The latest evolution of a federal push to improve care coordination and reduce costs across settings may spell lost revenue for skilled nursing providers who are unprepared, two experts warned this week.
The Centers for Medicare & Medicaid Services last week finalized details of its Transforming Episode Accountability, or TEAM, model as part of the fiscal 2025 Inpatient Prospective Payment System rule. Set to start in January 2026, the model changes how hospitals in 188 markets are paid to treat Medicare’s five most common, most expensive surgical procedures.
“Many in the industry have expected mandatory bundles for some time,” said Brian Fuller, a managing director and value-based care expert with ATI Advisory. “This is a logical progression coming out of the decades-long lessons of voluntary models.”
But by extending TEAM into rural and safety net areas and requiring participation for five years, CMS is also providing insights into how it sees episodic payments working with other value-based initiatives in the future. Models like TEAM will likely become part of the framework for all providers, even if they have other value-based arrangements.
Under the TEAM model, CMS will develop target prices for each procedure and pay those to the acute care provider, who must hold downstream providers such as skilled nursing and primary care accountable for related care within a 30-day window. If the providers beat the target, they can earn an additional payment from CMS, while overspending may require them to pay CMS a fee.
The included surgeries are: lower extremity joint replacement, surgical hip femur fracture treatment, spinal fusion, coronary artery bypass graft, and major bowel procedure. The post-acute spending on those conditions varies from 22% to 63%, according to an ATI analysis of CMS data. Together, those conditions account for more than 11% of all Medicare inpatient payments.
That means nursing homes need to prepare now to ensure they can still capture a share of payments after the model begins, said Fred Bentley, managing director of ATI’s post-acute, long-term care and senior living practice.
“Step one is finding out, ‘Am I in one of the markets?” he said. “Step 2 is really looking at, for these five conditions, and really the orthopedic conditions will be the most focused on, where are they getting referrals and how important is that to their bottom line?”
Much of the lower extremity joint replacement rehab already has trended toward home, thanks in part to the earlier Comprehensive Care for Joint Replacement bundled payment model. But that won’t be the case in all markets, especially in rural areas, Bentley said.
“That’s a potential risk, but I think the biggest one is probably the hip and femur fracture repair,” he added, noting that 63% of spending for those conditions happens after patients leave the hospital. “For a lot of SNFs, they get pretty decent volume from that and the margins are relatively strong. That’s a point of exposure.”
SNF bonuses possible
Being in-network with hospitals will be a critical step for referrals. And unlike some previous alternative payment models, skilled nursing providers do have the opportunity to take on a significant role and partner with acute care organizations. Outcome and operations data will be critical in proving they can handle the reigns, Bentley said.
The model allows for collaborators to have gain-sharing arrangements with participating hospitals, making bonuses available to those who are properly positioned. But Bentley and Fuller warned that hospitals’ first instincts will be to go to their surgical and primary care partners; skilled nursing providers must be proactive if they want in on the arrangements.
“That’s why it behooves SNFs to be smart about this as soon as possible,” Bentley said. “The sooner the better there.”
Fuller told McKnight’s that he was already working with one post-acute client eager to take a partnership agreement to its top three hospitals.
“That’s a great example of a SNF organization being proactive in their market and putting something on the table for the hospital to react to that is analytics-driven and validated,” Fuller said. “A lot of times, the SNFs wait for the hospitals to act. But the opportunity here will often be incumbent on the SNF organizations.”
A three-day stay waiver will allow hospitals to transfer Medicare patients to SNFs for covered care more quickly where medically appropriate, but the model also might encourage hospitals to pressure SNFs to shorten their length of stays even further. Fuller pointed out there could be continued opportunity for SNF organizations that already have a home health component.
“The ability to package your service lines together to kind of create a continuum of solutions is another value-add in this model,” he said.
While CMS has said it limited the five mandatory TEAM conditions in order to not “overwhelm” participants, the agency does plan to expand covered episodes over time.
The level of risk participants take on also will increase across the life of the five-year rollout. That means providers should continue to watch, learn and adapt, even considering adding new capabilities should CMS develop additional TEAM priorities, Fuller and Bentley advised.
