CMS TEAM Model vs. Traditional Care Models: A Practical Breakdown

The CMS TEAM Model shifts Medicare payments from individual services to complete episode bundles covering 30 days post-discharge. In contrast to the models based on volume rewarded by fees, TEAM monitors the aggregate costs in hospitals, physicians, and post-acute care. Documented results from early adopters showed millions in savings, a reduction in readmissions, and a decrease in SNF stay lengths.

Healthcare payment reform keeps pushing hospitals toward accountability. The CMS TEAM Model launched in 2026 represents Medicare’s most comprehensive episodic payment structure yet, covering 370+ diagnosis groups and bundling costs from admission through 30 days post-discharge. This is not another pilot program. It’s a mandatory five-year model affecting hospitals nationwide and that will affect everyone, from high school teachers, to D.C. United players, to construction workers.

Traditional Medicare payments operate on simple logic: more services equal more revenue. A patient gets admitted, receives treatment, gets discharged to a skilled nursing facility, and returns for a readmission; each step generates separate billing. The TEAM Model CMS flips this. One episode, one target price, one accountability period. Hospitals now own outcomes beyond their walls, tracking spending at rehab centers, home health agencies, and physician offices.

What Is the CMS TEAM Model?

The Medicare TEAM Model fundamentally changes how hospitals get paid under Medicare. Instead of billing for individual services, hospitals now manage complete episodes of care. Each episode includes the initial admission plus 30 days of post-discharge spending across all care settings.

Medicare sets a target price for each episode based on historical spending, patient risk factors, and regional costs. Hospitals submit regular claims, but CMS reconciles actual spending against targets twice yearly. Beat the target, earn a reconciliation payment. Exceed it repay the difference.

Core Components of TEAM

• Episode trigger: Inpatient admission using specific MS-DRG codes starts the episode
• 30-day accountability window: All Medicare Part A and B spending counts toward episode totals
• Post-acute care inclusion: SNF, home health, IRF, and LTCH costs factor into totals
• Quality gates: Hospitals must meet quality thresholds to earn reconciliation payments
• Stop-loss protections: Risk caps limit hospital exposure to extremely high-cost cases

TEAM covers clinical episodes like joint replacements, cardiac procedures, pneumonia, stroke, sepsis, and major surgeries. Each episode type carries its own target price calculated from national and regional benchmarks.

How Traditional Care Models Work

Traditional Medicare runs using the fee-for-service reimbursement payment model, which has been prevailing in healthcare for decades. Billing is done on a case-by-case basis of the service provided, resulting in a disjointed accountability of the care continuum.

An admitted patient with pneumonia will result in a different set of charges: emergency department, inpatient, physician, and imaging, SNF discharge, SNF daily, follow-up, and re-hospitalization. Each provider bills independently. No single entity tracks total spending or coordinates transitions.

Traditional Model Characteristics

• Volume-based payments: More tests and procedures increase revenue
• No spending accountability: Providers face no penalties for high total costs
• Fragmented care coordination: Discharge planning happens informally without data integration
• Readmissions generate revenue: Hospital readmissions create additional billing opportunities
• Quality measured separately: Performance metrics don’t directly affect payment amounts

This structure rewards activity over outcomes. A patient readmitted three times generates more revenue than one discharged successfully. The system works for providers but creates inefficiencies for Medicare and risks for patients cycling through disconnected care settings.

Key Differences Between TEAM and Traditional Models

The transition to fee-for-service to episodic payment is altering all aspects of hospital operations and financial incentives. These differences will enable hospitals to be ready to make a change in their operations.

Payment Accountability

Traditional Medicare pays hospitals for admissions. TEAM Model CMS pays for outcomes across the continuum. A readmission that once brought $15,000 in revenue now adds $15,000 to episode costs, potentially triggering repayment obligations.

Care Coordination Requirements

Fee-for-service creates no mandate for post-discharge tracking. TEAM requires:

• Pre-discharge planning using clinical and financial data
• Real-time spending and utilization monitoring throughout 30-day windows
• Provider collaboration with SNFs, home health, and physicians
• Proactive readmission prevention when risk factors emerge

Why CMS Introduced the TEAM Model

Medicare spending grows faster than GDP, and traditional payment models contribute by incentivizing volume without accountability. CMS developed TEAM to address coordinated care gaps that plague the current system.

The Bundled Payments for Care Improvement program and the Comprehensive Care for Joint Replacement model were some of the episodic payment programs that were tested by CMS. Hospitals involved were able to save 2-5% of episode expenditure, and quality scores remained unchanged. TEAM expands these principles across hundreds of diagnosis groups rather than limiting them to select conditions.

Problems TEAM Addresses

• Uncoordinated transitions: Patients move between settings without information sharing
• Preventable readmissions: 15-20% of Medicare readmissions could be avoided with better discharge planning
• PAC overutilization: Lack of spending accountability leads to longer SNF stays
• Rising costs: Medicare spending per beneficiary increases without corresponding value improvements

How TEAM Changes Hospital Operations

Implementing episodic payment requires operational transformation, not just billing adjustments. Hospitals need new capabilities across analytics, care coordination, and quality reporting to succeed under bundled accountability.

Analytics and Performance Tracking

The hospitals require real-time monitors that indicate PAC spending by facility, episode gains/losses, NPRA predictions, rate of PAC leakage, and quality measures performance. In the absence of this visibility, hospitals are operating in the dark; they cannot determine cost drivers, and they cannot determine improvement efforts.

Care Coordination Workflows

Success under the Medicare TEAM Model demands systematic coordination:

• Daily discharge huddles: Review upcoming discharges and plan appropriate PAC settings
• Risk stratification: Identify high-risk patients needing intensive transition support
• PAC facility partnerships: Develop preferred networks based on outcomes and costs
• Post-discharge follow-up: Arrange doctor visits and check the medication compliance.

Such processes need committed employees and technology adoption that draws data on EHRs, PAC facilities, and claims systems into common platforms.

Real Results: What Hospitals Are Achieving

Early episodic payment adopters demonstrate measurable improvements across financial and clinical metrics. The results are not theoretical; they’re documented outcomes from health systems using integrated care coordination platforms.

One health system, when integrated Persivia’s Platform, achieved:

• $17 million saved across approximately 200 episodes
• 15% reduction in readmissions through proactive care coordination
• 7% reduction in SNF length of stay using disposition planning tools

How These Results Happen

Savings come from specific interventions:

• Better discharge planning: Aggregating patients with suitable PAC environments minimizes the number of patients being wasted in SNFs.
• Readmission prevention: Care coordinators make a call to high-risk patients within 48 hours of discharge.
• PAC facility optimization: The collaboration with SNFs and home health agencies that perform well in their business provides a better result and a reduction in costs.

These improvements happen when hospitals have the right analytics showing where costs accumulate and care coordination tools enabling systematic intervention.

Post-Acute Care Under TEAM

Post-acute care represents 40-60% of episode costs for many diagnosis groups, making PAC performance central to hospital success under the CMS TEAM Model. Every SNF day, every home health visit, every therapy session counts toward episode spending.

Traditional Medicare allows patients to choose any PAC facility. Hospitals provide lists but rarely guide decisions or track outcomes. TEAM makes PAC optimization essential.

PAC Cost Drivers

• Facility selection: SNF costs vary from $400 to $900 per day, depending on location and quality
• Length of stay: Each additional SNF day adds costs without necessarily improving outcomes
• Service intensity: Excessive therapy minutes or nursing interventions increase spending

PAC Optimization Strategies

• Predictive disposition models analyze patient characteristics to recommend appropriate settings.
• Preferred facility networks demonstrating strong outcomes and reasonable costs
• Real-time utilization monitoring tracking PAC spending as it occurs
• Care plan sharing, sending detailed patient information to PAC facilities

Hospitals reducing SNF length of stay by even one day per episode save thousands annually across their patient volumes.

Technology Requirements for TEAM Success

Spreadsheets can’t manage episodic payment. Hospitals need integrated platforms handling analytics, care coordination, and quality reporting across the entire care continuum.

Essential Technology Capabilities

• Episode tracking: Automatically identify episode starts and monitor spending against targets
• PAC analytics: Report facility-level performance, cost trends, and leakage rates
• Care coordination tools: Task management, patient outreach, communication with PAC providers
• EHR integration: Pull clinical data without requiring duplicate documentation
• Predictive modeling: Risk stratification and discharge disposition recommendations

A digital health platform consolidating these capabilities lets hospitals manage hundreds of episodes simultaneously without overwhelming staff. Integration across hospital EHRs, PAC facility systems, claims data from CMS, and quality reporting platforms gives care TEAMs complete visibility into patient status, spending, and outcomes.

Quality Measurement in TEAM

CMS gates reconciliation payments on quality performance; hospitals can’t simply cut costs. They need to sustain or enhance results on numerous measures, such as all-cause hospital readmissions, patient-reported outcomes, screening of social needs, and health equity measures.

TEAM makes hospitals obtain social risk factors such as housing instability and food insecurity, record patient demographics and language preferences, and accomplish health risk assessments within predetermined time periods. This data helps CMS adjust target prices for social complexity, ensuring that vulnerable populations receive appropriate care.

Preparing for TEAM: Practical Steps

Hospitals entering the CMS TEAM Model should start preparation immediately. Early action gives hospitals time to test strategies and build capabilities before financial stakes increase.

Year One Priorities

• Baseline current performance, analyzing historical episode costs, and readmission rates
• Select and implement analytics and care coordination technology platforms
• Build dedicated care coordination TEAMs managing transitions and post-discharge follow-up
• Develop PAC networks, identifying high-performing facilities
• Train clinical staff on episode accountability and cost drivers

Ongoing Requirements

• Weekly performance reviews, monitoring episode spending, and quality scores
• Monthly PAC facility meetings reviewing outcomes and identifying improvements.
• Quarterly target price analysis, understanding CMS calculations, and benchmarking performance
• Continuous workflow optimization, refining care coordination based on results

Bottom Line

The CMS TEAM Model shifts Medicare reimbursement from fee-for-service to comprehensive episode accountability. Unlike traditional models, TEAM makes hospitals responsible for costs and outcomes 30 days post-discharge, including PAC spending, physician services, and readmissions. 

Success under episodic payment models depends on visibility across the care continuum. Persivia’s integrated platform supports hospitals with real-time tracking, predictive insights, and post-acute performance monitoring. This helps care teams strengthen coordination, improve outcomes, and manage costs more effectively across every episode.