Insights

This week, in our In Focus section, Health Management Associates’ Medicare experts review the changes to the Center for Medicare and Medicaid Innovation’s (CMMI) Transforming Episode Accountability Model (TEAM) proposed in the Fiscal Year (FY) 2026 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long-Term Acute Care Hospital (LTCH) Proposed Rule (CMS-1833-P). The IPPS proposed rule, released April 11, 2025, maintains the model with no changes to the timeline, participants, accountable care organization overlap policies, or required episodes.

While most changes are technical in nature, involve minor methodological tweaks, or seek to align with the Trump Administration’s policy priorities, stakeholders should continue to assess their readiness and prepare to implement the TEAM model. This is a critical time for healthcare stakeholders to stay on top of this specific proposed rule, the TEAM model, and other federal and state-level developments that are affecting the healthcare system.

This article reviews key aspects of the IPPS proposed rule policies related to TEAM with strategic steps for stakeholders as they continue to prepare for the model’s implementation.

Background on TEAM

TEAM is a value-based care initiative that requires participating hospitals to manage costs for a range of surgical procedures, including both inpatient and outpatient services. The program involves bundled payments covering all aspects of care from the surgical procedure itself to most post-acute care occurring within a 30-day window following discharge from the hospital. Payments will be calculated based on regional benchmarks, and hospitals will assume financial responsibility for the quality and cost of care provided.

TEAM is scheduled to begin in 2026 with 741 hospitals required to enter into value-based arrangements. The program will affect how hospitals manage five types of surgical episodes in both the inpatient and outpatient hospital setting by shifting more risk to the hospitals themselves. This risk includes not only the cost of the surgery but also post-acute care, including readmissions, complications, and downstream provider services. The goal is to incentivize hospitals to improve care coordination, reduce costs, and enhance patient outcomes.

Proposed Changes to the Model

According to the proposed changes, CMS is moving forward with the five-year mandatory model largely as planned, with minor updates focusing on technical details rather than a significant overhaul. Some of the proposed changes were expected based on the administration’s policy priorities, including removal of:

• The Decarbonization and Resilience Initiative
• Health equity plans
• Health-related social needs data reporting

Other technical changes address flexibility for newly opened hospitals within TEAM’s required geographies, the impact of the possible expiration of the Medicare Dependent Hospital (MDH) program, and modified episode attribution to be based on discharge date, rather than start date. CMS is also still seeking comment on how to finalize the low-volume threshold policy, where hospitals under a certain number of procedures would only have Track 1 (upside only) applied.

Overall, CMS expects that its proposed changes to TEAM “should not result in dramatic shifts to the Medicare savings estimate” of $481 million in savings to CMS across the model’s five performance years.

Stakeholder Considerations for the Future

Keeping this model largely intact and maintaining the mandatory nature signals that the Trump Administration intends to continue with value-based arrangements and is looking for ways to achieve program savings. A mandatory model will generally achieve a higher level of savings than a voluntary one.

As they prepare for implementation, stakeholders will need to take action, including:

• Thoroughly reviewing the proposed changes to the TEAM model to understand the changes and their implications to model of care policies and operations, financing, and collaborations with clinicians and care teams outside of the facility. Consider submitting comments to CMS on the proposed changes. Review the list of hospitals in TEAM.
• Contextualizing their work to implement this model alongside other pending federal and state policy changes. Stakeholders will benefit from staying on top of developments in this dynamic policy landscape since many pending proposals have financial and structural implications for healthcare providers.
• Preparing for the mandatory model by developing strategies to manage the financial risk associated with the bundled payments and improving care coordination. This may include modeling hospital payment policies and assessing the implications of the proposed changes.
• Assessing the system and technology changes and collaborations that will be required to effectively manage risk in the model.

Connect With Us

Health Management Associates’ (HMA’s) Medicare Practice Group monitors federal regulatory and legislative developments in the inpatient setting and assesses the impact on hospitals, life science companies, and other stakeholders. Our experts interpret and model hospital payment policies and assist clients in developing CMS comment letters and long-term strategic plans. Our team replicates CMS payment methodologies and model alternative policies using the most current Medicare fee-for-service and Medicare Advantage claims data. We also support clients with Diagnosis Related Group (DRG) reassignment requests, new technology add-on payments (NTAP) applications, and analyses of Innovation Center alternative payment models.

For more information about the proposed policies, contact our featured experts below.

April is always a busy month for Medicare. It is the month when Medicare Advantage (MA) policies get finalized and the bid season moves into the final stretch. It is also the starting month for annual rule making for the next cycle of Medicare payment rules. These provide important signals about the Center for Medicare & Medicaid Services (CMS) plans for modernizing Medicare’s quality programs and commitment to value-based care. 

This month, we’ve highlighted the work that HMA’s federal policy experts do to support organizations’ Medicare projects. We’ve discussed our experts’ ability to support organizations with the transition to digital quality measures. Our experts were on top of policies that made it into final MA rate notices and policy rules. We also flagged what wasn’t included and what this may mean for the future of Medicare policy. We examined the notable policy proposals in Medicare payment rules for inpatient hospitals and how these are a “canary in the coal mine” for other upcoming rules, especially related to making quality reporting and measurement more efficient and actionable. And we asked whether Medicare is ready for the next era of innovation?  

We are at the start of a new season of priority setting for CMS. Early signals of what will be important to policy officials include alignment with the Make America Healthy Again (MAHA) initiative, digital health, transparency, and addressing fraud. 

Impact of Recent Policy Changes 

Recent policy changes have impacted the Medicare landscape in various ways. Changes announced in recent Medicare Advantage and Part D rate notices and policy include updates to payment models, quality reporting requirements, and measures to enhance transparency and accountability. The focus on digital health and the integration of digital tools into clinical models are reshaping how care is delivered and measured. Additionally, the emergent emphasis on chronic disease and program integrity is driving organizations to take a fresh look at their data, models of care, and strategies for collaborating with partners to improve patient care. Staying informed and adapting to these policy changes is crucial for organizations to remain competitive and deliver high-quality care to Medicare beneficiaries. 

The Future of Medicare 

Medicare will continue to play a vital role in providing healthcare to the more than 68 million beneficiaries in the program, as it is poised for significant transformation through the integration of digital tools, increased focus on quality care, and the need for cost efficiency in both Medicare Advantage and in Fee-for-Service Medicare. Organizations that stay ahead of these changes and align with policy priorities will be well-positioned to drive meaningful improvements and ensure the sustainability of the program. 

As we look ahead, the commitment to innovation, transparency, and quality will be key to shaping the future of Medicare. HMA is helping clients navigate this dynamic landscape in Medicare Advantage, integrated care programs for dual eligibles, Medicare Advantage Stars and Medicare value-based care programs, PACE, and rural-focused health by providing actuarial support, long term strategic plans for data and quality initiatives, modeling of payment policies, and analyses of alternative payment models.   

If you missed it, watch the replay of our Medicare Town Hall from Wednesday April 30^th. And to learn more about our work in Medicare, read our recent blog post Navigating Uncertainty in Medicare and other Federal Health Programs or visit our Medicare page. Our policy team, actuaries, clinicians and digital quality experts are ready to help advance your Medicare projects. Contact us at Medicare@healthmanagement.com.