CMS TEAM Model Q&A: Your 10 concerns addressed in partner webinar

DataGen partnered with the VBCExhibitHall and the Association of American Medical Colleges (AAMC) to host an informational webinar on CMS’ Transforming Episode Accountability Model (TEAM), Unpacking the mandatory CMS TEAM model: Overcome new rules & challenges. 

During this one-hour session, attendees received valuable TEAM insights provided by Alyssa Dahl, vice president of advanced analytics at DataGen, and Erin Hahn, lead policy analyst of value-based care and quality at the Association of American Medical Colleges (AAMC). However, some attendees had good questions that we wanted to elaborate on — hence, the creation of this blog post!

Speakers answer your webinar Q&As   

With great participant questions during the Q&A portion, Dahl and Hahn took time to expand on their answers to provide more clarity.* So, if you’re a hospital with mandatory TEAM participation status, keep reading to unpack the new rules and challenges. 

 

Q1: What happens to hospitals at risk during the reconciliation process? 

CMS will conduct reconciliation about six months after the performance year (PY) ends. CMS will look at the winsorized total Medicare episode expenditures for the episodes that were initiated by the hospital and will compare them to the finalized regional target prices for the hospital’s episodes.  

To get the final target price, CMS will need to update the trend factor and normalization factor for the PY that just completed. The target price will reflect each hospital's episode case mix. CMS will also calculate each hospital’s composite quality score and each hospital’s stop-gain and stop-loss threshold, which are based on participation track. 

If the hospital’s episode expenditures are higher than the target price, the hospital will owe a repayment to CMS. If the hospital's episode expenditures are lower than the target price, they will earn a performance-based payment.  

One important thing to remember with the composite quality score is: If a hospital has a positive reconciliation result, but poor quality, that can lower the payment that the hospital would receive from CMS. Alternatively, if the hospital has a negative reconciliation result, where the hospital owes a repayment to CMS, a strong quality score can reduce the amount the hospital would have to repay CMS.  

Q2: How does CMS account for the cost of care being higher or lower in different markets across the country? 

When setting target prices, CMS starts with the standardized Medicare episode spend across the three-year baseline period for each region (see slide 24 in the slide deck). By using standardized payments, that means CMS is looking at Medicare’s episode spend in the absence of provider-specific payment adjustments like the wage index or penalties associated with various quality programs like the readmissions reduction program.  

Any elements that would make one provider’s Medicare payment different from another provider’s Medicare payment for the same claim are removed. Ultimately, this is what CMS uses to compare a hospital’s episode expenditures to the target during reconciliation. After CMS calculates the net payment reconciliation amount, CMS will re-add geographic adjustments to each hospital’s payment or repayment amount.    

Q3: Will the quality measures added in performance year 2 be in addition to performance year 1 measures or replace them? 

The PY 2 measures will be added to the existing PY 1 measures. The failure to rescue measure will replace the PSI 90, meaning that measure will be eliminated going into PY 2. The all-cause unplanned readmission measure and the lower extremity joint replacement patient-reported outcome measure will continue to be implemented in PY 2. 

Q4: How do you define the episode payment actionable status?  

DataGen considers actionable expenditures during the episode of care to be Medicare payments that happen in the 30 days after the anchor procedure for all settings, except payments for professional services.   

That means any post-acute care, readmissions or part B expenditures for services like labs and imaging would be considered actionable. Those Medicare expenditures are the only services that the accountable hospital has the potential to influence. When considering total Medicare episode spend for the episode categories included in TEAM, a majority of the Medicare episode spend is entirely composed of the diagnosis-related group (DRG) payment for episodes triggered in the inpatient hospital setting or the actual surgical procedure payment for episodes triggered in the outpatient hospital setting.  

In most cases, the Medicare payment for the triggering event is going to be static and is not something that accountable hospitals can change. That is why DataGen distinguishes between Medicare episode spend that is actionable and inactionable.   

Q5: Will there be different regional target prices for inpatient vs outpatient lower extremity joint replacement episodes, or one consolidated target price?  

In TEAM, CMS will not produce target prices that are different based on whether the anchor procedure was performed in an inpatient hospital or outpatient hospital setting.  As part of the payment methodology, lower extremity joint replacement procedures performed in the outpatient hospital setting will be assigned the same target price as lower extremity joint replacement procedures performed in the inpatient hospital setting at the lowest acuity DRG.  Therefore, target prices in TEAM will be site neutral.

Q6: Based on population health and value-based care (VBC) work, could the prospective trend and prospective normalization factors be negative?  

It is not impossible for the prospective trend factor or the prospective normalization factor to be negative. Based on prior models, trend factors tend to be slightly positive and in the direction that dollars are heading.  

However, the impact of the normalization factor on the target price is expected to be negative. The goal of the normalization factor is to prevent risk adjustment from increasing the national non-adjusted average target price. When a similar normalization factor was used in the first year of the CJR 3-year extension, it reduced target prices nationally by about 14% and eliminated much of the positive impact of risk adjustments on the target price, unfortunately.   

It is also important to note that the trend factor and normalization factor can increase or decrease from what CMS initially calculates prospectively when they are recalculated during reconciliation after the PY ends.  CMS has established retrospective adjustment caps for each factor, limiting the relative percent that they can change from what was initially calculated for the PY prospectively.   

CMS has not released any preliminary values of the trend factor or normalization factor but does state in the final rule that prospective values will be released prior to the start of the PY, so likely Q4 2025. 
 

Q7: Is PY concurrent risk capture/risk adjustment an option?   

In TEAM, each hospital’s target price for the performance year will reflect the hospital’s realized patient case mix of the population that initiated episodes at the hospital. Hospitals will not receive a case mix adjustment based on their experience during the baseline period. The final target price for the PY will reflect the patients who initiated episodes during that specific period of time.      

Q8: Does the episode begin at the time of discharge? 

The episode is initiated by the surgical procedure performed in an inpatient hospital or outpatient hospital setting. For inpatient episodes, the 30-day follow-up period begins after the inpatient discharge date. For outpatient episodes, the 30-day follow-up period begins after the date of the completed procedure.   

Q9: How does this model work with value-based purchasing model reimbursement in place for all organizations? 

All Medicare payment policy programs that are part of the prospective payment system final rules like value-based purchasing, the readmissions reduction program and the inpatient quality reporting program will continue as expected, concurrently with TEAM. 

Q10: How will COVID-19 cases in the baseline data be addressed in 2026 target prices? 

Prior CMS models have had exclusions or sometimes risk adjustments when a patient had a COVID-19 diagnosis during the episode. This was primarily during the first year or two of the pandemic. It does not appear that CMS will make any particular exclusions or risk adjustments for COVID-19 in TEAM.  

The PY 1 baseline covers calendar years 2022 through 2024. CMS will also rebase every year so that the three-year period will move up. The impact of COVID-19 on utilization in the healthcare care system, while it had a substantial impact on care delivery in the beginning, over time the impact has reduced, and those patterns have stabilized. 

Recording and slides 

You can access the entire webinar recording and slide deck in VBCExhibitHall’s online library. You can also explore our DataGen exhibit booth.  

Have questions? DataGen has you covered 

Understanding an alternative payment model is challenging under any circumstance, especially when you’re selected for mandatory participation. Get ahead of CMS and its requirements with DataGen’s Transforming Episode Accountability Model (TEAM) solution. 

• Access Medicare payment policy experts with advanced healthcare claims data knowledge. 

• Gain valuable insights into your hospital’s strengths and weaknesses under CMS TEAM Model payment methodology. 

• Interpret data trends to identify improvement opportunities. 

• Easily monitor key performance indicators throughout the performance year. 

Contact us today to get started. In the meantime, view our white paper that describes the three main challenges of TEAM and how to overcome them. If you need a refresher on TEAM components, download our full guide for model design and payment information. 

*These responses may vary from what was said during the webinar. Some questions have been edited for length and clarity.