Understanding CMS TEAM Episodes Plus How to Balance Quality Metrics with Costs

Starting in 2026, hospitals will face a new challenge under Medicare's Transforming Episode Accountability Model (TEAM). To succeed under the new CMS TEAM Model, organizations must manage costs and meet specific quality metrics. Part of that will include understanding the different episodes and quality metrics that make up the upcoming program.

Here we will provide a clear breakdown of the episodes, pricing targets, quality measures, and patient-reported outcomes to help you prepare for the CMS TEAM Model.

Covered Episodes Under TEAM: Looking at the 5 CMS TEAM Episodes & What Counts

CMS selected five high-impact surgical episode categories for mandatory inclusion in TEAM. These aren't arbitrary—they reflect procedures with wide cost variation, high volumes, and measurable opportunities for improved care coordination.

Each TEAM episode begins with a qualifying procedure identified by specific DRG or CPT codes and includes all related care through 30 days following patient discharge. Both inpatient hospital stays and outpatient surgical procedures (where applicable) are explicitly covered under TEAM.

Here’s a breakdown of the five TEAM episodes:

1. Lower Extremity Joint Replacement (LEJR)

Lower Extremity Joint Replacement (LEJR) procedures like total hip and knee replacements are among the most frequently performed surgeries in the Medicare population. They come with significant cost variation—largely driven by differences in post-acute care utilization.

Prior bundled payment models (like CJR) have already shown that standardizing care pathways here can reduce costs and improve outcomes. TEAM builds on that success.

Qualifying procedures for LEJR under TEAM includes:

• Inpatient: DRG 469 (with complications) or DRG 470 (without complications)
• Outpatient: CPT 27447 (Total Knee Arthroplasty)

2. Major Bowel Procedures

Bowel surgeries are complex and have relatively high rates of complications, prolonged recovery, and readmissions. These episodes capture substantial spending variation across hospitals—particularly in the use of home health, SNFs, and inpatient rehab.

By encouraging better perioperative planning and discharge coordination, TEAM aims to improve both quality and cost efficiency.

Qualifying major bowel procedures under TEAM will include Inpatient DRGs associated with colon and rectal surgeries (e.g., DRG 329, 330, 331).

3. Coronary Artery Bypass Grafting (CABG)

CABG is a high-cost cardiac surgery with lengthy recovery and a high risk of rehospitalization. It’s also one of the best-studied surgical episodes in value-based care. Including CABG in TEAM reflects CMS’s goal of extending accountability beyond the hospital stay, ensuring cardiology teams collaborate effectively with rehab providers, primary care, and patients to reduce avoidable complications.

Triggers for CABG under TEAM include DRGs 231–236 (CABG with and without complications)

4. Spinal Fusion

Spinal fusions are expensive, high-volume procedures that often lack standardized care pathways. Utilization patterns vary widely—from inpatient stays to imaging, rehab, and opioid prescribing. TEAM seeks to rein in unnecessary variation and incentivize evidence-based, coordinated care that improves functional recovery while reducing overuse.

Triggers for spinal fusion under TEAM include DRGs 453–460 (cervical and lumbar spinal fusion procedures)

5. Vascular Procedures

These procedures are commonly performed in patients with advanced vascular disease—often accompanied by diabetes, hypertension, and other chronic conditions. The risk of complications, readmissions, and poor outcomes is high. TEAM encourages hospitals to take a more holistic, multidisciplinary approach to managing both the procedure and the downstream recovery process.

Vascular procedures under TEAM will include DRGs related to peripheral vascular bypass and revascularization (e.g., DRG 252–254)

Target Prices: Leveling the Playing Field

Hospitals will receive target prices for each episode type prior to the start of each performance period. These targets are calculated using three years of historical regional data, adjusted for regional cost differences and patient complexity.

Because targets are set regionally, hospitals with historically higher costs won't benefit from "cushioning." Every participant in a region will aim for a similar target, creating a competitive environment that rewards true efficiency and care improvement.

Quality Measures: Looking Beyond Costs and Spending in TEAM

CMS TEAM offers a huge opportunity and risk for hospitals. However, cost control alone won't ensure success under TEAM. CMS will also assess performance across several quality measures, including:

• Readmission Rates: Particularly the 30-day hospital-wide readmission rate.
• Complication Metrics: Measures like PSI-90 (Patient Safety and Adverse Events Composite) that track surgical complications and safety events.
• Mortality and Other Outcomes: Broader clinical outcomes will also be monitored.

Each measure contributes to a Composite Quality Score (CQS), benchmarking hospitals against national standards.

CMS will introduce certain quality metrics incrementally during the TEAM model:

• Year 1 (2026): Hospital-wide 30-day readmission rate, PSI-90 (Patient Safety Composite), and LEJR PROM measure (HOOS Jr/KOOS Jr).
• Year 2 (2027): ‘Falls with Injury’ (eCQM), ‘Postoperative Respiratory Failure’ (eCQM), and ‘Failure to Rescue’ mortality measure.
• Year 3 (2028): ‘Information Transfer’ patient experience measure evaluating clarity of discharge instructions.

Patient-Reported Outcome Measures (PROMs): The Patient’s Voice

For the first time, CMS will formally include patient-reported outcomes in its quality assessments under TEAM.

For joint replacements, hospitals must report outcomes from surveys like the HOOS Jr (hip outcomes) and KOOS Jr (knee outcomes) both before surgery and 6 to 12 months afterward. Metrics will track improvements in patients' pain levels and functional abilities.

Other surgical categories may have their own PROMs, such as:

• Spinal Fusion: A lower back pain PROM.
• Coronary Artery Bypass Graft (CABG): A quality-of-life PROM.

Currently, CMS requires PROMs exclusively for Lower Extremity Joint Replacement (LEJR) episodes. Hospitals must use the HOOS Jr (hip outcomes) and KOOS Jr (knee outcomes) surveys, collecting patient responses before surgery (within 90 days prior) and again at approximately 6 to 12 months after surgery.

While hospitals may internally choose to track PROMs for other procedures, CMS does not yet mandate patient-reported outcome surveys for spinal fusion, CABG, major bowel procedures, or hip/femur fracture episodes under TEAM.

Hospitals must meet minimum reporting thresholds for PROM data to ensure adequate statistical significance. If hospitals report insufficient PROM data, CMS will assign a neutral score, which may impact reconciliation payments.

Composite Quality Scoring: How It All Adds Up

All quality measures, including PROMs, roll into a single Composite Quality Score. Here’s how it affects payment:

• Strong Quality Performance: Hospitals can boost their reconciliation payments by up to 10%.
• Poor Quality Performance: Hospitals may face reduced reconciliation payments, although CMS has capped the downside risk to prevent severe penalties.

Hospitals with strong quality performance can increase their reconciliation payments by up to 10% if costs are below targets. If costs exceed targets, high quality scores can help reduce repayment amounts. Poor quality scores result in minimal or no financial adjustments.

Final Thoughts: Balancing Cost and Quality

Success under TEAM will require hospitals to lower costs while delivering excellent clinical outcomes and patient experiences.

To succeed, hospitals must:

• Manage entire episodes efficiently from surgery through post-acute care.
• Reduce avoidable readmissions and complications.
• Improve patient-reported outcomes through better pre- and post-operative care.

Ultimately, TEAM reflects the broader shift toward value-based care—rewarding providers who can deliver high-quality care at a lower cost. Preparing now, by tightening episode management and enhancing patient engagement, will be critical to thriving under the new model.

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