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42 U.S.C. 1302, 1315a, and 1395hh.
85 FR 61362, Sept. 29, 2020, unless otherwise noted.
89 FR 69914, Aug. 28, 2024, unless otherwise noted.
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Subscribe to: 42 CFR Part 512 Subpart E - Reconciliation and Review Process
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(a) General. Providers and suppliers furnishing items and services included in the episode bill for such items and services in accordance with existing Medicare rules.
(b) Reconciliation process. Six months after the end of each performance year, CMS does the following:
(1) Performs a reconciliation calculation to establish a reconciliation payment or repayment amount for each TEAM participant.
(2) For TEAM participants that experience a reorganization event in which one or more hospitals reorganize under the CCN of a TEAM participant, performs—
(i) Separate reconciliation calculations for each predecessor TEAM participant for episodes where the anchor hospitalization admission or the anchor procedure occurred before the effective date of the reorganization event; and
(ii) Reconciliation calculations for each new or surviving TEAM participant for episodes where the anchor hospitalization admission or anchor procedure occurred on or after the effective date of the reorganization event.
(c) Calculation of the reconciliation amount. CMS compares the reconciliation target prices described in § 512.545 and the TEAM participant's performance year spending to establish a reconciliation amount for the TEAM participant for each performance year as follows:
(1) CMS determines the performance year spending for each episode included in the performance year (other than episodes that have been canceled in accordance with § 512.537(b)) for each MS-DRG/HCPCS episode type using claims data that is available 6 months after the end of the performance year.
(2) CMS calculates and applies the high-cost outlier cap for performance year episode spending by applying the calculation described in § 512.540(b)(4) to performance year episode spending for each MS-DRG/HCPCS episode type.
(3) CMS applies the adjustments specified in § 512.545 to the preliminary target prices computed in accordance with § 512.540 to calculate the reconciliation target prices for each MS-DRG/HCPCS episode type.
(4) CMS aggregates the reconciliation target prices computed in accordance with paragraph (c)(3) of this section for all episodes included in the performance year (other than episodes that have been canceled in accordance with § 512.537(b)) for each MS-DRG/HCPCS episode type.
(5) CMS subtracts the performance year spending amount determined under paragraphs (c)(1) and (2) of this section from the reconciliation target price amount determined under paragraph (c)(4) of this section for each MS-DRG/HCPCS episode type.
(6) CMS sums the values calculated under paragraph (c)(5) of this section across all MS-DRG/HCPCS episode types to determine the reconciliation amount.
(7) Exception for low volume hospitals: CMS caps the performance year spending amount for each MS-DRG/HCPCS episode type determined under paragraphs (c)(1) and (2) of this section to equal the reconciliation target price computed in accordance with paragraph (c)(3) of this section for episode categories where the TEAM participant did not meet the low volume threshold of at least 31 episodes during the 3-year baseline period. Low volume hospital episodes, including episode categories where CMS caps performance year spending, are included in the CQS, as calculated in § 512.547(b), and stop-loss/stop-gain thresholds, as applied at paragraph (e) of this section.
(d) Calculation of the quality-adjusted reconciliation amount. CMS adjusts the reconciliation amount based on the Composite Quality Score as follows:
(1) CMS calculates a CQS adjustment percentage based on a TEAM participant's CQS, computed in accordance with § 512.547(b).
(i) CMS applies a CQS adjustment percentage up to 10 percent for positive reconciliation amounts for TEAM participants in Track 1.
(ii) CMS applies a CQS adjustment percentage up to 10 percent for positive reconciliation amounts and up to 15 percent for negative reconciliation amounts for TEAM participants in Track 2.
(iii) CMS applies a CQS adjustment percentage up to 10 percent for positive reconciliation amounts and up to 10 percent for negative reconciliation amounts for TEAM participants in Track 3.
(2) CMS multiplies the CQS adjustment percentage, computed under paragraph (d)(1) of this section, by the TEAM participant's positive or negative reconciliation amount calculated in paragraph (c) of this section to construct the CQS adjustment amount.
(3) CMS subtracts the CQS adjustment amount, computed from paragraph (d)(2) of this section, from the positive or negative reconciliation amount calculated in paragraph (c) of this section to construct the quality-adjusted reconciliation amount.
(e) Calculation of the net payment reconciliation amount (NPRA). CMS applies stop-loss and stop gain limits to the quality-adjusted reconciliation amount computed in paragraph (d) of this section to calculate the NPRA as follows:
(1) Limitation on loss. For TEAM participants in Track 3, except as provided in paragraph (e)(3) of this section, the repayment amount for a performance year cannot exceed 20 percent of the aggregated reconciliation target price amount calculated in paragraph (c)(3) of this section for the performance year. The post-episode spending calculation amount in paragraph (f) of this section is not subject to the limitation on loss.
(2) Limitation on gain.
(i) For TEAM participants in Track 1, the reconciliation payment amount for a performance year cannot exceed 10 percent of the aggregated reconciliation target price amount calculated in accordance with paragraph (c)(3) of this section for the performance year.
(ii) For TEAM participants in Tracks 2, the reconciliation payment amount for a performance year cannot exceed 5 percent of the aggregated reconciliation target price amount calculated in accordance with paragraph (c)(3) of this section for the performance year.
(iii) For TEAM participants in Track 3, the reconciliation payment amount for a performance year cannot exceed 20 percent of the aggregated reconciliation target price amount calculated in accordance with paragraph (c)(3) of this section for the performance year.
(iv) The post-episode spending amount calculated in accordance with paragraph (f) of this section is not subject to the limitation on gain.
(3) Limitation on loss for certain providers. For performance years 2-5, the repayment amount for a TEAM participant in Track 2 defined at § 512.505, must not exceed 5 percent of the aggregated reconciliation target price amount calculated in accordance with paragraph (c)(3) of this section.
(f) Post-episode spending calculation. CMS calculates the post-episode spending amount as follows: If the average post-episode spending amount for a TEAM participant in the performance year being reconciled is greater than 3 standard deviations above the regional average post-episode spending amount for the performance year, then the post-episode spending amount that exceeds 3 standard deviations above the regional average post-episode spending amount for the performance year is subtracted from the NPRA for that performance year.
(g) Calculation of the reconciliation payment or repayment amount.
(1) CMS applies the results of the post-episode spending calculation set forth in paragraph (f) of this section to the NPRA as follows:
(i) For TEAM participants whose post-episode spending amount does not exceed the limit calculated in paragraph (f) of this section, the reconciliation payment or repayment amount is equal to the NPRA.
(ii) If the TEAM participant's post-episode spending exceeds the limit calculated in paragraph (f) of this section, CMS subtracts the amount of post-episode spending exceeding the limit from the NPRA to calculate the reconciliation payment or repayment amount.
(2) If the amount calculated in paragraph (g)(1) of this section is positive, the TEAM participant is owed a reconciliation payment in that amount, to be paid by CMS in one lump sum payment.
(3) If the amount calculated in paragraph (g)(1) of this section is negative, CMS determines the repayment amount as follows:
(i) For TEAM participants in Track 1, the TEAM participant does not owe a repayment amount.
(ii) For TEAM participants in Track 2 or Track 3 for Performance Years 1-5, as applicable, the Team participant owes that amount as a repayment to CMS.
(h) TEAM reconciliation report. CMS issues each TEAM participant a TEAM reconciliation report for the performance year. Each TEAM reconciliation report contains the following:
(1) The total performance year spending for the TEAM participant.
(2) The TEAM participant's reconciliation target prices.
(3) The TEAM participant's reconciliation amount.
(4) The TEAM participant's composite quality score calculated in accordance with § 512.547(b).
(5) The TEAM participant's quality-adjusted reconciliation amount.
(6) The stop-loss and stop-gain limits that apply to the TEAM participant.
(7) The TEAM participant's NPRA.
(8) The TEAM participant's post-episode spending amount, if applicable.
(9) The amount of any reconciliation payment owed to the TEAM participant or repayment owed by the TEAM participant to CMS for the performance year, if applicable.
[89 FR 69914, Aug. 28, 2024, as amended at 90 FR 37207, Aug. 4, 2025]
The TEAM does not replace any existing Medicare incentive programs or add-on payments. The TEAM payments are independent of, and do not affect, any incentive programs or add-on payments under existing Medicare payment systems.
(a) General. CMS prorates services included in the episode that extend beyond the episode so that only those portions of the services that were furnished during the episode are included in the calculation of the actual episode payments.
(b) Proration of services. CMS prorates payments for services that extend beyond the episode for the purposes of calculating both baseline episode spending and performance year spending using the following methodology:
(1) Non-IPPS inpatient services. Non-IPPS inpatient services that extend beyond the end of the episode are prorated according to the percentage of the actual length of stay (in days) that falls within the episode.
(2) Home health agency services. Home health agency services paid under the Medicare prospective payment system in accordance with part 484, subpart E of this chapter that extend beyond the episode are prorated according to the percentage of days, starting with the first billable service date and through and including the last billable service date, that occur during the episode.
(3) IPPS services. IPPS services that extend beyond the end of the episode are prorated according to the MS-DRG geometric mean length of stay, using the following methodology:
(i) The first day of the IPPS stay is counted as 2 days.
(ii) If the actual length of stay that occurred during the episode is equal to or greater than the MS-DRG geometric mean, the full MS-DRG payment is allocated to the episode.
(iii) If the actual length of stay that occurred during the episode is less than the MS-DRG geometric mean length of stay, the MS-DRG payment amount is allocated to the episode based on the number of inpatient days that fall within the episode.
(4) If the full amount of the payment is not allocated to the episode, any remainder amount is allocated to the post-episode spending calculation (defined in § 512.550(f)).
(a) Notice of calculation error (first level of appeal). Subject to the limitations on review in § 512.594, if a TEAM participant wishes to dispute calculations involving a matter related to payment, reconciliation amounts, repayment amounts, the use of quality measure results in determining the composite quality score, or the application of the composite quality score during reconciliation, the TEAM participant is required to provide written notice of the calculation error, in a form and manner and by a date specified by CMS.
(1) Unless the TEAM participant provides such written notice, CMS deems the TEAM reconciliation report to be final 30 calendar days after it is issued and proceeds with the payment or repayment processes as applicable.
(2) If CMS receives a notice of a calculation error within 30 calendar days of the issuance of the TEAM reconciliation report, CMS responds in writing within 30 calendar days to either confirm that there was an error in the calculation or verify that the calculation is correct. CMS reserves the right to extend the time for its response upon written notice to the TEAM participant.
(3) Only TEAM participants may use the calculation error process described in this part.
(b) Exception to the appeals process. If the TEAM participant contests a matter that does not involve an issue contained in, or a calculation that contributes to, a TEAM reconciliation report, a notice of calculation error is not required. In these instances, if CMS does not receive a request for reconsideration from the TEAM participant within 10 calendar days of the notice of the initial reconciliation, the initial determination is deemed final and CMS proceeds with the action indicated in the initial determination. This does not apply to the limitations on review in § 512.594.
(a) Applicability of this section. This section is applicable only where section 1869 of the Act has been waived or is not applicable for TEAM participants. This section is only applicable to TEAM participants.
(b) Right to reconsideration. The TEAM participant may request reconsideration of a determination made by CMS only if such reconsideration is not precluded by section 1115A(d)(2) of the Act or this subpart.
(1) A request for reconsideration by the TEAM participant must satisfy the following criteria:
(i) The request must be submitted to a designee of CMS (“Reconsideration Official”) who—
(A) Is authorized to receive such requests; and
(B) Did not participate in the determination that is the subject of the reconsideration request or, if applicable, the notice of calculation error process.
(ii) The request must include a copy of the initial determination issued by CMS and contain a detailed, written explanation of the basis for the dispute, including supporting documentation.
(iii) The request must be made within 30 days of the date of the initial determination for which reconsideration is being requested via email to an address as specified by CMS.
(2) Requests that do not meet the requirements of paragraph (b)(1) of this section are denied.
(3) Within 10 business days of receiving a request for reconsideration, the Reconsideration Official sends the parties a written acknowledgement of receipt of the reconsideration request. This acknowledgement sets forth the following:
(i) The review procedures.
(ii) A schedule that permits each party to submit position papers and supporting documentation in support of the party's position for consideration by the reconsideration official.
(4) The TEAM participant must satisfy the notice of calculation error requirements specified in this part before submitting a reconsideration request under paragraph (b) of this section.
(c) Standards for reconsideration.
(1) The parties must continue to fulfill all responsibilities and obligations under TEAM during the course of any dispute arising under this part.
(2) The reconsideration consists of a review of documentation that is submitted timely and in accordance with the standards specified by the reconsideration official.
(3) The burden of proof is on the TEAM participant to demonstrate to the reconsideration official with clear and convincing evidence that the determination is inconsistent with the terms of this subpart.
(d) Reconsideration determination.
(1) The reconsideration determination is based solely upon—
(i) Position papers and supporting documentation that are timely submitted to the reconsideration official per the schedule defined in paragraph (b)(3)(ii) and meet the standards for submission under paragraph (b)(1) of this section; and
(ii) Documents and data that were timely submitted to CMS in the required format before CMS made the determination that is the subject of the reconsideration request.
(2) The reconsideration official issues the reconsideration determination to CMS and to the TEAM participant in writing.
(3) Absent unusual circumstances, in which case the reconsideration official reserves the right to an extension upon written notice to the TEAM participant, the reconsideration determination is issued within 60 days of receipt of timely filed position papers and supporting documentation per the schedule defined in paragraph (b)(3)(ii) of this section.
(4) The reconsideration determination is final and binding 30 days after its issuance, unless the TEAM participant or CMS timely requests review of the reconsideration determination in accordance with paragraphs (e)(1) and (2) of this section.
(e) CMS Administrator review. The TEAM participant or CMS may request that the CMS Administrator review the reconsideration determination.
(1) The request must be made via email within 30 days of the date of the reconsideration determination to the address specified by CMS.
(2) The request must include a copy of the reconsideration determination and a detailed written explanation of why the TEAM participant or CMS disagrees with the reconsideration determination.
(3) The CMS Administrator promptly sends the parties a written acknowledgement of receipt of the request for review.
(4) The CMS Administrator sends the parties notice of the following:
(i) Whether the request for review is granted or denied.
(ii) If the request for review is granted, the review procedures and a schedule that permits each party to submit a brief in support of the party's position for consideration by the CMS Administrator.
(5) If the request for review is denied, the reconsideration determination is final and binding as of the date the request for review is denied.
(6) If the request for review is granted—
(i) The record for review consists solely of—
(A) Timely submitted briefs and the evidence contained in the record of the proceedings before the reconsideration official; and
(B) Evidence as set forth in the documents and data described in paragraph (d)(1)(ii) of this section;
(ii) The CMS Administrator reviews the record and issues to CMS and to the TEAM participant a written determination; and
(iii) The written determination of the CMS Administrator is final and binding as of the date the written determination is sent.