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Preparing for Change: The TEAM Model and What Medicare鈥檚 2026 Inpatient Proposed Rule Means for Hospitals

This week, in our In Focus section, 红领巾瓜报鈥� Medicare experts review the changes to the Center for Medicare and Medicaid Innovation鈥檚 (CMMI) proposed in the Fiscal Year (FY) 2026 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long-Term Acute Care Hospital (LTCH) Proposed Rule (). The IPPS proposed rule, released April 11, 2025, maintains the model with no changes to the timeline, participants, accountable care organization overlap policies, or required episodes.

While most changes are technical in nature, involve minor methodological tweaks, or seek to align with the Trump Administration鈥檚 policy priorities, stakeholders should continue to assess their readiness and prepare to implement the TEAM model. This is a critical time for healthcare stakeholders to stay on top of this specific proposed rule, the TEAM model, and other federal and state-level developments that are affecting the healthcare system.

This article reviews key aspects of the IPPS proposed rule policies related to TEAM with strategic steps for stakeholders as they continue to prepare for the model鈥檚 implementation.

Background on TEAM

is a value-based care initiative that requires participating hospitals to manage costs for a range of surgical procedures, including both inpatient and outpatient services. The program involves bundled payments covering all aspects of care from the surgical procedure itself to most post-acute care occurring within a 30-day window following discharge from the hospital. Payments will be calculated based on regional benchmarks, and hospitals will assume financial responsibility for the quality and cost of care provided.

TEAM is scheduled to begin in 2026 with 741 hospitals required to enter into value-based arrangements. The program will affect how hospitals manage five types of surgical episodes in both the inpatient and outpatient hospital setting by shifting more risk to the hospitals themselves. This risk includes not only the cost of the surgery but also post-acute care, including readmissions, complications, and downstream provider services. The goal is to incentivize hospitals to improve care coordination, reduce costs, and enhance patient outcomes.

Proposed Changes to the Model

According to the proposed changes, CMS is moving forward with the five-year mandatory model largely as planned, with minor updates focusing on technical details rather than a significant overhaul. Some of the proposed changes were expected based on the administration鈥檚 policy priorities, including removal of:

• The Decarbonization and Resilience Initiative
• Health equity plans
• Health-related social needs data reporting

Other technical changes address flexibility for newly opened hospitals within TEAM鈥檚 required the impact of the possible of the Medicare Dependent Hospital (MDH) program, and modified episode attribution to be based on discharge date, rather than start date. CMS is also still seeking comment on how to finalize the low-volume threshold policy, where hospitals under a certain number of procedures would only have Track 1 (upside only) applied.

Overall, CMS expects that its proposed changes to TEAM 鈥渟hould not result in dramatic shifts to the Medicare savings estimate鈥� of $481 million in savings to CMS across the model鈥檚 five performance years.

Stakeholder Considerations for the Future

Keeping this model largely intact and maintaining the mandatory nature signals that the Trump Administration intends to continue with value-based arrangements and is looking for ways to achieve program savings. A mandatory model will generally achieve a higher level of savings than a voluntary one.

As they prepare for implementation, stakeholders will need to take action, including:

• Thoroughly reviewing the proposed changes to the TEAM model to understand the changes and their implications to model of care policies and operations, financing, and collaborations with clinicians and care teams outside of the facility. Consider submitting comments to CMS on the proposed changes. Review the in TEAM.
• Contextualizing their work to implement this model alongside other pending federal and state policy changes. Stakeholders will benefit from staying on top of developments in this dynamic policy landscape since many pending proposals have financial and structural implications for healthcare providers.
• Preparing for the mandatory model by developing strategies to manage the financial risk associated with the bundled payments and improving care coordination. This may include modeling hospital payment policies and assessing the implications of the proposed changes.
• Assessing the system and technology changes and collaborations that will be required to effectively manage risk in the model.

Connect With Us

红领巾瓜报鈥� (红领巾瓜报鈥檚) Medicare Practice Group monitors federal regulatory and legislative developments in the inpatient setting and assesses the impact on hospitals, life science companies, and other stakeholders. Our experts interpret and model hospital payment policies and assist clients in developing CMS comment letters and long-term strategic plans. Our team replicates CMS payment methodologies and model alternative policies using the most current Medicare fee-for-service and Medicare Advantage claims data. We also support clients with Diagnosis Related Group (DRG) reassignment requests, new technology add-on payments (NTAP) applications, and analyses of Innovation Center alternative payment models.

For more information about the proposed policies, contact our featured experts Amy Bassano or Clare Mamerow.

Wakely Report Analyzes Cost Impact of Preventive Care Services Potentially Affected by Kennedy v. Braidwood

The US Supreme Court heard oral arguments on April 21, 2025, in ., a case that could significantly reshape preventive care coverage under the Affordable Care Act (ACA). The court鈥檚 decision is expected in late June or early July 2025. published a with valuable insights regarding the possible effect of the Court鈥檚 forthcoming ruling from a cost perspective.

In Braidwood, the plaintiffs challenged the ACA鈥檚 requirement for health plans to cover certain preventive services, arguing that the US Preventive Services Task Force (USPSTF) was unconstitutionally appointed. Many of the published analyses provide important details regarding the ruling鈥檚 potential effect on coverage and access to services. The forthcoming ruling also could significantly affect healthcare costs for patients and payers.

Wakely鈥檚 April 23, 2025, white paper analyzes the potential financial implications of preventive services that may no longer be required under federal law. The report estimates the financial implications for health plans and consumers. Using data from , the analysis provides an evidence-based perspective on possible changes to coverage and cost structures.

The analysis shows that preventive services based on USPSTF recommendations made after March 2010 account for approximately 14鈥�18 percent of all preventive care claims. If the Supreme Court removes federal coverage requirements for these services, the cost burden could shift to patients, particularly for services such as HIV PrEP (pre-exposure prophylaxis), colorectal cancer screening, and depression counseling during pregnancy. How much individuals with publicly funded and commercial insurance will be affected will depend on how plans, employers, as well as state and federal regulators choose to respond after the ruling.

Wakely鈥檚 analysis provides stakeholders valuable insights into the financial and policy considerations associated with different implementation scenarios. Access the full Wakely white paper . For more information about the analysis, contact featured expert and report author, .

Mark Your Calendar: Registration for 红领巾瓜报鈥檚 2025 Annual Conference Opens May 1

Early Bird registration opens May 1, 2025, for , 红领巾瓜报鈥檚 8^th Annual Conference. Join healthcare leaders from across the country October 14鈥�16, 2025, at the for engaging discussions on the future of publicly funded healthcare. As new federal priorities reshape Medicare, Medicaid, and the ACA Marketplace, this year鈥檚 conference will provide essential insights into how organizations can successfully navigate changes in policy, funding, and service delivery.

Conference plenaries and engaging workshops are designed for federal, state, and local policymakers and leaders from healthcare providers, payers, industry, philanthropic, and other organizations seeking actionable strategies and forward-looking perspectives.

Early bird rates are available through July 31, 2025; reserve your spot today. For information about sponsorship and details about the event, contact Andrea Maresca.