The team is here and the hospital has no time to prepare

The Transforming Episode Accountability Model (TEAM) is the first mandatory alternative payment model (APM) launched by the Centers for Medicare and Medicaid Services (CMS), officially launching on January 1, 2026. It represents a major shift toward bundled payments and offers tremendous opportunities to improve care and reduce costs. But the potential benefits come with a caveat: If downside risks become part of the plan in 2027, most hospitals authorized to participate could lose money if they don't make any changes to how they currently operate in the five designated TEAM phases of care, analysis shows.

There is also good news. Organizations can take steps now in the early months of the program to set themselves up for success by evaluating past performance, identifying opportunities for improvement, and implementing event-driven clinical and operational workflows. Optimizing early will provide a competitive advantage and a greater chance of receiving positive rewards and avoiding negative penalties in TEAM.

Why are many TEAM participants not ready? Here are three common themes I’ve seen in conversations with industry experts, hospital and physician leaders.

Reason #1: Too much reliance on past bundling experience and performance

Many hospitals rely on past experience with bundled payments, assuming that this will automatically translate into TEAM success. Of course, having some experience with bundled payments helps, but hospitals must understand that there are significant differences between previous models such as Bundled Payments for Care Improvement (BPCI) and TEAM.

Two key changes include:

• Benchmark: Previous bundled payment plans set benchmarks based on past individual performance. This creates difficulties for high-performing companies, who find it increasingly challenging to exceed their cost and quality targets year after year. TEAM sets targets based on regional benchmark pricing across nine census tracts. While this eliminates competition with yourself, it creates the challenge of competing with other potentially high-performing sites and surgeons in your area.
• schedule: TEAM shortens the post-acute window from 90 days (typical of previous bundled payment plans) to just 30 days. This forces hospitals and surgeons to focus on surgical quality, initial hospitalization, and transitions of care to reduce costs.

Both changes require new approaches. Cost benchmarks will now become a moving target as other players in the region improve performance, and cost reduction strategies within the project's 90-day post-acute time frame may not be a driver in TEAM.

Reason #2: Plan 2026 as a “Practice” Year

TEAM hospitals know they won't be penalized for failing to meet cost and quality targets in the 2026 performance year, and some may still want to wait and see how their early performance fares before making changes in 2027. The pitfall of this approach is underestimating the time it will take for changes to have a significant impact on future project performance.

Identifying the levers that can be used to improve cost and quality, designing and implementing effective workflows, and monitoring the results to determine if they are having the desired impact (and if not, making additional adjustments and improvements) can take anywhere from several months to a year. Hospitals and providers who wait until early 2027 to implement changes may also miss the target in 2027 and be subject to negative penalties of up to 20%.

Reason #3: Competing priorities and lack of broader strategic alignment

With only five initial procedures included in TEAM, some hospitals may not view the potential downside risk (in total dollars, or as a percentage of their profits) as sufficient to devote significant resources to preparing for program launch. Hospitals already face a range of financial pressures, from emergency department admissions and throughput challenges to workforce shortages and post-acute placement delays.

But this misses two key points. First, CMS has expressed its intention to expand the list of procedures in TEAM, which will put additional financial pressure on hospitals that have not invested appropriate time and resources in developing effective care processes and procedures from the outset. Experts predict that expansion could come as early as 2027, so hospitals that wait for the first year could find themselves further behind when their second performance year begins.

Second, efforts to optimize TEAM and bundle performance now may translate into success in addressing other clinical and financial priorities. Bundles have proven effective in addressing rising costs and improving the patient experience at many centers of excellence across the country. Mastery of TEAM bundled payments could also translate into additional opportunities outside of CMS, including in the commercial market, to launch potential bundled services for a variety of high-cost, high-volume procedures.

Specifically, bundled payments can address cost and quality issues in the following ways:

• Improve surgical quality and efficiency by avoiding unnecessary consultations, optimizing operating room efficiency, and reducing avoidable complications and surgical errors
• Enhance care transitions through seamless discharge planning and patient care follow-up workflows, strong partnerships with post-acute care facilities, and minimizing avoidable readmissions
• Encourage more collaboration among providers and agencies involved in care—from pre-surgery consultation to surgery and post-discharge care
• Move appropriate procedures to a more cost-effective location, such as a hospital outpatient facility
• Minimize cost differences between sites or providers and over-reliance on unnecessary services such as inpatient rehabilitation

Some of the longest-running prospective bundled payment programs in the United States have proven that bundled payments are a viable option for delivering excellent care at lower costs. TEAM participants can draw important lessons from the established model in three key areas: people, process and technology.

First, physician advocates are critical to the success of any major transformation, especially for programs like TEAM that will fundamentally shift decades of fee-for-service behavior to a value-based care model. These champions can contribute to the success of bundled payments by driving cultural change, enabling shared accountability, engaging every member of the care team, and working with finance, IT, and other departments.

Second, organizations must invest time and effort in developing processes that better coordinate care events. This includes identifying events, establishing appropriate and effective care pathways, planning care transitions, preventing readmissions, and soliciting feedback from providers and care teams to improve processes over time.

Finally, TEAM hospitals (and any organization planning to participate in a CMS-driven or commercial bundled payment model) need a strong technology and services partner to design, implement, monitor, and optimize the program. Technology platforms must include broad analytical insights with modeling and drill-down capabilities so everyone can identify the levers they can leverage to reduce costs and improve quality of care, seamless workflow management through integrated care and analytics applications, and claims management technology that can easily bundle and unbundle incident-related claims.

Transitioning from fee-for-service to value-based care takes time. This doesn’t happen in days or weeks, but rather takes months to successfully implement and optimize. First movers who refine and strengthen their TEAM strategies will be ready for the next wave of bundled APM, whether that's episodic expansion within TEAM, new CMS mandated models, or commercial payers designing their own programs.

Today, TEAM is an active driving feature in the broader shift toward bundled payments and APM, but this will not be the end. Through preparation, deep physician engagement, strong partnerships, and advanced technologies supporting APM, organizations can now avoid the downside risks of TEAM and position themselves as competitive leaders for the future.

Photo: Andriy Onufriyenko, Getty Images

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