On January 1, 2026, CMS launched Transforming Episode Accountability Model (TEAM), a mandatory alternative payment model that impacts health systems relative to episode-based payments across five common surgical procedures. Forward-thinking health system executives recognize TEAM for what it truly represents: a strategic imperative that will define competitive advantage in the coming decade.
TEAM targets five high-volume, high-cost surgical episodes: coronary artery bypass graft, major bowel procedure, lower extremity joint replacement, surgical hip and femur fracture treatment, and spinal fusion. The model holds hospitals and health systems accountable for total cost and quality of care across a 30-day post-discharge episode, with the goal of reducing fragmented care, eliminating avoidable readmissions, and improving patient outcomes while controlling costs.
What makes TEAM particularly significant is the window of opportunity it creates. CMS deliberately structured the first year as upside-only, giving health systems a grace period to develop processes without financial risk. Starting in year two, most systems will have downside risk of up to 20%. Health systems that invest now will be positioned for success, while those that delay could face additional margin compression across these lucrative service lines.
Why action cannot wait
TEAM is not an isolated program — it signals the future. Regardless of political administration, one reality unifies Washington: there is insufficient funding to sustain Medicare under the current model. Everything coming from CMS is budget-neutral and more mandatory bundles are inevitable; expanding to cover additional procedures and specialties over time.
Health systems that defer investment are missing an opportunity, especially because the infrastructure, processes, and cultural shifts required for high performance in episodes of care likely cannot be built overnight. Health systems have an opportunity to use this first year to establish capabilities, processes, and workflows that can then adapt quickly when additional mandatory models arrive. Health systems that skip this first year could likely find themselves perpetually behind.
Building sustainable excellence
Success in TEAM requires health systems to excel in three critical areas. First, mastering transitions of care. The largest opportunity exists in the post-acute space—skilled nursing facilities, inpatient rehab, and home health. Hospitals and health systems must deploy robust care management resources and forge strategic partnerships with post-acute providers to align episode-based goals.
Second, standardizing clinical operations. TEAM creates a compelling business case to implement evidence-based care pathways, standardized order sets, and consistent discharge procedures. This standardization delivers dual benefits which includes improved patient outcomes and enhanced operational efficiency.
Third, building cross-continuum collaboration. TEAM uniquely requires primary care referrals and overlaps with ACO models, creating accountability that extends beyond traditional boundaries. This design intentionally drives collaboration between specialists and primary care providers through aligned incentives and shared accountability mechanisms.
The path forward
Implementation requires coordinated efforts across multiple domains. Clinical teams should develop evidence-based pathways; data and analytics teams should create dashboards that track performance; quality leaders should ensure excellence in patient-reported outcomes, and provider education programs should be aligned to help physicians and staff understand the TEAM model and deliver coordinated care.
The most successful and high-performing health systems will approach TEAM not as a regulatory burden, but as a catalyst for transformation. They will use this moment to build the operating model, processes, workflows, and culture that position their health system for long-term success in value-based care. Excellence in episode-based care delivers benefits beyond financial performance including better clinical outcomes, enhanced patient and physician experience, stronger community reputation, and the satisfaction of knowing patients receive coordinated, high-quality care across their entire treatment journey.
The clock is ticking with 2026 representing an opportunistic year — a time when health systems can learn, build capabilities and their operating model which they can then leverage for years to come, all while being protected from downside risk. Health systems that invest in TEAM now are not simply preparing for compliance, they are building the foundation for a new care delivery system that benefits patients, providers, and entire communities for decades to come.
Photo: lvcandy, Getty Images
Dr. Jeff Gleason is Chief Medical Officer at Navvis, a value-based care enablement company. He brings more than three decades of care delivery experience, including guiding healthcare organizations through transformational change. His leadership experience spans the healthcare continuum in board service, C-suite, clinically integrated network, health system, and multi-specialty medical group roles.
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