CMS’ new Transforming Episode Accountability Model set to replace and expand on BPCI-A and CJR

The Centers for Medicare & Medicaid Services (CMS) recently announced the Transforming Episode Accountability Model (TEAM), set to launch on Jan. 1, 2026. This new mandatory model, replacing voluntary Bundled Payments for Care Improvement Advanced (BPCI-A) and Comprehensive Care for Joint Replacement (CJR), introduces episode-based payment tied to quality metrics. CMS aims for the TEAM model to standardize cost management, care coordination, and quality outcomes across healthcare, impacting orthopaedic practices heavily. It is imperative for orthopaedic surgeons to pay attention to these changes.

What is TEAM?
TEAM targets cost control and quality improvement by holding acute-care hospitals accountable for expenses across an entire care episode, including preoperative, perioperative in-hospital, and 30-day post-discharge care. Under this model, CMS sets a bundled target price, and if a hospital keeps actual spending below this price while meeting quality targets, the hospital receives reconciliation payments. Conversely, if spending exceeds the target, the hospital faces financial penalties.

For orthopaedic surgeons, TEAM is especially relevant, as it covers three common, high-cost surgical episodes: lower-extremity joint replacements (including hip, knee, and ankle), surgical hip/femur fracture treatment, and spinal fusion. CMS aims to leverage the high post-acute costs in these procedures, often accounting for a significant portion of total episode spending, to drive improved discharge and recovery practices.

TEAM primarily involves acute-care hospitals, with CMS as the model’s administrative body. However, its design encourages collaboration with other providers, such as surgeons, rehabilitation facilities, and home health agencies. Orthopaedic surgeons will play a crucial role, as their patient outcomes directly impact the hospital’s performance against TEAM’s cost and quality metrics.

Physician group practices are not directly accountable but can engage through financial partnerships with TEAM participants, allowing them to benefit from successful cost management and quality performance. These co-management agreements allow better alignment and accountability for patient care and shared financial incentives.

The TEAM timeline is as follows:

• The launch date is Jan.1, 2026.
• 2026 to 2030 is an initial performance period when hospitals will participate, results will be tracked, and CMS will assess TEAM’s effectiveness.

Participation tracks
TEAM introduces three tracks with varying levels of risk, allowing hospitals to adapt over time:

• Track 1: Available only in the first year, except for safety-net hospitals, this track includes only upside risk. If a hospital meets quality and cost targets, it receives reconciliation payments with a maximum gain of 10%.
• Track 2: For safety-net hospitals and select others, track 2 begins in year two and involves two-sided risk with a 5% cap on gains or losses.
• Track 3: Open for all years, track 3 includes full two-sided risk, with stop-loss and stop-gain limits set at 20%.

Where is TEAM being tested?
CMS selected 25% of eligible Core-Based Statistical Areas to participate, ensuring a mix of metropolitan, rural, and underserved areas. By targeting regions with high-cost, high-volume care episodes, CMS aims to assess TEAM’s impact on a broad range of healthcare settings. CMS will also offer a one-time, voluntary opt-in policy for hospitals participating in BPCI-A and CJR that are not located in the mandatory Core-Based Statistical Areas.

CMS employed a stratified sampling method, oversampling areas with safety-net hospitals. This method aims to capture insights into how TEAM affects diverse populations, especially in regions with historically high costs or disparities in care.

Why this matters for orthopaedic surgeons
As TEAM shifts financial accountability for entire episodes to hospitals, orthopaedic surgeons are central to the model’s success in managing surgical costs and improving post-acute outcomes.

For example, surgeon performance directly impacts quality metrics and financial impact. Hospital reimbursement under TEAM depends on a Composite Quality Score, which includes readmission rates, safety, and patient-reported outcomes specific to orthopaedic procedures. Surgeons’ performance in these areas will directly impact hospital reimbursements. Elective surgery has inherently greater ability to control for 90-day episode-of-care costs, whereas nonelective fracture care depends upon the patient’s health. Patients with complex medical comorbidities, such as many of those with hip fractures, represent a significant challenge where length of stay and post-acute discharge are largely dependent upon the patient’s preoperative status. It will be important for surgeons to work closely with their medical hospitalists to achieve success.

Also of interest are the potential shared financial incentives. TEAM encourages “sharing arrangements” that allow hospitals to distribute financial rewards to surgeons who help control costs and improve quality. These arrangements could mean financial incentives for surgeons who focus on efficient, high-quality care.

Several key components of TEAM are relevant to orthopaedic surgeons. The first is episode-based payments. CMS assigns a fixed target price covering the entire surgical episode, from preoperative through 30 days post-discharge. This means every care decision — from surgical technique to discharge planning — can influence the hospital’s ability to meet the target price.

Additionally, surgeons should be aware of their hospital’s selected risk track and the associated financial implications. Hospitals may choose tracks based on their ability to manage financial risk. Track 1, with only upside potential, lets hospitals start cautiously, whereas tracks 2 and 3 offer greater financial risk and reward. After year 1, most hospitals will be required to move to track 3 and take on full two-sided risk.

Cost control in post-acute care is another key consideration. Given the high post-acute costs in orthopaedic episodes, surgeons should focus on discharge planning that balances patient recovery with cost-effective care. CMS rewards hospitals that optimize post-acute services without compromising outcomes.

How to prepare
Orthopaedic surgeons can begin to prepare for this model by becoming familiar with TEAM’s financial implications and quality metrics, as orthopaedic outcomes will influence reimbursement and hospital performance.

Surgeons may also collaborate on care pathways, such as working closely with post-acute providers to create streamlined care pathways that maximize recovery while controlling costs. Emphasize rehabilitation protocols, timely follow-ups, and effective discharge planning. For elective surgery, this starts well before the procedure by making sure the patient is optimized for surgery. A collaborative approach with medical hospitalists, physical and occupational therapists, and case management is needed to make sure the entire care team has the singular goal of cost-effective, high-quality, efficient care.

As CMS rolls out TEAM, orthopaedic surgeons will play a pivotal role in shaping care quality and cost efficiency within this new framework. By staying informed, engaging in hospital planning discussions, and focusing on efficient patient-care pathways, orthopaedic surgeons can help ensure TEAM’s success while safeguarding hospital resources and patient outcomes. Orthopaedic surgeons must prepare for the changes that TEAM will bring to episode-based care, as this model could shape the future of reimbursement and quality expectations in healthcare.

Andrew Couture, MD, is an orthopaedic surgery resident at the University of Tennessee Health Science Center–Campbell Clinic Department of Orthopaedic Surgery and Biomedical Engineering, as well as an AAOS Resident Assembly delegate.

Matthew D. Wideman, MD, is an orthopaedic surgery resident at the University of Tennessee Health Science Center–Campbell Clinic Department of Orthopaedic Surgery and Biomedical Engineering, as well as an AAOS Resident Assembly delegate.

Tyler J. Brolin, MD, is an associate professor, associate program director for the Sports Medicine and Shoulder Fellowship, and medical director of the ambulatory surgery centers at the University of Tennessee Health Science Center–Campbell Clinic. Dr. Brolin is president of the Tennessee Orthopaedic Society, member of the AAOS Central Program Committee, and co-chair of the AAOS 2027 Annual Meeting.

Reference

1. Centers for Medicare & Medicaid Services. TEAM Government Proposal. U.S. Department of Health and Human Services, 2025. https://www.cms.gov/priorities/innovation/innovation-models/team-model