Hospitals mandated to take part in the new TEAM's model have four months to get ready for the Jan. 1, 2026, start of the episode-based model.
Until the Transforming Episode Accountability Model (TEAM) was finalized in late July in the 2026 Inpatient Prospective Payment System final rule, hospitals were unsure whether the model introduced under the Biden administration would move forward.
Hospitals have been watching and waiting, according to Dr. David Shulkin, former secretary of the Department of Veterans Affairs and board member at Sanford Health, a large rural hospital system based in Sioux Falls, South Dakota.
“Hospitals are grappling with the reality that this is going to happen Jan. 1,” Shulkin said. “The reality is, this is coming.”
TEAM is mandatory for 741 hospitals. The Centers for Medicare and Medicaid Services model requires bundled payments for episode-based care for five high-spend surgical procedures: coronary artery bypass grafting, surgical hip and femur fracture treatment, lower extremity joint replacement, spinal fusion and major bowel procedures.
Participating hospitals are located in 188 selected regions, according to CMS and The Institute for Accountable Care.
Specialty care represents roughly 60% of total care costs in the United States.
The model requires downside risk depending on one of three tracks hospitals choose to take. The alternative payment model starts Jan. 1, 2026, and runs for five years, through Dec. 31, 2030.
The American Hospital Association has said it objects to the model being mandatory as it puts at risk hospitals not large enough in size to support the investments needed.
Shulkin was asked why he believes the Centers for Medicare and Medicaid Services made TEAM mandatory.
“The government generally has one lever,” Shulkin said, “generally to force things in the market. You do not get the same type of participation when you do it on a voluntary basis. The smaller hospitals are not likely to raise their hand volunteering for this.”
The final rule did exclude some safety net hospitals, he said.
Shulkin added, “This is uncomfortable when put into a mandatory model.”
CMS has mandated bundled payments prior to TEAM. The new model builds on the Comprehensive Care for Joint Replacement (CJR) model for hip and knee replacements and the Bundled Payments for Care Improvement (BPCI) models.
TEAM focuses on the total cost of care 30 days post-surgery.
“Hospitals are taking on additional risk beyond the procedure,” Shulkin said. “It’s a bigger bite.”
What CMS is forcing is value-based care for most Medicare beneficiaries by 2030 to control healthcare costs and improve patient outcomes.
“This is an important indication,” Shulkin said, “the fact that we want hospitals to have accountability over the total cost of care.”
WHY THIS MATTERS
Shulkin recommends hospitals:
Do a gap analyses
Deploy data monitoring
Look at data beyond the four walls to understand the patient journey during a 30-day episode of care
Create a team and a plan of action
Deploy AI for predictive analytics
THE LARGER TREND
Shulkin said there are lessons to be learned from his time at the VA.
“To me the most important thing I learned at the VA is proactive outreach to patients,” he said. “Let the patient know that you care and there are things you can do to improve their health outcomes.”
This is opposed to the patient getting into trouble and showing up in the emergency room.
Shulkin was the ninth Secretary of the U.S. Department of Veterans Affairs. A board-certified internist, Shulkin has served as chief executive of leading hospitals and health systems including Beth Israel in New York City and Morristown Medical Center in Northern New Jersey.
Email the writer: SMorse@himss.org