For years, hospitals could choose whether to take on bundled-payment risk. As of January 1, 2026, that choice is gone for a large group of them.
The Transforming Episode Accountability Model — TEAM — is mandatory, it is running now, and one early analysis suggests most participating hospitals could lose money on it unless they actively change how they manage surgical episodes.
- What TEAM is
TEAM is a five-year, mandatory, episode-based payment model running from January 1, 2026 through December 31, 2030. Selected acute-care hospitals in chosen geographic markets are accountable for the cost and quality of care for Traditional Medicare patients undergoing one of five surgical episodes — lower-extremity joint replacement, surgical hip/femur fracture treatment, spinal fusion, coronary artery bypass graft, and major bowel procedures — from the procedure through 30 days after discharge.
More than 700 hospitals across 188 markets are required to participate.
- “Mandatory” is the word that changes everything
Voluntary bundles selected for the confident. TEAM conscripts everyone in the market.
Earlier models like BPCI-Advanced were voluntary — hospitals that opted in tended to be the ones already good at managing episodes. TEAM removes self-selection.
Hospitals that never built episode-management capabilities are now accountable for episode cost and quality whether or not they are ready. That is the point: CMS wants to see what mandatory accountability does where voluntary programs never reached.
- The money is real — and it can go the wrong way
Target prices are set on regional, risk-adjusted episode spending across a three-year baseline, adjusted for quality. One early analysis using 2023 Medicare claims estimated that up to two-thirds of hospitals could lose an average of roughly $1,350 per case.
Across surgical volume, that adds up quickly. There is a glide path in the first year that limits downside for many participants, but the model escalates from there.
- The cost lives after discharge — where hospitals have least control
The episode doesn’t end at the hospital door, but the hospital’s direct control mostly does.
The 30-day post-discharge window pulls in skilled-nursing stays, readmissions, and post-acute utilization — precisely the costs hospitals influence but do not directly deliver.
Succeeding under TEAM means managing transitions: discharge planning, post-acute partner selection, readmission prevention, and the surgeon and care-team decisions that shape the whole episode. It is a care-coordination problem wearing a payment model’s clothing.
- The ACO overlap is a feature, not a footnote
TEAM is designed to coexist with ACO models — a patient aligned to an ACO can also fall into a TEAM episode if they have one of the surgeries at a participating hospital.
For systems inside both, that means two overlapping accountabilities for the same patient — and an opportunity. Organizations that align their ACO care-management and TEAM episode-management efforts, instead of running them in separate silos, will be the ones that come out ahead.
Final Thoughts
TEAM is the clearest signal yet that CMS is done waiting for hospitals to volunteer for risk.
As someone who has worked across strategy and the clinical side, I would put it plainly: this is a care-coordination test with real dollars attached, and the hospitals that treat it as a billing exercise will be the two-thirds that lose. The ones that treat it as a transitions-of-care problem — surgeons, discharge planning, and post-acute partners working from the same playbook — can actually win on it.
If you’re in a TEAM market and your plan is to wait and see, the model’s downside is already running against you. At HealtheNomics I help hospitals and systems build the surgical-episode and transitions-of-care management that turns mandatory risk into a manageable one.
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