospitals’ standing with private health plans’ high-performance networks.