Summary: CMS is expanding value-based care through the TEAM and ASM programs, tying reimbursement more closely to cost, quality, and care coordination. Healthcare organizations should assess their exposure and readiness as CMS continues to scale value-based reimbursement models.

The shift toward value-based care continues to accelerate with the introduction of two new mandatory payment models from the Centers for Medicare & Medicaid Services (CMS). These new models – the Transforming Episode Accountability Model (TEAM) and the Ambulatory Specialty Model (ASM) – are in effect now and signal where reimbursement is heading next.

Although these models may have received limited attention, their implications are significant. Participation is mandatory, and both models apply to traditional fee-for-service Medicare only. Even for hospitals and physician groups that aren’t immediately impacted, these models should be evaluated closely – particularly as CMS continues to scale mandatory participation.

TEAM Overview

The Transforming Episode Accountability Model (TEAM) is a five-year, mandatory bundled payment model that began Jan. 1, 2026, and runs through 2030. While participation is mandatory, it only applies to certain regions and hospitals. The full list of participants can be found here.

Building on prior initiatives such as the Comprehensive Care for Joint Replacement Model (CJR), TEAM bundles selected surgical procedures into episodes of care for which a single Medicare payment is provided. This bundled payment covers all providers caring for the patient, including acute care, physicians, and post-acute care.

Key TEAM details:

• Episodes are 30 days in length and begin on the day of the procedure.
• The episode includes all Medicare Part A and B billings, including post-discharge physician visits and rehabilitation services.
• Procedures in scope include:
  • Lower extremity joint replacement (hip and knee)
  • Surgical hip femur fracture repair (ORIF)
  • Spinal fusion
  • Coronary artery bypass graft (CABG)
  • Major bowel procedures (small and lower intestine bypasses)
• Approximately 700 hospitals across multiple regions are required to participate.
• Each region has a target price for each episode, which is risk-adjusted and based on beneficiary and hospital-specific data.
• Hospitals may earn additional payments if actual billables to Medicare are less than the target price or incur repayment obligations if they exceed it.
• The first year of the program (2026) includes upside risk only but with limited reward. Future years introduce two-sided risk. Notably, safety-net and rural facilities have lower levels of risk and reward for all years.
• Both the upside and downside bonus or repayment amounts are adjusted for quality metrics. Quality performance below expectation will reduce the additional payment and vice versa.
• Similar to the Medicare Shared Savings Program (MSSP), hospitals will continue their routine billings to Medicare. Any bonus or repayment is factored into the future period settlement amounts.
• For skilled nursing facilities (SNFs), the requirement of a three-day hospitalization prior to admission is waived for select SNFs that meet quality criteria based upon their Five-Star Quality Rating System score.

TEAM is a mandatory model for selected hospitals. Physicians performing these services at participating hospitals should have minimal disruption or changes impacting care delivery, except perhaps earlier direct patient placement into a SNF post-procedure. Savvy independent groups may consider whether a portion of a bonus received by the hospital is due to their efforts.

ASM Overview

The Ambulatory Specialty Model (ASM) is a five-year, mandatory program for physicians treating traditional fee-for-service Medicare patients with heart failure or low back pain in selected urban areas. The model will start Jan. 1, 2027, and run through 2031.

ASM is an amplification of the Merit-Based Incentive Payment System (MIPS) Value Pathways. Based on MIPS scoring, specialists either get a positive, neutral, or negative payment adjustment on future Medicare Part B billings. Hospitals are not directly impacted by this model.

Key ASM details:

• Over 200 urban areas have been selected based on a review of Medicare spending.
• Specialists treating over 20 qualifying Medicare patients in these markets will be included in the model. Physicians can check their participation status here.
• Participating specialties include the following:
  • General cardiology (heart failure)
  • Anesthesiology (low back pain)
  • Pain management (low back pain)
  • Interventional pain management (low back pain)
  • Neurosurgery (low back pain)
  • Orthopedic surgery (low back pain)
  • Physical medicine and rehabilitation (low back pain)
• The current MIPS categories of performance measurement will be used: quality, cost, care improvement, and technology interoperability.
  • Quality and cost measures will be based on individual performance. Other categories will be based on group performance.
  • The category weighting remains the same as MIPS.
• Data reporting and sharing are important factors in assessing specialist performance. CMS will provide enhanced data sets to facilitate reporting and care management.
• Participation requires collaboration agreements between specialists and primary care physicians. These agreements, and the annual attestation to them, must outline three of these five elements:
  • Clinical data-sharing
  • Co-management of patients (when and how)
  • Care transitions
  • Referral expectations (when, duties of parties)
  • Care coordination and integration documentation
• Payment adjustments are the same as MIPS (+9%, neutral, or -9%) for the first year but may increase in subsequent years. This adjustment is applied to all Part B payments in the corresponding payment year. For example, performance in 2027 will be applied to 2029 payments.
• ASM reporting will be housed on CMS’s Quality Payment Program portal and will replace MIPS reporting.

ASM is a mandatory model for participating physicians. However, the required collaboration agreements, which describe the roles and expectations of specialists and primary care providers, signal a continued shift toward more integrated, coordinated care models.

Implications for Healthcare Organizations

As CMS continues to expand mandatory value-based care models, TEAM and ASM offer a clear signal of where reimbursement is headed. These programs reflect a broader shift toward greater accountability for cost, quality, and care coordination across the continuum.

For hospitals and physician groups, the immediate impact may vary, but the underlying expectations are consistent. Organizations should begin assessing their exposure to these models, evaluating alignment across providers, and identifying gaps in care coordination, data capabilities, and performance management. Taking a proactive approach now can help position organizations to navigate future models more effectively as CMS continues to scale value-based reimbursement.

Preparing for value-based care models like TEAM and ASM requires a proactive, coordinated approach. KSM’s healthcare consulting team helps organizations assess financial and operational impact, identify performance improvement opportunities, and align providers around more coordinated care models. From evaluating care delivery and cost drivers to strengthening physician alignment and reporting capabilities, we work alongside your team to help turn strategy into measurable results. Whether you’re directly impacted or planning ahead, we can help you move forward with clarity.

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