Takeaways from FY 2025 IPPS Proposed Rule: A new payment model targeting Medicare patients

By Maribeth Labbe June 17, 2024

What is the “Transforming Episode Accountability Model” (TEAM)?

The Transforming Episode Accountability Model (TEAM) is a new payment model recently proposed by CMS. TEAM is a mandatory five‐year episode based payment model in which hospitals in certain geographic regions would be responsible for the total cost of care during and for 30 days after these five different surgical procedures:

• Lower Extremity Joint Replacement
• Surgical Hip Femur Fracture Treatment
• Spinal Fusion
• Coronary Artery Bypass Graft (CABG)
• Major Bowel Procedure

The specific geographies being chosen to participate will likely be announced in late 2024 or early 2025.

Acute care hospitals selected to participate in the model would be accountable for ensuring that people with Medicare receive coordinated, high-quality care during and after certain surgical procedures. Selected hospitals would also be required to refer patients to primary care services to support long-term positive health outcomes. CMS seeks comment on the proposed Transforming Episode Accountability Model and expects to release a final rule in the fall of 2024. The actual program model would start in January 2026.

Why TEAM?

According to CMS, patients insured through traditional Medicare who undergo a surgical procedure at a hospital or similar facility “may experience fragmented care that can lead to complications in recovery, avoidable hospitalization, and increased spending.” Click here for the full fact sheet. TEAM is structured to drive equitable outcomes for patients and providers alike through improved quality of care and decreasing both patient and provider costs.

As a mandatory model, TEAM would advance testing and evaluation of episode-based care, where each treatment needed for an illness is considered an ‘episode.’ The model addresses participation challenges inherent in voluntary models, namely provider attrition and selection bias against Traditional Medicare surgical patients.

Hospitals required to participate would continue to bill Medicare Fee-for-Service (FFS) but would receive a target price based on all non-excluded Medicare Parts A & B items and services included in an episode. Hospitals may earn a payment from CMS, subject to a quality performance adjustment, if their spending is below the target price. Hospitals may owe CMS a repayment amount, subject to a quality performance adjustment, if their spending was above the target price.

Does this benefit providers?

While the new model is largely targeted at improving health outcomes and experience on the patient side, there are key provider and facility benefits in the short and long term.

For example, hospitals that provide care for a higher rate of underserved patients would be able to take advantage of TEAM to provide more value-based care with reduced financial pressure. Risk adjustments would also reflect proper pricing, particularly for underserved communities, and ongoing data review and analysis would ensure continuous needs assessment and quality improvement for facilities from CMS.

Previously, all other proposed rules have been voluntary, and TEAM is the first mandatory proposed model. Transitioning from a voluntary model to a mandatory model is a big change for the industry, but one that could have lasting positive outcomes across the continuum of care. For more information on TEAM and its potential impacts, please reach out to Maribeth Labbe or another member of the BNN revenue cycle team.

To read the full proposal, go to FY 2025 IPPS Proposed Rule Home Page.

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