Policy Update: CMS’s Transforming Episode Accountability Model (TEAM) Medicare Funding Proposal

On April 10 2024, the Centers for Medicare & Medicaid Services (CMS) introduced the Transforming Episode Accountability Model (TEAM), a mandatory bundled payment model aimed at evaluating the efficacy of episode-based payments for select surgical procedures within the Medicare system. This policy brief provides insights into the proposed TEAM model and its potential implications for healthcare providers and beneficiaries.

TEAM seeks to address the challenges of fragmented care experienced by Traditional Medicare beneficiaries undergoing surgical procedures, which often result in complications, avoidable hospitalizations, and increased costs. By transitioning to a bundled payment approach, TEAM aims to incentivize hospitals to coordinate care effectively across the continuum, ultimately improving both cost and quality outcomes. One point to note is that as part of the model, participants would maintain billing through Medicare Fee for Service (FFS) throughout the model’s duration.

Key Components of the TEAM Model

TEAM encompasses several key components:

1. Episode Selection: The model focuses on five surgical procedures: lower extremity joint replacement, surgical hip femur fracture treatment, spinal fusion, coronary artery bypass graft, and major bowel procedure. Episodes begin with an inpatient stay or hospital outpatient procedure related to one of these surgeries and extend to 30 days post-discharge.
2. Payment Structure: Instead of separate payments for each service, hospitals receive a target price covering all costs associated with an episode of care. Hospitals are held accountable for spending and quality performance, with payments adjusted accordingly.
3. Participation Tracks: The model offers three participation tracks with varying levels of risk and reward, allowing hospitals to gradually transition to full-risk participation over a one-year glide path.
4. Quality Measures: Hospitals are evaluated based on three quality measures: hospital readmission, patient safety, and patient-reported outcomes. Performance on these measures influences payment adjustments.

Key Features of TEAM:

• Target Price: Hospitals receive a target price to cover all costs associated with an episode of care, including inpatient stays, outpatient procedures, and services after discharge.
• Accountability: Providers are held accountable for spending and quality performance based on the target price.
• Episode Length: An episode begins with one of five surgical procedures and lasts until 30 days after the patient's discharge.
• Episode-based: TEAM operates on an episode-based model, distinguishing it from bundled payment models covering index hospitalizations or outpatient procedures for 90 days.
• Flat Fee: Unlike other bundled payment models charging a flat fee for an inpatient diagnosis-related group (DRG) episode, TEAM's target price is based on actual costs incurred.

If finalized, TEAM participation would become mandatory for all acute care hospitals paid under the Inpatient Prospective Payment System (IPPS) situated within certain randomly-selected core-based statistical areas (CBSAs), with exceptions such as hospitals in Maryland. Participating hospitals would bear the risk for specific episodes of care, including lower extremity joint replacement, surgical hip femur fracture treatment, spinal fusion, coronary artery bypass graft, and major bowel procedures.

Financially, CMS would compensate hospitals with a target price that represents most Medicare Parts A and B spending during an episode, covering surgery, inpatient stay, post-acute care, and follow-up visits. Payments would be risk-adjusted and reconciled annually, with the model offering three participation tracks featuring varying levels of financial risk and quality performance adjustments.

In terms of flexibility and initiatives, CMS proposes measures to support care coordination and improved transitions, including safe harbor protections for financial arrangements and beneficiary incentives. Additionally, proposed Medicare waiver flexibilities encompass waivers of certain telehealth requirements and the SNF 3-day rule. For providers, participation in TEAM offers an opportunity to enhance care coordination, improve quality outcomes, and potentially achieve financial rewards for efficient care delivery. However, it also poses operational and financial challenges related to assuming accountability for episode costs and meeting quality benchmarks. Conversely, for beneficiaries, TEAM offers the prospect of streamlined, coordinated care experiences, which could lead to improved health outcomes and reduced out-of-pocket expenses. Nonetheless, it is crucial to uphold care quality throughout the episode of care.

Implications for Providers and Beneficiaries:

For providers, participation in TEAM presents an opportunity to improve care coordination, enhance quality outcomes, and potentially realize financial rewards for efficient care delivery. However, it also entails operational and financial challenges associated with assuming accountability for episode costs and meeting quality benchmarks.

For beneficiaries, TEAM holds the promise of more streamlined, coordinated care experiences, potentially leading to improved health outcomes and reduced out-of-pocket expenses. However, it is essential to ensure that care quality remains paramount throughout the episode of care.

As representatives of independent urologists and integrated urology practices, LUGPA recognizes the potential benefits of value-based care models like TEAM in driving innovation, improving care delivery, and controlling costs within the Medicare system. However, we emphasize the importance of:

1. Stakeholder Engagement: Meaningful engagement with healthcare stakeholders, including physician practices, is critical to the successful implementation of the TEAM model. Collaboration and communication are key to addressing challenges and optimizing outcomes.
2. Flexibility and Support: Recognizing the diverse needs and capabilities of healthcare providers, CMS should offer flexibility and support mechanisms to facilitate participation in the model, particularly for smaller or resource-constrained practices.
3. Transparency and Accountability: Clear communication of model requirements, performance metrics, and payment methodologies is essential to ensure transparency and accountability throughout the implementation process.

The TEAM Medicare Funding model represents a significant step towards aligning financial incentives with care quality and efficiency in the Medicare system. While challenges and uncertainties remain, LUGPA is committed to engaging constructively with CMS and other stakeholders to support the new payment models and improve care outcomes for Medicare beneficiaries.