CMS to Test Mandatory 5-Year Episode-Based Alternative Payment Model
People with Traditional Medicare who undergo surgery may experience fragmented care, which can lead to complications and prolonged recoveries. To address this issue, and based on lessons learned from previous episode-based payment models, the CMS Innovation Center has proposed a new mandatory 5-year, episode-based alternative payment model that would launch in 2026.
The mandatory Transforming Episode Accountability Model (TEAM) would aim to improve the patient experience from surgery through recovery by supporting the coordination and transition of care between providers and promoting a successful recovery that can reduce avoidable hospital readmissions and emergency department use. TEAM episodes would begin with lower extremity joint replacement, surgical hip femur fracture treatment, spinal fusion, coronary artery bypass graft, and major bowel procedures.
Under the proposed model, selected acute-care hospitals would coordinate care for people with Traditional Medicare who undergo one of the surgical procedures included in the model and assume responsibility for the cost and quality of care from surgery through the first 30 days after the Medicare beneficiary leaves the hospital.
All hospitals selected to participate in TEAM would be required to refer patients to primary care services to support patient continuity of care and positive long-term health outcomes.
With a health equity focus, the model would offer certain flexibilities, such as allowing safety net hospitals to participate in a track with lower levels of risk and reward and a pricing methodology that includes adjustments to account for underserved individuals.
Hospitals required to participate would be based on selected geographic regions from across the United States. The proposed TEAM design includes a one-year glide path, which would allow organizations to ease into full financial risk. TEAM would have three participation tracks: Track 1 would have no downside risk and lower levels of reward for the first year; Track 2 would be associated with lower levels of risk and reward for certain hospitals, such as safety net hospitals, for years 2 through 5; and Track 3 would be associated with higher levels of risk and reward for years 1 through 5.
Provider organizations have largely been reluctant to embrace mandatory alternative payment models. When CMS sought input about the TEAM design last year, the American Hospital Association expressed concern to CMS about the impact of mandatory participation. “This means that many organizations may not be of an adequate size or in a financial position to support the investments necessary to transition to mandatory bundled payment models. Requiring them to take on risk for large, diverse bundles of episodes, may require more financial risk than they can bear. This is especially true given the historic financial pressures that hospitals and health systems continue to face,” the AHA wrote.
The AHA cited a Government Accountability Office report that found that mandatory participation could negatively impact patient care and financial sustainability if participants are not able to leave the model. It also found that mandatory participation could impact organizations’ ability to support other voluntary models for which they may be better equipped.
“Further, much of the discussion about mandatory participation has been predicated on the high rates of dropout from historical models. However, instead of pursuing mandatory participation, we encourage CMS to address those model design features that led participants to withdraw from historical episode-based payment models in the first place,” the AHA wrote. “For example, many decisions to leave were due to index pricing concerns – specifically the ratchet effect where index prices were based on previous years’ performance, thus requiring organizations to compete against their own best performance.”
In a statement, Soumi Saha, senior vice president of government affairs at Premier, said that “while Premier believes that voluntary models with the appropriate incentives are ideal as they allow providers to select participation based on their mission, abilities and market realities, Premier values CMS’ efforts in seeking stakeholder input last year to help inform the design of its proposed mandatory bundled payment model. As CMS evaluates the design of the new mandatory Transforming Episode Accountability Model (TEAM), Premier strongly urges the agency to incorporate key design principles to help ensure the model achieves its intended purpose of improving beneficiary care, lowering Medicare expenditures and increasing care coordination across healthcare settings. Premier also urges CMS to continue to monitor the model for implementation challenges and to actively engage with stakeholders to ensure that the model offers meaningful opportunities for care transformation.”
The CMS Innovation Center said that the model is designed to complement longitudinal care management through policies that align with Accountable Care Organizations (ACOs) and promote primary care referral. Under TEAM, a person receiving care from providers in an ACO would still be able to be in an episode if they receive one of the surgeries included in TEAM at a hospital that is selected to participate in TEAM. The Innovation Center added that allowing a person with traditional Medicare to be included in both TEAM and ACO initiatives would help to promote provider collaboration to find opportunities to improve quality of care and reduce Medicare spending.
