How Quality Teams Manage Episode Performance Under the Transforming Episode Accountability Model (TEAM): An American Data Network Guide

Picture a 74-year-old patient who has an elective total knee replacement, an uneventful three-day stay, and a discharge home with home health and outpatient physical therapy. The home health referral leaves the hospital without a confirmed start date, and the first visit slips by four days. By day 12, the patient is back with a wound complication and is readmitted.

Under a hospital-centered framework, those events often get analyzed separately. The surgical stay looks clean on inpatient dashboards, while the readmission is reviewed weeks later as part of separate work on reducing readmissions, and the connection between the two can easily be missed. Under the Transforming Episode Accountability Model (TEAM), they belong to the same episode, and the hospital carries the financial result of both.

TEAM, a mandatory Centers for Medicare & Medicaid Services (CMS) model that began January 1, 2026, holds participating hospitals accountable for the cost and quality of five surgical episode categories, including lower extremity joint replacement, spinal fusion, and major bowel procedures. Each episode runs from the inpatient stay or outpatient procedure through 30 days after discharge.

Episode spending is compared with a target price, and the result, adjusted for quality performance, can mean a payment from CMS or a repayment to it.

The model builds on earlier episode-payment models, including the Bundled Payments for Care Improvement Advanced (BPCI Advanced) Model and the Comprehensive Care for Joint Replacement (CJR) Model, but extends mandatory episode accountability to a broader set of surgical procedures. For Quality leaders, the question shifts from whether the inpatient encounter performed well to where performance may be breaking down across the 30-day episode.

TEAM does not add a separate measurement system. According to the TEAM FAQ, participants are not required to report additional quality data beyond what they already submit to CMS for other programs.

The work for Quality teams is connecting data they already have to the full episode, while recognizing that some returns to the hospital are clinically appropriate or unavoidable and should not automatically be read as failures. American Data Network (ADN) helps hospitals find where episodes break down by analyzing clinical, quality, financial, and patient safety data.

Key Takeaways

• Accountability now runs 30 days past discharge. TEAM compares episode spending with a target price and adjusts the result for quality, so a clean inpatient stay can still end in a repayment to CMS.
• Risk concentrates at three transition points. Discharge readiness, care transitions, and post-acute utilization are where a poor episode outcome often originates, sometimes days before it surfaces.
• The scored measures are changing. For 2026, CMS scores readmissions, a patient safety composite, and a hip and knee replacement outcome measure. Changes starting in 2027 include dropping the patient safety composite and adding two Hospital Harm measures and a failure-to-rescue measure.
• Prioritize by frequency, impact, and influence. Focus on failures the hospital controls, give each intervention a named owner, and pair it with process and outcome indicators.

Where Does Quality Risk Emerge Across a TEAM Episode?

Quality risk in a TEAM episode tends to concentrate at three transition points: discharge readiness, care transitions, and post-acute utilization. Mapping them means following patients past the point where hospital data usually stops. In the knee replacement example, the readmission surfaced on day 12, but the unconfirmed home health start date is an earlier process gap worth investigating.

Discharge readiness. Gaps in discharge planning are a well-documented source of post-discharge problems. The Agency for Healthcare Research and Quality (AHRQ) notes in its IDEAL Discharge Planning tool that nearly 20 percent of patients experience an adverse event within 30 days of discharge. IDEAL recommends including patients and families as full partners in discharge planning and covering five key areas:

• Describing what life at home will be like.
• Reviewing medications.
• Highlighting warning signs and problems.
• Explaining test results.
• Making follow-up appointments.

Indicators to watch: the share of TEAM patients discharged with a follow-up appointment already scheduled, medication reconciliation completion, and unplanned returns within the first week after discharge.

Care transitions. The move from hospital to a skilled nursing facility, home health, or self-care at home is often where information gets lost. The Society of Hospital Medicine’s care transitions guidance ties successful transitions to adequate communication, optimized workflows, and discharge planning that begins early in the stay, and positions better transitions as a route to lower 30-day readmissions.

Indicators to watch: discharge destination mix by episode category, time from discharge to first post-acute service, and whether discharge summaries reach the next provider.

Post-acute utilization. Reducing avoidable readmissions and emergency department use is one of the outcomes CMS names for the model. Post-acute services also count toward episode spending, so a skilled nursing stay that runs longer than clinically needed can affect performance even when the clinical outcome is good.

Indicators to watch: unplanned returns within the episode, post-acute length of stay by facility, and spending by post-acute setting.

How Do You Identify What Is Driving Poor Episode Performance?

A single poor outcome rarely justifies a process change. The analytical task is separating isolated events from repeatable operational patterns, and that starts with getting the right data in one place.

Bring the episode data together. When Quality monitors inpatient performance on departmental dashboards while finance tracks episode spending separately, that separation can hide how clinical outcomes, care transitions, utilization, and cost interact across the episode. A workable episode view usually draws on three sources:

• Clinical and quality data, typically held by Quality: complications, patient safety events, readmissions, and, for joint replacement patients, patient-reported outcome survey completion.
• Care transition data, typically held by care management: discharge destination, post-acute provider, time to first follow-up or therapy visit, and medication reconciliation completion.
• Utilization and cost data, typically held by finance: post-acute spending by setting, readmission and emergency department costs, and spending against target price by episode category.

Timing matters as much as content. Hospitals may not immediately see every claim or service delivered outside their walls, and final episode spending is not settled until CMS’s annual reconciliation, which begins about six months after each performance year ends.

TEAM episode spending and reconciliation data come from CMS and the hospital’s own finance systems. Quality, finance, care management, and analytics teams should agree on which data is available, how often it refreshes, and which indicators can be monitored during the year versus only after reconciliation.

Pulling those sources into one view is where outside analytical support can help: ADN’s Data Analytics Services team analyzes clinical, quality, financial, and patient safety data to identify patterns, trends, and priorities.

Segment episodes before drawing conclusions. Break episode results down by surgical category, discharge destination, post-acute provider, surgeon, and patient risk factors. Problems that look hospital-wide often concentrate in one episode category, one discharge pathway, or a small number of downstream providers. Start with questions that point toward action: Which TEAM categories show the greatest spending variance or quality concern? Are problems clustered among certain units, discharge destinations, or post-acute partners?

Separate preventable transition failures from expected complications. Review a sample of unplanned returns case by case and classify each one as a likely transition failure (a missed follow-up, a medication discrepancy, unclear instructions), an expected clinical complication, or undetermined. The mix shows whether the improvement opportunity sits in processes the hospital controls.

Test a specific hypothesis. A team reviewing major bowel procedure episodes might suspect that medication discrepancies at discharge, such as pain or anticoagulant regimens that do not match the discharge summary, are contributing to emergency department visits in the first two weeks. Rather than assuming it, the team can compare medication reconciliation completion, discharge destination, and unplanned returns among those patients. If patients discharged without a completed reconciliation return at higher rates, the team has a concrete target, such as a pharmacist-led reconciliation before every major bowel discharge.

Check gaps against peers before acting. Clinical benchmarking data can help show whether an observed gap reflects meaningful variation or normal noise. For that comparison, ADN’s Clinical Benchmarking System provides monthly-updated clinical, quality, and financial information with peer and national benchmarks, including severity-adjusted comparisons at the facility, service line, and physician levels.

How Should Quality Teams Prioritize Episode Improvement?

Hospitals cannot control every part of a TEAM episode, so the improvement strategy has to be selective. A short framework keeps the work focused on problems the hospital can actually move.

#1. Weigh Frequency, Impact, and Influence

Score each candidate problem on three questions. How often does it occur across TEAM episodes? How much does it affect episode spending or quality measure performance? How much influence does the hospital have over the underlying process? A failure that is frequent, costly, and largely within the hospital’s control, such as follow-up appointments not scheduled before discharge, belongs near the top. A rare complication with limited hospital influence may warrant monitoring rather than a dedicated initiative.

#2. Decide What to Fix Internally and What Needs Post-Acute Coordination

Discharge planning timing, medication reconciliation, follow-up scheduling, and risk screening, including for social drivers of health, are largely internal. Problems that sit downstream, such as delayed home health starts or longer-than-expected skilled nursing stays concentrated at a few facilities, often require stronger coordination with those providers: sharing episode findings, agreeing on handoff expectations, and reviewing results together. Patient adherence remains only partly controllable either way.

#3. Assign One Owner per Intervention

In its policy paper on care transitions between settings, the American College of Physicians identifies clearly defined care team roles as a core element of effective transitions. The same logic applies to improvement work. Each intervention needs a named owner, often in care management or discharge planning, a defined patient population, and a start date.

#4. Define Indicators Up Front and Review Them Jointly

Pair every intervention with a process indicator and an outcome indicator. For a medication reconciliation initiative, that might be the percentage of major bowel patients discharged with a completed reconciliation (process) and unplanned returns within the episode (outcome). Process indicators can move within weeks, while outcomes and reconciliation results take longer. Tracking discharge-related complaints can add an early signal about where patients feel unprepared. Review the indicators monthly or quarterly with Quality, care management, finance, and analytics together, so no team optimizes its own piece of the episode in isolation.

Which Quality Measures Does TEAM Score, and How Are They Changing?

TEAM scores hospitals on quality measures drawn from existing CMS programs, and those scores change how much money moves at reconciliation. CMS combines the TEAM quality measures into a Composite Quality Score (CQS), weighting each by the hospital’s volume of applicable TEAM episodes. According to CMS’s quality measures fact sheet, a higher CQS means a hospital owes less of any repayment or receives more of any reconciliation payment.

For performance year 2026, the TEAM regulation specifies three measures:

• Hospital-Wide All-Cause Readmission Measure (HWR), for all inpatient episodes. CMS’s TEAM quality measures fact sheet identifies the claims-only version for performance year 2026.
• CMS Patient Safety and Adverse Events Composite (CMS PSI 90), for all inpatient episodes.
• Hospital-Level Total Hip and/or Total Knee Arthroplasty Patient-Reported Outcome-Based Performance Measure (THA/TKA PRO-PM), for inpatient lower extremity joint replacement episodes. The pre- and post-operative survey collection behind this measure is covered in ADN’s guide to the THA/TKA PRO-PM.

These are hospital-level measures, so they show that a gap exists, not where it originates. CMS does not report a separate PSI 90 score for spinal fusion or any other episode category.

Quality leaders get more from the scores by reading them alongside internal procedure-specific analysis: if the hospital’s PSI 90 result slips, for example, a review of safety events among spinal fusion patients can show whether the problem is concentrated in that population or spread across the hospital.

The measure set also changes. Among the changes beginning in performance year 2027, the regulation drops CMS PSI 90 and adds Hospital Harm measures for falls with injury and postoperative respiratory failure, along with a failure-to-rescue measure (the risk-standardized death rate among surgical inpatients who develop complications). The list has been amended in each of the last two annual inpatient payment rules, so teams building measure-linked analysis should confirm it each year.

What Does It Take to Manage the Full TEAM Episode?

CMS reconciles episode spending whether or not hospitals have identified the operational problems affecting performance. Quality teams that connect clinical outcomes, care transitions, and utilization data throughout the year are better positioned to act before those patterns appear in reconciliation results.

In the knee replacement example, the readmission surfaced on day 12, but the gap worth fixing left the hospital on day 3, in a home health referral with no confirmed start date. Under TEAM, the advantage goes to hospitals that find gaps like that across every episode, not one readmission review at a time. ADN’s Clinical Benchmarking System shows which gaps stand out against severity-adjusted peers, and ADN’s Data Analytics Services team, which includes PhD statisticians, clinicians, and quality and patient safety experts, can identify the patterns, trends, and priorities behind your episode results.