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In April 2024, Centers for Medicare & Medicaid Services (CMS) released its FY2024 Hospital Inpatient Prospective Payment System (IPPS) and Long-Term Care Home Prospective Payment System (LTCH PPS) Proposed Rule.
Included in this rule is a new mandatory alternative payment model, known as the Transforming Episode Accountability Model (TEAM), which would directly affect orthopedic care providers.
Perhaps the most unique update in this proposed model is the direct tying of reimbursement to quality measures as reported by patients themselves via PROs. This means mandated hospitals will not only have to worry about collecting enough data, but also about the quality of care provided to patients. In addition, this model covers episodes beyond lower extremity joint replacement (LEJR), including surgical hip/femur fracture treatment (SHFFT), spinal fusion, coronary artery bypass graft (CABG), and major bowel procedure.
Hospitals with previous experience in mandatory alternative payment models and those who have had many years of experience with effective quality reporting and PRO collection will likely find the shift to TEAM as a relatively small lift. In fact, many of these hospitals already collect and report the required data on all of their patients and seamlessly meet the most recent regulatory data collection and quality requirements. To see some examples of such organizations, access our latest case study here.
While this model shares similarities with other alternative payment models, such as the Comprehensive Care for Joint Replacement Model (CJR) or the Bundled Payments for Care Improvement-Advanced (BPCI-A), it also contains unique elements and a number of significant details. Below is a summary of the elements most relevant for orthopedic care teams.
Key Details
- Implementation period: January 1, 2026 - December 31, 2030, with 5 performance years aligning to calendar years.
- Mandatory implementation locations: CMS released a list of core-based statistical areas (CBSAs) that will be eligible for selection to participate in the mandatory model; the final list will be made available in the final rule.
- Episodes covered: LEJR (including ankle replacements, but not the small foot joints), SHFFT, spinal fusion, CABG, and major bowel procedure.
- Episode duration: From hospital admission or outpatient procedure and through 30 days after leaving hospital.
- Beneficiary cohort: Patients who are, at the time of admission or outpatient procedure, enrolled in Medicare Part A and B, not eligible for Medicare on the basis of ESRD, not enrolled in managed care plans, not covered under a UMWA health plan, and have Medicare as their primary payer.
- Payment: Participants continue billing Medicare through fee-for-service (FFS), with payment reconciliation occurring at the end of each performance year.
- Reconciliation evaluation: Performance is based on participant Medicare FFS expenditure relative to its target price, as well as quality measures. Subject to care quality adjustments, if participant expenditure is below the Medicare target price, they receive a payment; if expenditure exceeds the target price, participants owe Medicare.
- Quality measures: Hybrid hospital-wide all-cause readmission, patient safety (PSI 90), and (for LEJR episodes) the total hip/knee arthroplasty patient-reported outcome performance-measure (THA/TKA PRO-PM; learn more about this PRO-PM here). CMS has requested comment on the proposed measures and noted it plans to add more PRO-PMs in future rulemaking.
- Participation tracks:
- Track 1, which is available only in the first performance year, includes lower levels of reward with no financial risk (all participants start in this track unless they choose to start in another).
- Track 2 is available in years 2-5 only for certain hospitals (including safety-net hospitals and rural hospitals) and includes lower levels of both reward and financial risk.
- Track 3, available in all performance years, includes higher levels of both reward and financial risk.
- Care coordination requirements: Participants will be required to connect patients to primary care providers to support recovery.
- Health equity: Participants will be required to submit health equity plans, report some socio-demographic data, and screen for health-related social needs. Additionally, social risk adjustment would be conducted to inform target prices.
- Overlap: Hospitals are already required to submit data surrounding readmission and patient safety under existing quality programs, while the THA/TKA PRO-PM is included in quality reporting programs. CMS has proposed timelines that align with existing programs to avoid collection and reporting redundancies. In addition, this model begins only after CJR and BPCI-A have elapsed.
- Public reporting: Participant performance on quality measures will be publicly reported.
Hospitals that may be selected from the CBSAs eligible for selection and who have little experience with data collection and reporting processes and quality improvement initiatives will face a substantial challenge. Succeeding in a mandatory alternative based payment model that incorporates PRO-related quality measures requires a willingness to rethink current tools, workflows, and mindsets, and evolve care delivery based on data and sound evidence.
Experience from the CJR and BPCI-A models, as well as other quality improvement initiatives and accreditation requirements, indicates that the most successful participants in these models are those who have extensive electronic health capabilities, including specialized vendors for gold-standard patient engagement and education, both of which are predictors of PROs compliance.
Being ahead of the curve could translate to many millions in savings or penalties for large hospitals at a time when cost containment and resource allocation challenges are top of mind for healthcare executives. As CMS regulations push all providers toward full accountability for both cost and quality of care, enhancing your PROs collection, digital patient management, and remote care capabilities can prepare you for the future of healthcare.
Learn more: CMS website for TEAM model
