Simulating the Impact of the Transforming Episode Accountability Model

To simulate the financial impact of Medicare's Transforming Episode Accountability Model (TEAM) on CMS and assess variation in incentive payments across hospital types and geographic regions from 2026 to 2030.

We developed a simulation model to project hospital-level incentive payments and CMS savings under alternative TEAM design scenarios. The model incorporated hospital and patient characteristics, clinical episode categories, and target prices to estimate reconciliation payments, accounting for TEAM's mandatory participation and episode structure. Analyses included projections at the national level and by hospital type and state.

We applied random forest models using data from Model Year 4 (2021) of the Bundled Payments for Care Improvement Advanced (BPCI-A) program obtained through a Freedom of Information Act request. We identified 710 acute care hospitals required to participate in TEAM based on the CMS participant list after linking the data to BPCI-A target price and Inpatient Prospective Payment System impact files (2018-2021).

Assuming a $500 per-episode reduction in spending, TEAM is projected to yield $2.6 million in savings in 2026 and $46.6 million in 2030. In 2030, safety-net hospitals are projected to receive the highest average reconciliation payments ($962 per episode), followed by rural ($620) and urban non-safety-net hospitals ($77). Nebraska is projected to receive the highest average payments, whereas Oregon may face the largest penalties.

TEAM is projected to produce modest Medicare savings with substantial variation in hospital payments, highlighting the importance of balancing incentives across hospital types and regions.