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In August 2024, the Centers for Medicare and & Medicaid Services (CMS) finalized the Transforming Episode Accountability Model (TEAM), a new mandatory episode-based alternative payment model.
TEAM, a 5-year model beginning January 2026, includes 5 episode categories: lower extremity joint replacement (LEJR), surgical hip/femur fracture treatment (SHFFT), spinal fusion, coronary artery bypass graft (CABG), and major bowel procedure. According to Advisory Board’s Daniel Kuzmanovich, these “five procedures in the TEAM model account for 6% of hospitals' Medicare inpatient volumes nationwide.” Kuzmanovich adds “The thing that surprises me most about the TEAM model is how little hospital executives are talking about it.”
TEAM hospitals will be measured based on their fee-for-service (FFS) expenditures in 30-day episodes relative to a “target price”, as well as care quality measures including readmissions, patient safety, and (for LEJR episodes) the CMS total hip and knee arthroplasty patient-reported outcome - performance measure (THA/TKA PRO-PM). For more details on TEAM, download this complete guide for orthopedic care.
With orthopedic leaders already immersed in complying with the mandatory PRO-PM requirements as part of the CMS hospital inpatient quality reporting program since April 2024, our CEO Bronwyn Spira decided to host a discussion more focused on TEAM with a top expert in value-based orthopedic care: Dr. Michael Meneghini, CEO and founder of the Indiana Joint Replacement Institute and incoming 2025 AAHKS President.
Below are the most impactful callouts from this discussion.
Missed the panel? Access the full recording here.
What were your initial thoughts about TEAM when you first learnt of it?
Dr. Meneghini: If I start with my honest assessment. Sometimes I wonder if the Government makes it so complicated, they want us all to just give up so they can go to a single payer system. I hope that's not the case. I don't think our society would accept that. But, boy, certainly, when you look at the document: 3,000 pages of intense acronyms, formulas, calculations, methodologies. I don't know how–and this is probably a summary statement that I'm starting with, and then we can dive in–I don't know how a small, tiny rural access hospital survives in this.
And when I saw the mandatory Core Based Statistical Areas (CBSAs), they range from really tiny critical access hospitals in very rural areas to New York City and New Jersey and Washington D.C, all of them hugely populated areas.
So I guess it is true randomness but I just don't know how a little tiny rural access hospital takes on downside risk if they're operating at a margin that’s 0.2% or if they’re already underwater–the average margin for Indiana Hospitals in 2023 was -2%.
So what is the solution here?
Dr. Meneghini: I think if they're gonna tackle it, they're gonna need help. I really think they're gonna need help, because the infrastructure to manage this risk is not easy, and we did it before.
You know, I probably should have said this in the intro, but we have experience with the Comprehensive Care for Joint Replacement (CJR) model. So we were in mandatory CJR 5 years ago when it was mandatory for the largest 13 markets. Back then the government said let's pick the largest 13 markets for this model, but those hospitals would have the resources to manage this kind of risk. And it was successful–it drove down costs. But for TEAM the risk for smaller markets is huge.
The risk associated with a significant amount of readmissions, particularly in a rural area, is not inconsequential, and you know TEAM starts January 2026, so we've got about 16 months, and the clock is ticking, and it's gonna take a long time for these places to get ready.
Ultimately, hospitals faced with managing risk like this, they're either gonna have to hire people to do this for them, which I assume most of them will do if they can afford it, or they're gonna have to try and do it themselves.
Now, in places like New York, those hospitals they've already got data analysts and people that can do that internally. But how many people are gonna be like this?
How should hospitals think about managing risk under TEAM?
Dr. Meneghini: There's 3 huge elements to managing the risk in this setting:
- You have to have very accurate cost accounting, and you know that hospitals have no idea where their costs are going, most of them at least. And so to dive into really understanding your cost to manage risk is very challenging for a lot of hospitals–it takes a lot of time, effort, money, and people.
- You have to collect PROMs. Of course at Force, you all do that better than anybody else. I mean, Force has been a pioneer and leader in collecting PROMs. And now it's mandatory! As of a few months ago, mandatory for inpatient CMS patients, which we currently do using your platform–full disclosure.
- You have to have the analysts and the analytic ability to take all the data–the cost accounting, the PROMs, the readmissions, the adverse events–and then synthesize it in a way that sends it to CMS to show how you’ve managed the risk.
Those are not all easy feats.
What is your advice for orthopedic leaders, whether in quality or service line management or otherwise?
Dr. Meneghini: This is a 5-year program…I’m wondering what’s next and who it impacts. Certainly with the hospitals I’m involved with, my advice to them will not be to go around giving each other high-fives if they don’t have to do this. My advice to them is get your act together, because this is coming to a theater near you. And we’ve actually heard signals that a number of private payers are also ready to take on risk just like this as well, so it's not going to be just Medicare eventually.
But the first step of value-based care is reducing variation and minimizing outliers…just doing that saves tremendous amounts of money. As we were talking about earlier, some US markets are 20 years behind in terms of their protocol development and have wide variation in practice patterns, many of which are not even evidence based. So bringing everyone up to current standards for protocols and pathways and reducing that variation will certainly be the first step to minimize cost and improve quality.
What about the THA/TKA PRO-PM in quality reporting programs? What caught your attention?
Dr. Meneghini: Well we were just saying that some hospitals are starting to “get it” in terms of value-based care, but that’s really because it's being gradually mandated by the government, right? Now with the PRO-PM being mandated as of April 2024, what blew my mind about that was that a hospital’s entire Medicare dollars–not just hip and knee dollars–became at risk. I thought wow that’s a real heavy hit, and it’s meant to force hospitals to get their act together.
The issue with this substantial clinical benefit (SCB), this new term they’re now using even though it doesn't have as much data behind it as MCIDs, they’re going to publish data on the percentage of patients who got a 20 point or 22 point on their PROMs. What concerns me is that surgeons will look at their rates as they become published and then they start cherry picking a little bit–they’ll basically say if I can’t get my patient to predictably surpass that SCB, then I'm not going to do the surgery because it risks my ranking.
I’ve made my whole career by treating people whom others won’t treat. What happened when CJR started, all these patients with comorbidities and high BMI and other risk factors showed up at my clinic because others wouldn’t treat them, and we did a great deal of research to learn how to treat these patients at the highest quality possible too.
But what’s next? I’m concerned we are heading to a place where the government will say you shouldn’t do surgery on these patient populations because predictive analytics indicate they are not likely to meet that specific metric. That's a scary place for me.
Where is orthopedic value-based care heading? How should ortho leaders be prepared?
Dr. Meneghini: It's hard. It's hard to predict. I wouldn't have predicted this exact rollout of TEAM, either. But what I do think is that the solution to enabling us to practice medicine more efficiently (aside from what we’ve already covered) is through data and through technology, because humans can only do so much.
You know, there was recently a very large cyber security attack with a very large health system that occurred in the middle of the United States. And they shut down some hospitals, and they went on paper, and the irony was that the practitioners, the quotes we started hearing were “I feel like I'm taking care of patients again, I can actually pay attention to my patient. I'm not staring at a computer screen.”
And so I think what that told me, the message was not to not use technology, but to use technology smarter. Technology is so powerful, like your platform, for example. I'll be honest with you: it does everything I need, but I never look at it. And you shouldn't take that the wrong way–my staff looks at it all the time. It is the way they interact with patients. It's the way that they check wounds and collect how they're doing with PROMs. And all I do is tell the patient at the beginning “hey, you're gonna get an app on your phone. It's called Force Therapeutics, and you should make sure you pay attention to it, because that's how we're gonna keep track of you and how you're doing afterwards. And as you're going to get surveys, please fill them out. It's how we see how we're doing.” and that's all I have to say. The rest of it? I never see it. My staff is doing it all, and I hope you don't take that personally, but it's only because I'm busy doing surgery and running the program. But my staff is interacting with it nonstop.
That's how I think technology makes us more effective and more efficient. And it has to!
I think all the physicians and all the hospitals need to get our technology in place now and don't just talk about it. I mean, they're so disintegrated right now. It's so disintegrated. We have so many different platforms, and no one knows where the data is going. That has to be stopped.
But once you get your systems in place and they're communicating, and you're pulling data, and you're analyzing data, no matter what regulation they throw at you, you should be able to adapt. We have to get our systems in place because we can never predict what the government's gonna do. Hell, I've given that up a long time ago, so you might as well just keep your house in order, and then when the bullets start flying, you can adapt because you're a more powerful institution yourself.
Hear more from the 2025 AAHKS President about TEAM, orthopedic advocacy, and the future of value-based orthopedic care. Access the full panel recording here.
