Looking Ahead: The Future of TEAM & Bundled Payments

By: David Harvey, CMS Product Manager

This year marks that the launch of the newest Centers for Medicare and Medicaid (CMS) mandatory alternative payment model (APM), Transforming Episode Accountability Model (TEAM). Program details, and the steps that hospitals can take to succeed in TEAM with Cedar Gate’s help are already available elsewhere, so we won’t get into that here. Instead, we will focus on what could come next.

This series, Looking Ahead, will examine what we think the future of CMS programs—and other commercially-aligned value-based care (VBC) programs—might look like. We will discuss the implications of potential future programs on today’s healthcare delivery organizations, and how to better prepare for our VBC future. In this first installment of a three-part series, we share predictions on what’s next for bundled payment programs.

The Next Iteration of Bundled Payment Programs

While unique in its scale as a bundled payment model, TEAM is not the first model of this type to come out of CMS. In fact, the history of bundled payment programs sponsored by the federal government dates all the way back to the mid-1980s. Most recently, organizations participated in Comprehensive Care for Joint Replacement (CJR), Bundled Payments for Care Improvement (BPCI) and an advanced version of that program, with a goal of reducing total cost of care and improving quality for procedures like hip replacement surgery. CJR ended in 2024, while BPCI and BPCI-A ended in 2025. Some participants from both of these programs transitioned to TEAM.

But as we enter the next phase of bundled payment models, many of the participants remain unprepared. They are hesitant to commit the people, processes, and technology required to succeed in this type of APM. Part of the lack of urgency may be that there is no downside risk in 2026, but preparation delays could prove harmful to participants in the near future. Many experts believe that CMS will continue to expand their mandatory bundled payment programs in the next one to two years. Organizations that wait until after 2026 to get a technology and consulting partner in place could quickly find themselves very far behind in a downside risk scenario with added requirements and responsibilities.

The potential changes to come could include:

• Adding more bundled procedures to existing TEAM requirements. Currently, TEAM includes five bundled procedures:

• Lower extremity joint replacement

• Surgical hip femur fracture treatment

• Spinal fusion

• Coronary artery bypass graft

• Major bowel procedure

This list could expand to include more procedures in other specialties. That would necessitate collaboration with more surgeons and increase the administrative complexity. Organizations without proper protocols in place could quickly become overwhelmed, and the timeline for these changes would likely coincide with the onset of downside risk, increasing the financial risk even more.

• Mandating that additional hospitals participate in TEAM. The list of mandatory participants stands at just over 700 hospitals at program launch. That is around 12% of all the hospitals in the U.S., leaving room for considerable growth if CMS decides to include more hospitals in future iterations of bundled payment programs. While hospitals that are not currently mandated to participate may not have budget and capacity to immediately launch a TEAM-aligned bundled payment program, there are opportunities to explore prospective bundled payments outside of CMS requirements by partnering with commercial payers or large employers. Developing the internal infrastructure to support prospective bundles in commercial populations can create a significant advantage in the future if your hospital is selected for a mandatory CMS bundles program.

• Adding more hospitals and more procedures to existing TEAM requirements. While both of these options are potentially on the table as standalone expansions, it’s also possible that CMS could decide to do both at the same time – require more hospitals to participate with an expanded list of required procedures. 

Commercial Bundles Likely to Increase in 2026

The CMS requirements for TEAM only include Medicare patients enrolled in Part A and Part B. For many hospitals, Medicare reimbursement for the five included procedures is only a small fraction of total revenue for the year (another reason many hospitals may not feel the need to urgently prepare for TEAM). However, we have also seen a significant uptick in the number of commercial payers interested in launching bundled payment programs, as well as large self-funded employers engaging in direct contracting for bundled payments. They are particularly attractive in light of macroeconomic forces and government policies like rising cost and utilization, reduced reimbursements from CMS due to Stars and risk adjustment policy changes, projected growth in Medicare Advantage membership, and continual bottom-line cost pressures for employers.

These alternative payment models have proven effective at lowering total cost of care, improving collaboration among care teams, and creating predictable spend on healthcare, making them an attractive option for payers and employers that continue to feel the squeeze of rising costs, inflation, labor market pressures, and shrinking margins.

As we look ahead, we expect commercial bundled payment initiatives to increase. Network providers and hospitals are likely to find themselves in these bundled programs, whether by choice or not, and will need to understand the tools available and actions they can take to impact care cost and quality – maximizing reimbursement potential in an increasingly risk-based future. On the other side, commercial payers that launch these programs will need buy-in and collaboration from providers to succeed in these models, particularly when they are not mandated at the federal level. Both sides of the partnership benefit from having a technology and services partner that understands how to design, administer, and optimize bundled payments – and how to translate success in commercial bundles to federal programs, or vice-versa.

In summary, the future of bundles looks bright, but only for the organizations that are laying the proper groundwork now to optimize performance in these alternative payment models.

In our next Looking Ahead article, we’ll examine the expansion of alternative payment models, and some forecasts on where CMS may go with prospective bundles and capitation in the coming months and years.