On January 1, 2026, the Centers for Medicare & Medicaid Services launched the Transforming Episode Accountability Model (TEAM) – a mandatory, five-year program that requires approximately 740 acute care hospitals to take financial responsibility for the entire episode of a patient’s surgical care, from the operating room through 30 days post-discharge. While this is a Medicare regulation, its effects are already influencing how orthopedic injuries are treated across all payer types, including workers’ compensation.
Three of the five surgical categories covered by TEAM are directly relevant to workplace injuries: lower extremity joint replacement (hip, knee, and ankle), surgical hip and femur fracture treatment, and spinal fusion. For each episode, CMS sets a risk-adjusted target price. Hospitals that come in under budget while meeting quality benchmarks earn bonuses; those that exceed the target owe money back. Unlike earlier voluntary bundled-payment experiments, there is no opt-out.
Outpatient joint replacement is becoming the norm. Same-day discharge for total hip and knee replacement is now routine for appropriately selected patients. Outpatient orthopedic volume was already 33 times higher than inpatient volume by late 2023, and TEAM’s episode-based pricing further incentivizes hospitals to move procedures to ambulatory surgery centers and send patients home the same day. Advances in regional anesthesia, minimally invasive techniques, and “prehabilitation” protocols have made this clinically safe for many patients.
Post-surgical rehabilitation is being compressed. Hospitals are now accountable for all costs in the 30-day post-discharge window – physical therapy, home health, imaging, and ER visits. Physical therapy often begins within hours of surgery, and remote monitoring and telehealth follow-ups are replacing some in-person visits.
Patient-reported outcomes now affect reimbursement. TEAM ties hospital payment to a Composite Quality Score that includes readmission rates, complications, and – notably – patient-reported outcome measures (PROMs). The patient’s own assessment of pain, function, and satisfaction directly affects the hospital’s bottom line.
Faster timelines will become the expectation. As same-day joint replacement becomes standard of care, carriers and utilization reviewers will increasingly expect injured workers to follow accelerated protocols. Defense counsel should recognize that same-day discharge now reflects mainstream practice – not corner-cutting. Claimant’s counsel should watch for cases where comorbidities or job demands make an accelerated timeline inappropriate.
Financial incentives may influence treatment decisions. TEAM creates pressure to reduce episode costs. While this often aligns with good care, attorneys should be alert to situations where cost-reduction incentives conflict with a worker’s needs – premature discharge, inadequate post-op rehab, or limited follow-up visits within the 30-day window.
Patient-reported outcome data may become discoverable. Hospitals are now collecting standardized, quantitative data on how patients perceive their own recovery before and after surgery. This data could become relevant in disputes over disability extent, surgical success, or maximum medical improvement.
Reimbursement pressures may affect provider availability. CMS simultaneously applied a −2.5% efficiency adjustment to orthopedic surgical work RVUs in 2026, on top of roughly 20% cumulative RVU reductions for hip and knee arthroplasty over the past decade. As Medicare margins tighten, some surgeons may become more selective about which payers they accept — potentially affecting the availability of specialists willing to treat comp patients.
CMS has stated its goal of placing 100% of Medicare recipients under alternative payment models by 2030. The trends TEAM is accelerating – outpatient surgery, compressed rehabilitation, data-driven outcome tracking, and cost-conscious episode management – will increasingly define how workplace musculoskeletal injuries are treated regardless of the payer. Practitioners should understand these dynamics now, because they will soon shape the medical evidence, treatment timelines, and expert opinions in your cases.
Keep in mind that the TEAM model applies to Medicare; workers’ compensation systems are governed by state law and may differ in their treatment and reimbursement frameworks.