Healthcare accountability now has measurable standards that directly influence how hospitals are paid. The CMS TEAM Model transforms a volume-centric to a value-centric focus with the providers having direct accountability for the patient outcomes and costs in whole units of care. It is not about treating symptoms in isolation. It is about taking ownership of the entire process of admission to the recovery stage.
Conventional fee-for-service models paid more attention to the amount rather than to quality. An increase in procedures was an increase in income, even though patients did not necessarily improve. The TEAM Model CMS reverses that script. Hospitals are now jointly financially liable for all that occurs within an episode, such as readmissions, complications, and post-acute care costs. Linking accountability to payment encourages faster behavior change among providers.
What Is the CMS TEAM Model?
The Medicare TEAM Model is an episodic payment model in which hospitals assume responsibility for both total episode spending and quality outcomes. CMS establishes a target price for certain episodes with regard to historical information and risk factors of patients. Hospitals continue receiving standard Medicare fee-for-service payments during the episode, and CMS performs reconciliation afterward.
When the actual spending is lower than the target, and the standards of quality are followed, hospitals retain the savings. In the event of more than the target costs or lower quality, hospitals are made to pay the difference.
How Episodes Are Defined
Episodes begin when a patient is admitted for specific conditions covered under the model. Each episode has a defined timeframe that extends beyond discharge:
- Inpatient stay duration
- 30 days post-discharge for most episodes
- 90 days post-discharge for major joint replacement
The episode includes physician services, diagnostics, medications, and post-acute care in skilled nursing facilities or home health agencies.
Target Price Calculation
CMS calculates target prices using historical spending data for similar episodes in the same region, patient risk scores that account for age and comorbidities, and annual trend adjustments for inflation. The formula balances national and regional benchmarks while applying risk adjustment multipliers and quality performance factors.
Why Accountability Matters in Episode-Based Care
Accountability creates alignment between hospital interests and patient outcomes. When providers share financial risk, they invest in preventing complications rather than just treating them. Post-acute care spending typically represents a significant portion of total episode costs, and without accountability, hospitals had little incentive to influence where patients went after discharge.
Financial Risk Drives Better Decisions
Hospitals under the Medicare TEAM Model face real consequences for poor care coordination. A preventable readmission doesn’t just hurt quality scores anymore. It adds thousands of dollars to episode costs that hospitals must cover during reconciliation.
This approach changes discharge planning in several ways:
- Care TEAMs assess home support before discharge
- Physical therapy starts during inpatient stay
- Medication reconciliation happens face-to-face
- Follow-up appointments get scheduled before patients leave
- Post-acute providers receive detailed transition summaries
Quality Metrics Add Another Layer
Financial performance alone doesn’t determine success. Quality measures ensure that cost savings don’t come at the expense of patient care. Hospitals must meet minimum quality thresholds before sharing in any savings. Missing these benchmarks triggers payment reductions even if costs stay low.
How the TEAM Model CMS Structures Accountability
The model uses several mechanisms to enforce accountability throughout episodes, creating specific touchpoints where hospitals must demonstrate responsible care decisions. Each component works together to ensure both cost efficiency and quality maintenance throughout the patient journey.
Net Payment Reconciliation Amount (NPRA)
NPRA represents the final accounting of episode performance. CMS compares actual spending against target prices after risk adjustment and quality score calculations.
NPRA Calculation Components:
| Component | Impact |
| Target Price | Spending benchmark |
| Actual Episode Spending | All Medicare payments during the episode |
| Risk Adjustment | Patient complexity modifier |
| Quality Score | Performance multiplier (0.00 to 1.00) |
| Reconciliation Payment | The hospital owes or receives a difference |
Positive NPRA means the hospital receives a reconciliation payment. Negative NPRA means the hospital owes CMS money. Quality scores can reduce savings or increase penalties significantly.
Spending Categories That Count
Every Medicare claim during the episode window affects accountability. Hospitals influence most of these through care coordination:
- Inpatient facility services and supplies
- Physician evaluation and management
- Diagnostic testing and imaging
- Post-acute care facility services
- Home health agency services
- Readmissions for any cause
- Emergency department visits
Stop-Loss and Stop-Gain Protections
The TEAM Model CMS includes risk corridors that limit extreme gains or losses. Stop-loss provisions cap the maximum amount hospitals pay for episodes that exceed targets. Stop-gain provisions cap the maximum savings hospitals can earn from episodes that come in well under budget.
Care Coordination Tools That Support Accountability
Accountability requires visibility into episode performance and patient needs in real-time. Hospitals require information to make sound decisions when giving care, rather than months after giving the care when performing reconciliation. Coordination helps to avoid expensive complications and smooth transitions between different care settings.
Episode Tracking Dashboards
Real-time dashboards show current episode performance against targets. These tools display spending trajectories, quality metric status, and patient risk factors throughout the episode window.
Dashboard features that matter most:
- Daily spending updates for active episodes
- Post-acute care utilization patterns
- Readmission risk scores by patient
- Quality measure performance trends
- Provider network leakage analysis
Platforms like Persivia CareSpace® integrate these analytics directly into clinical workflows. Care coordinators see alerts when patients need intervention before problems escalate into costly complications.
Discharge Planning Integration
Discharge planning starts at admission under the Medicare TEAM Model. Care TEAMs assess post-acute needs early and begin coordinating transitions before clinical stability allows discharge.
Effective discharge planning includes:
- Medical complexity assessment within 24 hours
- Social support evaluation by case managers
- Post-acute facility quality comparisons
- Patient preference discussions with families
- Equipment and medication arrangements
- Follow-up appointment scheduling
Post-Discharge Communication Protocols
Care coordination continues after discharge because the episode window includes post-acute recovery. Successful hospitals use structured follow-up schedules, typically at 24–48 hours, 3–5 days, 7–10 days, 14 days, and 30 days post-discharge. These contacts catch problems early when intervention costs less than readmission.
Quality Measurement Under the CMS TEAM Model
Quality accountability operates separately from cost accountability, but both affect final reconciliation payments. The CMS TEAM Model uses composite quality scores that combine multiple measures across different domains, making consistent performance essential for financial success.
Quality Score Calculation
CMS assigns points for performance on each quality measure. Points convert to a composite score between 0.00 and 1.00. This score then multiplies by any reconciliation payment as either a reward or a penalty.
Quality Performance Tiers:
- Score 0.85-1.00: Full reconciliation payment eligible
- Score 0.70-0.84: Reduced reconciliation payment
- Score 0.50-0.69: Significant payment reduction
- Score below 0.50: Maximum payment penalty applied
Key Quality Domains
The TEAM Model CMS evaluates quality across several standardized measures:
- All-cause hospital readmission rates
- Surgical mortality rates
- Patient-reported outcome measures
- Hospital-acquired infection rates
- Appropriate medication prescribing
Each domain contributes to the composite quality score, and hospitals must perform consistently across all measures.
Post-Acute Care Network Management
Post-acute care represents the largest opportunity for cost management under the CMS TEAM Model. Skilled nursing facility stays, home health services, and inpatient rehabilitation account for significant episode spending that hospitals previously didn’t manage directly. Strategic network development and quality monitoring now determine reconciliation success.
Network Quality Assessment
Hospitals must evaluate post-acute providers based on quality outcomes, not just convenience or cost. Low-quality placements become expensive through readmissions and complications that the hospital pays for during reconciliation.
Post-Acute Provider Evaluation Criteria:
- 30-day readmission rates by facility
- Length of stay for similar patient types
- Quality star ratings and inspection history
- Communication responsiveness
- Care plan adherence rates
Preferred Provider Development
Leading hospitals develop preferred post-acute networks rather than referring to whoever has beds available. These networks require continuous relationship management and reliable data exchange to maintain quality. These partnerships can be facilitated by digital health platforms by exchanging data securely, where post-acute providers can access detailed hospital records, and hospitals are provided with daily updates on patient status following the transfer.
Reducing Unnecessary Utilization
Not every patient needs skilled nursing facility care after discharge. The Medicare TEAM Model rewards hospitals that discharge patients directly home when appropriate. This needs a careful evaluation and effective home health provisions using options such as home health with intensive therapy, outpatient therapy with transportation, remote patient monitoring programs, and training the caregivers before discharge.
Risk Stratification and Care Management
Accountability works only when high-risk patients are identified early. Risk stratification commences at the admission stage by validated scoring systems, which determine clinical complexity, functioning status, cognitive ability, and social support. The high-risk patients are the ones who instigate better care coordination procedures, which means that the resources will be distributed to the patients who require them the most.
High-Risk Patient Indicators
- Multiple chronic conditions
- Previous readmissions within six months
- Limited social support at home
- Cognitive impairment or dementia
- Polypharmacy with eight or more medications
- Recent emergency department visits
Platforms like Persivia CareSpace® use machine learning to predict discharge disposition and readmission risk. These predictions help care TEAMs allocate resources efficiently and prevent costly complications.
Tailored Care Plans
Standardized care plans fall short under episodic accountability because each patient requires customized interventions based on clinical and social risk. Care planning is effective and takes into consideration medical, functional, and social needs. A heart failure patient requires medication control, yet it requires dietary education, exercise overseen, and medication access assistance.
Technology Requirements for Success
The data requirements under the TEAM Model CMS exceed what traditional hospital systems handle. Effective accountability requires real-time visibility into episode spending, quality indicators, and care coordination across settings. Hospitals require a unified technology that interrelates clinical, financial, and operational information.
Essential Platform Capabilities
- Real-time episode cost tracking
- Quality measure automation
- Care coordination workflow tools
- Post-acute provider integration
- Predictive analytics for risk
- NPRA projection modeling
These capabilities must work together without creating siloed data that leads to missed opportunities and unexpected losses during reconciliation.
Clinical Workflow Integration
Technology supports accountability only when it fits into routine clinical workflows. The TEAM Model requires point-of-care tools that minimize added documentation. Care managers should have alerts when patients qualify to receive intervention, physicians should have discharge recommendations depending on the anticipated results, and care coordinators must have communication tools that reach post-acute providers in real time.
Takeaway
Accountability is strengthened in the CMS TEAM Model by direct financial implications of quality of care and cost management. The hospitals cannot treat patients in a vacuum without thinking of the post-discharge situations. Episode-based payment establishes shared accountability for the results of the whole continuum of care, including admission to post-acute recovery. Such responsibility enhances coordination, prudent utilization of resources, and enhanced patient experiences during the health care process.
FAQs
- Does the CMS TEAM Model apply to all hospital admissions?
No, the CMS TEAM Model only applies to specific clinical episodes defined by MS-DRG codes. CMS selects conditions where episodic payment is proven to improve outcomes and reduce costs. Only these eligible episodes are included in reconciliation calculations.
- Can hospitals lose money under the CMS TEAM Model?
Yes, hospitals must repay CMS when actual episode spending exceeds the target price after reconciliation. While stop-loss limits cap the maximum potential loss, consistently high spending or poor quality performance can still result in significant financial penalties.
- Does the CMS TEAM Model require hospitals to use certain technology platforms?
No specific platform is required by CMS. However, effective participation typically depends on advanced analytics and care coordination tools. Real-time episode tracking, quality metric management, and risk prediction are essential, and manual processes are usually insufficient.
- Are quality measures more important than cost savings in the CMS TEAM Model?\
Both hold equal importance. Hospitals must meet minimum quality thresholds before they can receive any savings. Even if costs stay below target, poor quality scores can reduce or eliminate reconciliation payments and may trigger penalties.
- Can hospitals choose which episodes they participate in under the CMS TEAM Model?
No, once a hospital is enrolled in the program, all eligible episodes automatically enter reconciliation. This prevents selective participation and ensures consistent accountability across the patient population.
