AHA Comments on CMS TEAM Payment Model in FY 2026 Proposed Inpatient Payment Rule

June 10, 2024

The Honorable Mehmet Oz, M.D.
Administrator
Centers for Medicare & Medicaid Services
Hubert H. Humphrey Building
200 Independence Avenue, S.W., Room 445-G
Washington, DC 20201

Submitted Electronically

RE: CMS-1833-P, Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long Term Care Hospital Prospective Payment System and Policy Changes and Fiscal Year 2026 Rates; Requirements for Quality Programs; and Other Policy Changes, (Vol. 90, No. 82), April 30, 2025.

Dear Administrator Oz,

On behalf of our nearly 5,000 member hospitals, health systems and other health care organizations, our clinician partners — including more than 270,000 affiliated physicians, 2 million nurses and other caregivers — and the 43,000 health care leaders who belong to our professional membership groups, the American Hospital Association (AHA) appreciates the opportunity to provide comment on the Centers for Medicare & Medicaid Services’ (CMS) proposed changes to the Transforming Episode Accountability Model (TEAM). We are submitting separate comments on the agency’s proposed changes to the inpatient and long-term care hospital prospective payment systems (PPSs).

TEAM is a new, mandatory, episode-based payment model scheduled to begin on Jan. 1, 2026. The five-year program will require acute care hospitals in selected geographic areas to participate in five surgical episodes, including coronary artery bypass graft (CABG), lower extremity joint replacement (LEJR), major bowel procedure, surgical hip/femur fracture treatment (SHFFT) and spinal fusion. TEAM will hold acute care hospitals accountable for the quality and cost of all services provided during select surgical episodes, from the date of inpatient admission or outpatient procedure through 30 days post-discharge. Similar to other bundled payment models, TEAM participants will reconcile performance year spending against a target price to determine if a hospital is eligible for a reconciliation payment or repayment.

Hospitals and health systems are eager for opportunities to participate in value-based payment arrangements and to drive innovation in the Medicare program. As such, the AHA and its members support innovative payment models that improve quality and lower costs. However, we continue to be concerned that TEAM does not meet these desired goals and may, in fact, hamper access to care by overburdening providers who do not have the infrastructure or population to be successful in this model, the way it is currently designed. Indeed, a majority of our original concerns about the model persist or have even been heightened by this rule. For example, TEAM has a very similar design to models such as Bundled Payments for Care Improvement (BPCI), BPCI Advanced (BPCI-A), and Comprehensive Care for Joint Replacement, none of which have either generated significant net savings or met statutory criteria for expansion, and yet this rule does not change the aspects of TEAM that could result in the same disappointing outcomes. In addition, in four out of the five TEAM episodes, over 71% of costs are incurred during the anchor hospitalization or outpatient procedure, for which reimbursement is already paid on a bundled basis, leaving few opportunities for savings by participants. Furthermore, for procedures such as spinal fusion and LEJR, over 40% of anchor costs are tied to supplies, equipment and implantable devices. We have advocated for exemptions of medical devices and equipment from tariffs, but should they go into effect, hospitals’ and health systems’ ability to impact these costs will decrease even further.[1]^,[2]

Our primary request continues to be that CMS make TEAM voluntary, as most recently highlighted in our response to the administration’s deregulation request for information. Mandatory participation is inappropriate given that many of the selected organizations are neither of an adequate size nor in a financial position to support the investments necessary to transition to mandatory bundled payment models. Requiring hospitals to take on large, diverse bundles would require more risk than many can manage, threatening their ability to maintain access to quality care in their communities.

View the detailed letter below.