Bellinger Moody: CMS TEAM — Alternative Payment: Transforming Episode Accountability Model

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Bellinger Moody (00:05):

So Gary and I, we've been working as colleagues now for many, many years and he keeps me honest. I call him my little bean counter because I have all these grand ideas and Gary always says, Bellinger, these are the numbers. We can't do that. So when we started looking at this whole model of perioperative medicine, one of the things that came to mind for me was TEAM because this is something that is going to change the way that we perform our services and it's basically going to require a shift in the way we do things. And I'm going to talk a little bit about what TEAM is and what it's going to do in terms of services for hospitals. So let's get started on that. So what is TEAM? TEAM stands for Transforming Episode Accountability Model and it's a new alternative payment model from CMS that started January 1, 2026.

(01:05)
So what CMS did was they targeted 745 hospitals across the country. So you may not even know that you're in it, but you are. And they did open it up for some volunteer hospitals. So they started with 735 and they said, "We'll allow some of you to volunteer to participate." And that was back in 2025 and they had like 10 hospitals that volunteered. So what it is basically is a transition through the bundle payment for care improvement to the comprehensive care for joint replacement to now TEAM. And I'm going to talk about that. So this is the model here aims to enhance the quality of care for Medicare beneficiaryficiaries by holding the hospitals responsible for the entire episode of care from the beginning of the surgery all the way through 30 days past discharge. That's what this is. And so what's going to happen is there's going to have some stop loss here where you could get 10% as a bonus or you could be penalized 10% and that's going to increase over a five-year period.

(02:14)
So this is a five-year program that CMS has put in place that's going to go from January one, 2026 through December 31st of 2030.

(02:27)
So as I said, you're going to see a progression from fee for service to what? To value-based care. That's what's happening here. And if you don't know it yet, the three primary drivers of healthcare going into the future are patient satisfaction, reduction in costs and improvement of quality care. So if you're not on that boat yet, this is going to help you get on it, help the hospitals get on it. So you started with a voluntary pilot stage BPCI program that moved to a more structured mandatory comprehensive care for joint replacement model. And it was voluntary at first. And then when you got to the CJR, parts of it were mandatory. Well, guess what? TEAM is mandatory. So we're going to talk a little bit about that evolution here. So CMS introduced the BPCI back in 2013 and it was one of the first steps CMS took toward bundled payments and focus on aligning incentives among providers to reduce costs while maintaining the quality of care.

(03:36)
Then they moved to CJR. And this was an expansion of the bundle payments initiative. And they built on the BPCI success and introduced the CGR model, which specifically targeted hip and knee replacement procedures. And they held a bunch of people accountable for the cost associated with that. Now what's going to happen going forward, and this is what I see happening in the future, is you're going to have people, specialties and different specialties fighting for a portion of that bundled payment that's going to be given to the hospitals and you're going to have to be able to prove what you're going to get as a part of that. So I think the perioperative medicine clinic is going to play an important part of that. And I'm going to talk about that here in just a minute. So then they morphed into what's called team now, right?

(04:27)
This new alternative payment model and they expanded the surgeries that this applies to. So now we're talking about spinal procedures. We're talking about knees, hips. We're talking about even inpatient ankles, total ankle procedures. We're talking about CABGs and major bio procedures that this program actually applies to.

(04:51)
So as I said, it's a mandatory participation for 735 hospitals then went to 745 because some hospitals volunteered to participate in it. Now, what I think is going to happen over the next few years is after they get the performance data from this year, they're going to take a look at it and then they're going to require more hospitals to be involved in it. But as it stands right now, there's no more voluntary participation in it. They opened it up in 2025 and they closed it. So there will be episode-based payment in this model. Hospitals receive a bundle payment for specific surgical services, like I said before. And then there's target procedures, the CABGs, the bowels. I talked about that just a minute ago, but they're going to utilize quality metrics as a part of this program. And there's something called a composite quality score that they're going to use in addition to what they call a reconciliation of payment.

(05:48)
The cost report that you send into Medicare, they're going to reconcile that based on three years of data, previous years of data. And they're going to have target prices set that you're going to have to either meet if you don't meet it, or if you exceed it, you may get a bonus on the quality metrics.

(06:07)
If you're below it, then you're going to have to pay money back to CMS and we'll talk about that here in just a minute. Again, the key here is financial accountability for the entire episode of care. And here I talked about the target prices for episodes. Those are going to be done each performance year is going to be reevaluated and they're going to set new target prices each year. So what I anticipate will happen is after the first year, most of the hospitals are not going to really do very much in it. And you don't have to change much of what you're doing because a lot of the data's going to come from your inpatient quality reporting that you're currently doing as well as outpatient quality reporting. That's where they're going to get a lot of the data from. So you're not going to have to change a lot of things the first year and the first year basically is all upside.

(06:56)
So after that first year, then I think hospitals are going to start taking a look at it and saying, "Hey, what did we miss here and what are our shortages where we can come back and make sure that we don't pay at the end of the next target year?" All right. There's three tracks that are going to be applied here in CMS team and I'm going to talk about those three. So the first year, the first performance year, track one, all team participants are eligible in track one and there's only an upside risk here. So you can only get a bonus, there won't be a penalty. Now in track two, the eligible participants are your safety net hospitals, your rural hospitals, your Medicare dependent hospitals, sole community hospitals, and essential access community hospitals. And in this track there's an upside and this is for performance years two through five.

(07:54)
There's an upside and downside risk and a 10% stop gain loss in terms of what you could pay or what you could receive. And the CQS adjustment that composites quality score that I talked about, that's going to be up to 10% for positive reconciliation amounts. So you may get a bonus of 10% or it's going to be 15% for a negative reconciliation amount. You're going to have to pay 15% of that back to CMS. And then track three, again, it moves up to 20% and then CQS adjustment is 10%. So as you can see, it goes up each year. Now let me talk about why I think the perioperative medicine clinic is so critical here. I see the perioperative medicine clinic as on primary mechanism for hospitals to make sure that they meet these team requirements because what it does is it front loads risk management.

(08:54)
The periactive clinic operates before the patient enters the team episode and it focuses on optimization. It focuses on medical reconciliation, those things that are important to making sure you meet the quality metrics. It reduces avoidable cancellations and delays. Same day surgical cancellations are pure what? They're pure cost under the team model. That's what it's going to be, pure cost. And it standardizes the care pathways that are utilized in perioperative medical clinics. So you're talking about evidence-based pre-op testing, you're meeting the ERAS protocols, opioid sharing, sparing, anesthesia plans, those kinds of things. So it also prevents post-acute cost explosions. Most team financial losses happen after discharge, right? Not in the perioptive medical clinics, right? I mean, not in the OR. So CMS heavily weighs readmissions and readmissions are going to play a big part in that composite quality score. So is skilled nursing facility length of stay and emergency department bounce backs.

(10:04)
So that is going to feed into your composite quality score that they utilize to weigh what ... And that scale is from zero to 100. You're going to have a number assigned and they're going to weigh that when they decide how much you're going to pay or how much you're going to receive in addition to what was spent. And then the perioperative clinic also serves as what I consider to be a data backbone for this whole team thing because better documentation leads to more accurate target pricing and less downside risk if you're documenting correctly. Okay. Now let me talk about some takeaways here and I'll end this. Team shifts the financial risk upstream, right? So financial performance is now going to be driven before the surgery and not after discharge. So hospitals that don't manage pre-op risk, you will absorb avoidable downstream costs. You will absorb those costs.

(11:02)
Post-acute utilization is the biggest margin threat because most downside risk in team comes from SNF utilization and length of stay, readmissions, and as I said, emergency department bounce backs. So clinical variation is also now a financial liability because team rewards what? Predictability and it penalizes unwarranted variation across pre-op testing and length of stay. Okay.

(11:33)
A couple of other takeaways. Leadership is going to have to have alignment and that leadership alignment determines whether you're going to succeed or fail under team because it cuts across surgery, it cuts across anesthesia, hospital medicine, care management, finance, it cuts across all of that. So the other thing I want you to realize and take away from this is team converts. What it does overall is it converts surgical episodes from volume-based revenue risk, revenue to risk management portfolios and hospitals either are going to control the episode or you're going to absorb the cost. That's what's going to happen. Either you control that episode or you're going to be paying back money to CMS. So I want to talk about the perioperative medicine clinic value contribution to team. As I said, team shifts the risks upstream. So the perioperative medicine clinic is how hospitals can manage and mitigate that risk before it becomes expensive for the hospital.

(12:37)
So hospitals without a strong perioperative medical clinic, you're going to struggle under team. So if you haven't looked at the perioptive medicine clinic, I strongly recommend that you do so. Take a look at what you're doing right now because a lot of you are providing the services but you're not billing for it. And hospitals with a strong PMC, you'll be able to bend the cost curve and protect your margins there. So that's basically what I wanted to talk about today. Again, you want to make sure that you are aware of what's happening with team. If you have any questions or if you want more information about it, I'm happy to provide that to you. I'll be around for questions if you want.

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