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My Takes on the TEAM Model
An incentive for acute care hospitals to participate in VBC
Dana Prommel Strauss
April 23, 2024
I previously covered the newly announced TEAM Model, a mandatory CMS alternative payment model that must go through the rulemaking process (as all mandatory models must). It was announced in the 2025 IPPS Proposed Rule.
In that post, I provided:
A recap of models announced by CMS in the last nine months
The CMS updated specialty care strategy
The summer of 2023 Request for Information (RFI) about a mandatory episodes of care model, as well as several publicly-available comment letters from stakeholder groups
CMS and MedPAC’s language that shares their reasoning for this model’s development
A link to a page that breaks key parts of the TEAM section of the IPPS into sections
A summary of major components of the model, such as the Tracks, Quality, Pricing, Risk Adjustment, and Overlap
A commitment to a Part II, where I will share takeaways and considerations, what this signals, opportunities, downstream implications, and more
The challenge of aligning incentives of VBC with those of acute care hospitals
How do we ultimately succeed in lowering overall health care costs?
Reduce the need for and likelihood of individuals to seek emergency care at a hospital and have inpatient hospital stays.
That also reduces the need for inpatient post-acute care services, risky care transitions, and negative sequelae that can come from preventable and/or avoidable acute and post-acute care.
But how do we do this?
Establish a system where people get the right healthcare at the right time and in the right place. Simple concept? Yes. Simple to accomplish? No.
Improve access to care for all populations, including for those in rural and underserved communities, in those with low health literacy, in healthcare deserts, and in medically underserved areas (MUAs).
We have to meaningfully address social determinants of health and health-related social needs, which determine 80% of health outcomes.
You read that correctly. Only about 20% of clinical factors influence health outcomes.
Some Health Equity Visuals:
Healthy People 2030, U.S. Department of Health and Human Services, Office of Disease Prevention and Health Promotion. Retrieved [date graphic was accessed], from https://health.gov/healthypeople/objectives-and-data/social-determinants-health
Reward providers for taking accountability for the longitudinal health outcomes of their patient populations
How do we do this?
Community providers can opt into alternative payment models (moving away from fee-for-service), such as:
Accountable Care Organizations
Advanced Primary Care Programs
Value-Based Care Contracts Across Payers
How are these providers rewarded for being successful?
They provide the care their populations need, whether or not there are billable codes for the services. This is most feasible when the provider takes on full accountability for a population and can invest in robust advanced primary care and on site primary specialty care.
Then, the payer looks at the difference between anticipated/historical/regional spend, trends, the risk levels of the population, and gives back to those providers a portion of the savings when the total cost of care was reduced over the year (AND quality was maintained or improved).
Where do hospitals come in?
Hospitals are paid for treating emergencies and performing services like those in intensive care, trauma, surgeries, early surgical recovery, childbirth and post-partum care, and more that meet an established threshold indicating only the hospital can care for the individual adequately.
So if we think about how we reduce the total cost of care and improve patient outcomes, what can hospitals do that won’t hurt their own bottom line but will help achieve the BIG GOALS of VBC?
My friends, incentives drive everything in business. This includes the business of healthcare.
Regulations and payment policies create the structure around which payers determine reimbursement to providers and for what services they will reimburse. 🥼
Under the prospective payment system, Medicare reimburses the acute care hospital based on the “Final Diagnostic Related Group (DRG)” assigned to a patient. This DRG may even be determined after discharge, when all inpatient documentation is completed.
DRGs are a lump sum payment. So think of it like a debit card. 💳️ The DRG payment is like a retrospective debit card.
If a patient has a one week admission vs. the average length of stay for a DRG upon which a DRG payment is based (let’s say it’s five days in this example), the hospital is ultimately keeping less of that DRG payment. 💲
Every day one patient is occupying a bed means a new patient can’t be admitted and assigned that to that bed. 🛏️ So what are hospitals incentivized to do by nature of how they are paid?
Facilitate efficient discharges. When a patient doesn’t meet inpatient criteria, there is no incentive to keep them in the hospital. 🏥
This is an over-simplification, but it lets us level set on the foundational structure of acute care hospital reimbursement.
One more important point: the other provider type that bills during the Acute Care Hospital stay are the physicians and advanced practice providers.
Not the rehab staff, not the dieticians, not the social workers, not the discharge planning team.
The hospital bills for the bundle of services provided, and the physicians/advanced practice providers bill for their services.
There are other incentives important to hospitals, of course. To name just a few:
Achieving high degrees of patient safety
High scores on Quality Measures, such as the Inpatient Quality Reporting (IQR) and Hospital Readmission Reduction Program (HRRP)
Attracting and retaining physicians, nurses, and other healthcare staff to meet staffing requirements.
Sometimes the incentives are around publicly-reported data, competition with peers, attracting surgeons and other specialty care providers to work and/or round there rather than another hospital.
What is not incentivized in a hospital?
Early and frequent mobilization to prevent the rapid physical decline of bedrest (in all cases except those where it’s medically contraindicated (and even then, re-evaluated daily))
Thorough, team-based evaluations of patient’s home living situation and what led up to the hospitalization. Identifying factors that could have contributed to the hospitalization and how to prevent them from contributing to future emergency room visits and inpatient stays
Addressing barriers to good outcomes once the patient leaves the four walls of the hospital
Warm hand-offs back to community providers and post-acute teams that identify barriers to good outcomes, rehab prognoses, medical prognoses, tentative plans for the transition back to home, and support anticipated upon transition home
Connecting patients to community based organizations who can help address the social determinants of health driving disease complications and decompensation, acute events, and lack of engagement in healthcare
Discharging to the least restrictive setting that minimizes transitions of care, reduces the likelihood of complications from inpatient settings
Starting the discharge planning process with a “why not home” approach, with a hospital stay planned from the first hour around that ideal goal
Establishing and reinforcing high-quality preferred post-acute networks established using objective data, willing to collaborate on safe, optimal, efficient post-acute stays
Let’s revisit the idea of mandatory episodes of care for acute care hospitals
If a hospital is put at meaningful financial risk for 30 days after a hospital stay, are they more likely to consider how to address:
reducing readmission risks, unnecessary post-acute care, overutilization of care, acute care mobility programs, robust discharge planning, warm hand-offs, and post-acute networks and management?
In developing the TEAM Model, I believe CMS is counting on that.
In my first post about palliative care and the incredible results of the Medicare Care Choices Model, I shared a link to:
and called out Table 2, page 10 of 49 of the pdf:
That article (part one of two) was a discussion of the incredible results of the MCCM and how to consider recreating the program without other available models.
If we hop up to the second set of rows on BPCI-A, the two types of episodes that reduced both gross and net spending in the first few years of the model (limited number of years available for this evaluation, which ended with the 2020 Performance Year across models) were…drumroll…
surgical episodes
From page 11 of that same document:
The Bundled Payments for Care Improvement Advanced (BPCI-A) Model had improvements in institutional PAC, SNF, and IRF utilization or expenditures within many episodes within the hospital setting (medical and surgical episodes) with only one episode unfavorably increasing HH expenditures as well as some non-significant changes in certain episodes
CMS also notes this on page 25:
Considerations for Acute or Specialty Care & Targeted Populations Models Models within this grouping served beneficiaries that may have used costly institutional or care that would be otherwise potentially avoidable if their condition was not properly managed. The overwhelming majority of these models were able to demonstrate significant reductions in utilization such as inpatient admissions and post-acute care (PAC) that drove down Medicare spending, with some improvements in quality. All of these models had reductions in gross Medicare spending and most had reductions in inpatient admissions and PAC….
….Two key contextual factors separated this grouping of models. First, there were differences in results based on model design features such as mandatory or voluntary participation and whether the model provided financial incentives for participation. Second, results also varied based on whether the model served targeted or broader patient populations.
So CMS has done some evaluation of models, like in this document synthesizing findings of 21 models.
They have data showing surgical episodes reduce net spend and all reduce post-acute care utilization, with no negative impact on outcomes. Also, from page 37:
BPCI-A reduced readmissions for surgical episodes during the 90 days following a discharge or procedure by 4.1% of the BPCI-A mean for Model Years 1 and 2 (2018-2019).
The decision to implement mandatory surgical episodes of care makes sense based on evidence and feedback from stakeholders.
CMS has systematically been meeting with stakeholders and collecting feedback, such as through the 2023 Request for Information on a future episode-based payment model. I covered some of the responses to the RFI in part one of this two-part series, which you can find here:
The proposed rule contains some great features that I covered in Part One, including:
easily-identifiable episodes (not triggered by episodes of chronic illness exacerbations but rather, distinct events)
30-day episode lengths
hospitals holding accountability for the cost and quality of care rather than physicians
favorable model overlap policies that don’t have negative impacts on longitudinal care programs like ACOs
it requires the hospital to tuck patients into their community providers upon discharge
There are components of the model that some will not like, such as the fact that it’s mandatory (reasons covered in part one), only a small number of episodes per lookback period qualify a facility for inclusion in TEAM (intentional, to capture and include safety net hospitals), only one year of no downside risk, risk adjustment methodology, and more. CMS seeks additional comment in the proposed rule on specifically indicated areas.
CMS wants hospitals to consider what’s best for patients beyond the hospital stay, and coordinate and communicate closely with the patient, their care partners, the multidisciplinary team, and those who will need to successfully engage with the patient upon transition out of the hospital.
CMS is also trying to address issues like staffing shortages in inpatient sites of care, like the final rule announced yesterday:
From the Fact Sheet:
This final rule was informed by the feedback CMS received from over 46,000 public comments submitted in response to the proposed rule. Central to this final rule are new comprehensive minimum nurse staffing requirements, which aim to significantly reduce the risk of residents receiving unsafe and low-quality care within LTC facilities. CMS is finalizing a total nurse staffing standard of 3.48 hours per resident day (HPRD), which must include at least 0.55 HPRD of direct registered nurse (RN) care and 2.45 HPRD of direct nurse aide care. Facilities may use any combination of nurse staff (RN, licensed practical nurse [LPN] and licensed vocational nurse [LVN], or nurse aide) to account for the additional 0.48 HPRD needed to comply with the total nurse staffing standard.
CMS is also finalizing enhanced facility assessment requirements and a requirement to have an RN onsite 24 hours a day, seven days a week, to provide skilled nursing care.
and
In September 2023, CMS announced that the agency would be investing over $75 million to launch a national nursing home staffing campaign to increase the number of nurses in nursing homes, thereby enhancing residents’ health and safety. Through this campaign, CMS will be providing financial incentives for nurses to work in the nursing home environment.
I’ll cover this topic in a future article, but noting here that I believe SNFs’ challenges, such as those above, drive the development of policy solutions that reduce unnecessary utilization of SNF as a post-acute site of care. I believe CMS hopes TEAM will keep the momentum going to encourage better post-acute care management that’s been started in the BPCI, BPCI-A, and CJR programs.
That’s all for today!
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Thanks for reading, my friends!
All the best,
Dana