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What starts on Jan. 1
TEAM is a five-year model running through Dec. 31, 2030. Acute care hospitals paid under the inpatient and outpatient prospective payment systems in CMS-selected metropolitan areas must take part. The episodes are lower extremity joint replacement, surgical treatment of hip and femur fractures, spinal fusion, coronary artery bypass graft and major bowel procedures.
Each episode begins with the inpatient stay or outpatient procedure and runs 30 days past discharge. Hospitals keep billing fee-for-service as usual. After the year closes, CMS compares actual Medicare Part A and B spending with a risk-adjusted target price. Hospitals that come in under target can earn a payment, and those over target may owe money, with both amounts adjusted for quality.
Year one is a rehearsal, but not for long
In the first performance year all participants may choose Track 1, which carries no downside risk. Safety net hospitals can stay there for up to three years. Starting in year two, safety net and rural hospitals can use a lower-risk Track 2, while Track 3 carries full two-sided risk from the start for hospitals that want larger potential gains.
That structure gives most systems twelve months to build the processes that will matter once real money is at stake. Quality scoring draws on readmissions, patient safety and patient-reported outcomes, so the clinical and financial work cannot be separated.
Where to focus in the first 90 days
- Post-acute spending. Skilled nursing and home health use usually drives the gap between episodes that beat their target and those that miss it. Participating hospitals can waive the three-day inpatient stay rule for skilled nursing admissions tied to these episodes, which can support earlier, appropriate discharges.
- Data flow. Confirm that claims data from CMS reaches the people who can act on it, and set a monthly review of episode costs by surgeon and service line.
- Physician alignment. Decide whether gainsharing arrangements make sense and involve legal counsel early.
- Handoffs to primary care. CMS expects participants to connect patients with primary care after surgery, which also helps contain readmissions.
Boards should ask for a TEAM dashboard by the end of the first quarter that shows episode volume, spending against target and post-acute use. Hospitals that treat year one as a dry run with a real scorecard will be better placed when downside risk arrives.
Archive entry for Jan 1, 2026, added Nov. 11, 2026.