TEAM Sets the Stage for Expanding Mandatory Bundles and APMs

The most expansive mandatory alternative payment model (APM) from the Centers for Medicare and Medicaid Services (CMS) is officially underway. The Transforming Episode Accountability Model (TEAM) launched in January, and more than 700 hospitals are now required to shift to a retrospective bundled payment model for five select surgical episodes of care. Participating hospitals are on the hook to meet both cost and quality targets, with substantial downside risk commencing in less than 11 months. 

With such an expansive mandate in place, it would make sense for participating hospitals and providers to take steps to implement the streamlined processes and advanced technology necessary to design, build, and optimize a bundled payment program. But the anecdotal evidence out there shows the opposite—very few TEAM participants appear to be prepared for what’s coming. 

The reasons for this gap between expectations and reality could be explained by: 

• Over-reliance on past bundles experience. Some hospitals and providers have participated in other bundled payment programs from CMS, specifically the Bundled Payments for Care Improvement (BPCI) and the advanced version of that program (BPCI-A). They may think that TEAM will be an extension of these programs, which is a mistake. TEAM has some key differences that will affect total cost of care, specifically in the way the program sets benchmarks (regionally versus their own prior performance) and the timeline for care (only 30 days post-surgery versus 90 days in BPCI). 
• A decision to wait and see what 2026 performance looks like before making changes. TEAM will have downside risk as high as 20%, but in the first year, program participants face no downside risk. Unfortunately, those who choose to wait and see how they perform in 2026 and make changes in 2027 may be too late to make meaningful cost and quality improvement—which can take several months to implement and optimize, and can’t begin until after seeing performance reports for the prior year sometime in 2027. The result could be hefty financial future losses for hospitals that miss the first-year target. Additionally, each subsequent regional target will likely change, increasing the potential for losses if other regional hospitals’ performance improves. 
• Lack of urgency with many other priorities. For larger hospitals, the volume of procedures included in TEAM (five surgical episodes, performed on Medicare patients) may be a relatively smaller percentage of revenue, and not as high a priority as so many other operational and financial pressures. Hospitals may believe they can address TEAM later this year before downside risk hits. But this approach could prove detrimental, if hospitals discover that they are likely to miss the cost and quality targets and must rush to get effective reforms in place based on 2026 performance.

The Next Iterations of Bundles Are Coming

The speed and volume of new program announcements coming out of CMS since the new administration took office in January 2025 has surprised many long-time healthcare strategists and experts. In the past, new administrations usually spent their first year installing new leadership and planning, prior to announcing any significant changes. By contrast, CMS under the current administration has already announced six new value-based care models (ACCESS, BALANCE, GLOBE, GUARD, LEAD and ELEVATE). They are also continuing programs announced or launched in prior political administrations, including TEAM, IOTA, and ASM. 

The pace of new models and concepts coming out of CMS today exceeds that of any administration in recent memory, lending credibility to industry experts’ predictions that we may see even more significant changes announced this year. CMS may expand mandatory bundles in several ways:

• Adding more clinical episodes to the current list
• Increasing the number of hospitals required to participate
• Adjusting target pricing methodologies to be more stringent
• Expanding quality measurement and reporting requirements

Each of these changes increases operational and financial complexity. Managing multiple bundles across diverse service lines will require standardized workflows, robust analytics, and advanced financial modeling capabilities.

The Push for Prospective Bundles

Another potential change from CMS could be a move to prospective bundles. This would represent a dramatic shift for organizations required to participate. TEAM is a retrospective bundle, similar to many of its bundled payment model predecessors from CMS. Retrospective models set a target price for the episode of care and fee-for-service (FFS) payments continue throughout, with the caveat that CMS could adjust reimbursements up or down after the performance period is over. With prospective bundles, the reimbursement amount is set in advance, paid in a lump sum upon episode completion, and does not change, increasing the risk for participants and requiring capabilities to operate on a known, fixed budget per episode. But prospective models have also demonstrated success in achieving value-based care goals of reducing total costs and improving care quality and patient outcomes. 

Prospective bundles require organizations to shift their entire operational mindset from a model that is very similar to FFS, to one that is entirely risk-based. Success requires significant investment in people, processes, and technology to facilitate a value-based care (VBC) model where final outcomes (cost and clinical quality) are the metric, and not procedure volume. 

• People: Prospective bundled payment models are most likely to succeed when an organization has physician champions and mentors who can help others see the vision and understand their role in achieving greater cost savings, increasing collaboration and accountability and improving quality through bundled payments. 
• Processes: The shift from a volume-based to a value-based care model necessitates a change in processes toward those that facilitate collaboration and smooth care transitions. Everyone involved in a care episode must understand the specific levers they can pull to achieve better outcomes, and trust that their colleagues will also do their part to achieve the collective goals. 
• Technology: Prospective bundles require advanced analytics insights, with the ability to identify root-cause cost drivers, high and low performers, and opportunities for improvement. Additionally, organizations need integrated tools that seamlessly translate those analytics insights into actionable steps for care teams to improve patient outcomes. All of this information must be connected to a source of clean, enriched, shared data, so everyone is working from the same high-quality information and trusts the data.

Bundled Payment Success Will Favor Organizations that Prepare Today 

With evidence that bundled payments can lower total costs while improving care quality and patient outcomes, it is very likely we will see these APMs expand over the next decade. Organizations that continue to try and optimize the bottom line in a fee-for-service world will be left behind, while those who start down a VBC path now will be positioned for success. 

The most successful bundled payment organizations did not become proficient overnight. They built capabilities incrementally with data-driven insights, advanced technology designed for bundled payments, and ongoing evaluation and optimization.

Approaching TEAM as an opportunity to build sophisticated and scalable bundled payment capabilities will position hospitals and providers for even more success as the volume and complexity of VBC models proliferate from both CMS and commercial payers. Strong foundational capabilities also strategically position an organization to succeed in other value-based arrangements, including ACOs, shared savings, and capitation.