The 2026 CMS Mandates: Navigating the New Era of Accountability and Interoperability

The biggest shift for many acute care hospitals is the launch of the mandatory Transforming Episode Accountability Model (TEAM), starting January 1, 2026.

• What it is: TEAM is a bundled payment model that makes selected acute care hospitals financially accountable for the total cost and quality of care for a surgical episode, beginning with the anchor procedure and extending for 30 days post-discharge.
• Target Episodes: The model initially focuses on five high-volume, high-cost surgical procedures:
• Coronary Artery Bypass Grafting (CABG)
• Total Hip and Knee Arthroplasty (THA/TKA)
• Spinal Fusion
• Major Bowel Procedure
• Acute Myocardial Infarction (AMI)
• The Mandate: Selected hospitals in specific Core-Based Statistical Areas (CBSAs) will be required to participate.
• The Stakes: Hospitals will receive a bundled payment target price. If the actual cost is below the target and quality metrics are met, the hospital earns a share of the savings (upside risk). If costs exceed the target, the hospital may face financial penalties (downside risk), which will become mandatory for most participants after the first year.
• Action Items for Hospitals: Success requires significant investment in clinical redesign and care coordination to manage the entire 34-day episode, especially optimizing post-acute care (e.g., skilled nursing facility, home health) and ensuring strong patient-recorded outcomes (PROs) and proper referrals to primary care post-discharge.

CMS has finalized rules aimed at streamlining the notoriously burdensome prior authorization process and accelerating digital health data exchange.

• Faster Decisions (Starting Jan 1, 2026): Impacted payers (including Medicare Advantage and Medicaid managed care plans) must process standard prior authorization requests within 7 calendar days and expedited requests within 72 hours.
• New Transparency: Payers must provide a specific reason for any denial, regardless of the submission method.
• Prior Authorization API (Effective Jan 1, 2027, with some reporting starting Jan 1, 2026):
• Payers are required to implement a Prior Authorization API (Application Programming Interface). While the final API technology implementation deadline is 2027, providers should prepare for this shift. This API is intended to allow providers to:
• Determine if prior authorization is required for an item or service.
• Identify the payer's documentation requirements.
• Send and receive prior authorization requests and responses.
• Provider Impact: While the API is a payer requirement, providers will be expected to leverage this technology through their Electronic Health Records (EHRs) for faster, more efficient transactions. Clinicians participating in the Quality Payment Program (QPP) must also attest to their adoption of the Prior Authorization API in 2027.

CMS has issued its Final Rule for the Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital Prospective Payment System (LTCH PPS) for FY 2026.

• Payment Increase: Acute care hospitals that are meaningful EHR users and submit quality data will see a net payment increase of approximately 2.6%. This update reflects market basket adjustments and a statutory productivity cut.
• Quality Program Changes: CMS is refining quality reporting programs by removing several measures that focus on social drivers of health and health equity. Conversely, the agency is increasing its focus on data security, requiring eligible hospitals to attest to completing an annual self-assessment using all eight Safety Assurance Factors for EHR Resilience (SAFER) Guides starting with the 2026 reporting period.

The annual updates for the Medicare Physician Fee Schedule (PFS) and the Quality Payment Program (QPP) continue the transition toward value-based care.

• Merit-based Incentive Payment System (MIPS): The transition to MIPS Value Pathways (MVPs) will continue to expand, with new MVPs proposed for specialties like Diagnostic Radiology, Pathology, and Vascular Surgery.
• Payment Conversion Factors: The gap is widening for payment updates between providers in Advanced Alternative Payment Models (APMs) and those under the traditional PFS, further incentivizing participation in APMs.

Preparation is Paramount

The 2026 CMS mandates demand an integrated, organization-wide response. Facilities must focus on:

• TEAM Readiness: Identify your organization's exposure to the TEAM model, audit your current episode costs, and begin developing cross-functional care pathways that seamlessly coordinate care from pre-op through the 30-day post-discharge window.
• Tech Stack Updates: Work with your EHR and IT partners to ensure systems will be ready to integrate with the new payer APIs to handle interoperability and prior authorization functions by the compliance deadlines.
• Quality Program Alignment: Update your quality reporting infrastructure to comply with the new SAFER Guides requirement and align performance efforts with the remaining, modified, and new quality measures across all relevant CMS programs.

The year 2026 is set to solidify the shift toward highly coordinated, financially accountable, and digitally integrated care. Your proactive planning today will determine your organization's success tomorrow.