Final rule released will improve health and reduce costs for millions of Americans undergoing the five highest-spend medical procedures
The Centers for Medicare & Medicaid Services (CMS) issued the 2026 Final Rule that codifies the Transforming Episode Accountability Model (TEAM), kicking off the innovative blueprint for tech-enabled outcome-based care payment models. Launching next year, TEAM will reduce complications and reward quality for doctors and hospitals providing knee and hip replacements, heart bypass, and other major surgeries – and all of the follow-up care needed. In an unprecedented move, the new model will improve patient experience and outcomes, helping them recover more quickly after surgery and undergo smoother coordination of care. Hospitals will now have the sole responsibility to coordinate and pay for entire episodes of care, increasing accountability.
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Every year, Medicare pays $19.2 billion for the five highest-spend surgical procedures: lower extremity joint replacement, spinal fusion, coronary artery bypass graft, major bowel procedures, and hip/femur fracture treatment. However, the quality of the outcomes associated with those procedures vary dramatically. For example, a recent Medicare analysis found that total knee arthroplasties (a common lower extremity joint replacement) are associated with a ~16% complication rate, leading to an additional average spend of $812–$2,443 per procedure. The TEAM approach will eliminate these unnecessary costs by empowering hospitals to improve coordination and quality, which ultimately results in better patient outcomes. Throughout the course of the five-year model, select high performing health systems can earn up to 20% in additional reimbursements, yielding more than $100 million in cost savings per system.
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“With the billions in additional incentive payments from TEAM also comes staggering requirements for the mandated hospitals and health systems. Starting next year, they will need to collect, standardize and report on patient outcomes – providing high quality care coordination and post-acute care in ways that simply can’t be done manually,” said Eddie Qureshi, CEO and Founder of Rainfall Health. “It’s clear that hospitals who can quickly adapt to AI-powered solutions will be able to better manage the volume of healthcare data collection that will be required. I’m excited about the potential that our technology at Rainfall Health can have in achieving this – all with the goal of improved patient outcomes.”
The five procedures outlined in TEAM make up about 20% of the current annual Medicare reimbursement for the mandated hospitals, representing a major financial impact and opportunity to improve efficiencies at scale. Additionally, the 742 facilities stand to gain $3 billion in additional revenue via incentive payments by adhering to TEAM. Automating care workflows and utilizing tech and AI solutions will help systems prepare and implement these coordination and quality enhancements.
“The decision by CMS to implement a program of this size and scope signals the importance of value-based reimbursement as national health policy,” said David Shulkin M.D., the Ninth Secretary of the US Department of Veterans Affairs. “The TEAM model shows that the Administration is prioritizing outcome-based care models, and guiding health systems across the U.S. to use innovative approaches to reduce waste, improve workflow management, and incorporate AI and tech-enabled solutions.”
Beginning January 1, 2026, all mandated sites will oversee a patient’s care and cost from hospital admission or outpatient procedure through 30 days after the patient leaves the hospital, including coordination and communication between providers across all care settings and with the patient and family.
“Outcome-based care is pivotal in providing quality healthcare to our patients at University of Pittsburgh Medical Center,” said Rob Bart M.D., Chief Medical Information Officer at UPMC. “We know how important these alternative payment models are in improving care coordination, workflows, and outcomes – bringing our patients a more streamlined, and cost-effective healthcare experience.”
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Source- PR Newswire
