April 6, 2026
By Jay Chowdappa, MD, co-founder and CEO, Zynix AI · Updated October 1, 2026
The CMS TEAM model makes acute care hospitals in selected markets financially accountable for five surgical episodes, from surgery through 30 days after discharge. Because ACO patients can be in TEAM episodes, ACOs share the stakes: post-acute placement, readmissions and follow-up now affect both the hospital’s target price and the ACO’s total cost of care.
On January 1, 2026, CMS flipped the switch on the Transforming Episode Accountability Model (TEAM), a mandatory bundled payment model for surgical episodes. Acute care hospitals in 188 Core-Based Statistical Areas (CBSAs) are now required to take financial accountability for five surgical episodes from admission through 30 days post-discharge, and CMS's TEAM page currently lists 716 participating hospitals.
The five episodes: lower extremity joint replacement (LEJR), surgical hip femur fracture treatment (SHFFT), spinal fusion, coronary artery bypass graft (CABG), and major bowel procedures.
This is not a voluntary pilot. It is not a demonstration. Every IPPS hospital in a selected CBSA is in, whether they wanted to be or not. And for ACOs operating in those same markets, the downstream effects are massive.
ACOs I have led generated $300M+ in shared savings. And I can tell you from firsthand experience: surgical episode costs are one of the most undermanaged cost categories in the MSSP. TEAM changes that, whether ACOs are ready or not.
Under TEAM, participating hospitals receive a target price that covers all Medicare costs associated with the surgical episode, including the inpatient stay, post-acute care (skilled nursing facility stays, home health), physician follow-up visits, and any readmissions within 30 days. If total episode costs come in below the target price, the hospital earns a reconciliation payment. If costs exceed the target, the hospital owes CMS money back.
The model runs for five performance years through December 31, 2030. Quality performance adjustments factor into the final reconciliation amounts, meaning hospitals that score poorly on quality metrics see their potential upside reduced and their downside exposure increased.
Here is the critical detail for ACOs: CMS has explicitly designed TEAM to overlap with both MSSP and ACO REACH. A beneficiary can be attributed to an ACO and simultaneously trigger a TEAM episode at a participating hospital. CMS will not adjust a TEAM hospital's reconciliation amount based on a beneficiary's ACO alignment.
That means both entities have independent financial incentives to reduce the total cost of the surgical episode. In theory, this should drive collaboration. In practice, it creates a coordination problem that most ACOs and hospitals are not equipped to solve.
Let me walk through the math. Say your ACO has 25,000 attributed beneficiaries, and 15% of them are in a CBSA with a TEAM-participating hospital. That is 3,750 beneficiaries whose surgical episodes are now subject to dual financial accountability. If even 8% of those beneficiaries undergo one of the five TEAM procedures in a given year, you are looking at 300 surgical episodes where both the hospital and your ACO have skin in the game.
Each of these episodes carries substantial Medicare spending across the inpatient stay, post-acute care and any readmissions. If your ACO's care coordination does not extend into surgical episode management, you are leaving significant cost reduction on the table while the hospital captures the upside through TEAM reconciliation.
Here is where it gets worse. Not every participating hospital will come out ahead under TEAM. Hospitals under financial pressure will look for ways to cut costs, and that often means shorter inpatient stays and faster discharges to lower-cost post-acute settings. Without ACO-level oversight, those decisions can lead to higher readmission rates, which directly inflate your ACO's total cost of care.
This is the surgical cost trap: the hospital optimizes for the episode target price, the ACO eats the readmission cost, and nobody coordinates the post-acute transition.
LEJR has the longest track record in bundled payments, dating back to CJR. Most hospitals have already optimized length of stay and shifted toward outpatient total joint replacements. The ACO risk here is primarily in post-acute care utilization. If your beneficiaries are being discharged to SNFs when home with home health would serve them, you are overpaying for the episode. Better post-acute placement decisions, made by clinicians with complete data in front of them, are the main lever for LEJR episodes.
Hip fractures are a different animal. These patients are older, frailer, and have significantly higher 30-day mortality and readmission rates. Post-acute care is a large share of total episode spend. For ACOs, the key lever is ensuring timely surgical intervention (within 24 to 48 hours of admission) and structured post-discharge follow-up. Delays in surgery add risk for these frail patients.
Spinal fusion episodes vary widely in cost, depending on the number of levels fused, surgical approach, and implant costs. The ACO opportunity is in upstream utilization management. Many spinal fusions are elective, and some lumbar fusions do not meet clinical appropriateness criteria. Pre-surgical review and conservative treatment pathways can reduce unnecessary procedures while improving patient outcomes.
CABG is a high-acuity procedure with high episode costs, and CABG readmissions matter enough that CMS measures them in the Hospital Readmissions Reduction Program. Post-discharge complications, including surgical site infections, arrhythmias, and heart failure exacerbations, drive the majority of avoidable readmissions. ACOs need close post-discharge follow-up and rapid clinical escalation pathways to keep CABG episodes on track.
Major bowel procedures carry high complication rates, including surgical site infections and 30-day readmissions. Post-operative ileus, anastomotic leaks, and sepsis are the primary cost drivers. For ACOs, the intervention point is post-discharge monitoring with early detection of complications before they escalate to emergency department visits or readmissions.
The fundamental problem with surgical episode management is that it requires coordination across entities that do not share data, do not share incentives, and do not share workflows. The surgeon, the hospital, the SNF, the home health agency, the PCP, and the ACO are all operating in parallel with limited visibility into each other's actions.
This is exactly the kind of problem that multi-agent AI systems are designed to solve.
At Zynix, we divide the surgical episode workflow between analytics, AI agents and your clinical team, with clinicians making every clinical decision:
For how ACOs run follow-up, wellness visits and gap work on Zynix today, see our ACO customer stories.
If your ACO operates in any of the 188 CBSAs where TEAM is active, here is your immediate action plan:
Identify which of your attributed beneficiaries are likely to receive care at TEAM-participating hospitals. Cross-reference your beneficiary panel with CMS's published list of TEAM participants. Quantify the number of expected surgical episodes by procedure type.
Approach your TEAM-participating hospitals with a shared savings alignment proposal. Both parties benefit from lower episode costs. The ACO brings care coordination infrastructure and post-acute management. The hospital brings surgical quality improvement and inpatient cost control. Formalize this with a data-sharing agreement and joint care protocols.
Post-acute care is one of the largest cost levers in TEAM episodes. You need timely visibility into where your beneficiaries are being discharged, whether those placements are clinically appropriate, and how post-acute costs compare to benchmarks. If you are still relying on claims data with a months-long lag, you are managing surgical episodes with a rearview mirror.
The 48-hour and 7-day post-discharge windows are where readmissions are either prevented or allowed to happen. Manual call center models cannot scale across 300 or more surgical episodes per year. Multi-agent AI systems can run structured post-discharge outreach, record patient responses, escalate concerns to clinical staff by rule, and prepare documentation in the care management platform, while licensed clinical staff make the TCM interactive contact and every clinical decision.
Do not wait for annual reconciliation to find out whether your surgical episodes were profitable. Build or deploy prospective episode cost tracking that integrates hospital discharge data, post-acute claims, and pharmacy data to project episode costs as new data arrives.
TEAM is not just a hospital problem. For ACOs with beneficiaries in the 188 mandatory markets, surgical episode costs are now a shared accountability. The ACOs that build surgical episode management capabilities, whether through hospital partnerships, post-acute optimization, or multi-agent AI deployment, will capture significant savings. The ACOs that ignore TEAM will watch their total cost of care inflate as hospitals make unilateral decisions to optimize their own target prices.
The $300M+ in shared savings generated by ACOs I have led did not come from ignoring the details. It came from building systems that manage every cost category with precision. Surgical episodes are the next frontier. TEAM just made it mandatory.
The Transforming Episode Accountability Model is a mandatory CMS Innovation Center model in which acute care hospitals in selected Core-Based Statistical Areas receive a target price for five surgical episodes: lower extremity joint replacement, surgical hip femur fracture treatment, spinal fusion, coronary artery bypass graft and major bowel procedures. Each episode runs from the surgery through 30 days after discharge, and the model runs from 2026 through 2030.
Beneficiaries aligned to an ACO are included in TEAM episodes when they have one of the five surgeries at a participating hospital, and CMS does not adjust the hospital’s reconciliation for that overlap. Both the hospital and the ACO therefore gain from lower episode costs. The risk for ACOs is that hospital cost cutting shifts costs into readmissions or post-acute care that land in the ACO’s total cost of care.
Start by mapping which beneficiaries use TEAM hospitals and how many episodes to expect by procedure. Then agree data sharing and joint protocols with those hospitals, review post-acute placement patterns, and make post-discharge follow-up reliable for every surgical patient. The same outreach and escalation paths serve ACO programs for TCM, wellness visits and gap closure.
Agents can call or text patients on the schedule surgeons set, confirm follow-up visits, send approved education and run symptom check-ins, then route wound, pain, fever or medication concerns to the clinical team by rule. They should never decide on post-acute placement, judge whether a procedure is appropriate or assess symptoms. Post-procedure follow-up calls show how the handoff works.
CMS: TEAM (Transforming Episode Accountability Model). https://www.cms.gov/priorities/innovation/innovation-models/team-model
Federal Register: FY 2025 IPPS and LTCH PPS final rule (89 FR 68986, August 28, 2024). https://www.federalregister.gov/documents/2024/08/28/2024-17021/medicare-and-medicaid-programs-and-the-childrens-health-insurance-program-hospital-inpatient
CMS: Transforming Episode Accountability Model (TEAM) Model Overview (updated September 2026). https://www.cms.gov/priorities/innovation/files/team-overview-updated.pdf
CMS: Transitional Care Management Services (MLN908628, August 2025). https://www.cms.gov/files/document/mln908628-transitional-care-management-services.pdf
CMS: Hospital Readmissions Reduction Program (HRRP). https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/hospital-readmissions-reduction-program-hrrp
Jay Chowdappa, MD is co-founder and CEO of Zynix AI. He is a physician, and ACOs led by him generated $300M+ in shared savings before he started Zynix AI to help care teams follow through on what their data already shows.