NR 517 Week 7 Policy Impact Analysis, Episode Model Example

Policy Impact Analysis: One Payment Rule, Medicare's 30-Day Episode Accountability for Hip Fracture Surgery, Traced From the Conduct It Requires to What It Leaves Behind for Patients

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College of Nursing, Chamberlain University

NR 517: Policy & Economics of Healthcare Delivery

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Month Day, Year

Policy Impact Analysis: One Payment Rule, Medicare's 30-Day Episode Accountability for Hip Fracture Surgery, Traced From the Conduct It Requires to What It Leaves Behind for Patients

The Rule

The rule analyzed here is Medicare's Transforming Episode Accountability Model (TEAM), whose five performance years started at the beginning of 2026 and end with 2030. Participation is mandatory for inpatient-system hospitals in the areas CMS selected. The model covers five surgical procedures, one of which is surgical hip and femur fracture treatment. Each episode begins with the hospital stay and ends 30 days after the patient leaves the hospital. Hospitals receive a target price for the episode; if total Medicare spending comes in below it, the hospital may earn a payment, subject to a quality performance adjustment, and if spending exceeds it, the hospital may owe a repayment. There are three participation tracks with different levels of risk, and hospitals must refer patients to primary care (Centers for Medicare & Medicaid Services, n.d.-b).

The analysis keeps to one procedure, hip fracture surgery, at one community hospital, and follows the rule through the people who must now act differently.

Who Has to Do Something Differently

A rule does not produce outcomes directly. It changes what people do, and outcomes follow from that. Five groups at and around the hospital now face different incentives.

Hospital case managers now have a financial reason to influence where patients go after discharge and for how long, because skilled nursing facility (SNF) days, home health visits and readmissions all count toward the episode total. Before the rule, the hospital's payment for the stay did not change with any of these.

Hospital leaders have a reason to form preferred relationships with SNFs whose patients have shorter stays and fewer readmissions, and to share data with them.

SNFs that want referrals have a reason to shorten stays and to show results, since the hospital now watches their numbers.

Surgeons and hospitalists are not directly at financial risk in the episode, but the hospital has a reason to ask them to support earlier surgery, co-management with geriatrics and discharge planning that starts on admission.

Primary care practices will receive referrals the rule requires, and with them patients they may not have seen before the fracture.

From Conduct to Effects on Patients

The most likely change in conduct is fewer and shorter SNF stays. The best evidence comes from the predecessor model for joint replacement, which also included hip fracture patients treated with joint replacement. In a randomized evaluation of its first year, Finkelstein et al. (2018) found that hospitals in the model discharged 2.9 percentage points fewer patients to institutional post-acute care than control hospitals, with lower post-acute spending but no significant change in overall episode spending. Over two years, Barnett et al. (2019) reported that institutional spending per episode fell 3.1%, mostly because fewer patients went to post-acute facilities, while complication rates did not change significantly.

Those studies concerned mostly planned joint replacements in patients who could often go home. Hip fracture patients are older and frailer and have not chosen the timing of their surgery. For them, the same conduct, discharging more patients home and shortening SNF stays, may have different effects. Some will benefit: patients who can recover at home with therapy avoid a facility stay, and those in SNFs may receive more focused rehabilitation. Others may be harmed: a frail patient sent home too soon may fall, like the patient in this course's access brief who went home without SNF coverage and fractured her wrist eleven days later.

The quality performance adjustment is meant to discourage harmful savings. Whether it is strong enough to do so for hip fracture patients is not yet known.

Effects That Are Easy to Miss

Three effects of the rule will not appear in the hospital's episode report. First, family caregivers will absorb more of the recovery when patients go home instead of to a facility, and their time is not counted. Second, SNFs that lose referrals may cut staff or close beds, reducing capacity for patients who do need them, including those outside the model. Third, the primary care referral requirement is only as good as the appointment that follows. A referral to a practice with a three-month wait adds a line to the discharge summary and nothing else.

There is also a risk the rule may not change conduct much at all. Hip fractures are emergencies, so hospitals cannot choose healthier patients, and a community hospital may not have enough episodes a year for small savings per patient to matter.

How to Tell Which Effects Are Happening

The hospital can watch for the difference between good and harmful savings with a few measures it already collects or could collect cheaply. The share of hip fracture patients discharged home rather than to a facility shows whether conduct has changed. Falls, emergency visits and readmissions within 30 days of discharge, broken down by discharge destination, show whether patients sent home are doing worse. The number of days from discharge to the first primary care visit shows whether the referral requirement means anything in practice. And a short question to patients or families at the 30-day call, asking whether they felt ready to leave when they did, captures a harm that no claim will show. If the share going home rises while falls and readmissions among those patients also rise, the savings are coming from patients rather than from better care, and the unit should say so.

What Nurses Should Watch

For nurses on the orthopedic unit, the rule turns discharge planning into a place where payment and safety meet. Nurses are well placed to notice when a patient is being pushed home before they can walk safely, when a family cannot provide the care the plan assumes, or when a referral has no real appointment behind it. Recording functional status clearly, raising concerns in discharge rounds and confirming that follow-up is booked are the conduct changes nurses can bring to the rule. They are also the evidence the quality adjustment depends on.

None of these watch points requires new technology. They require that someone on the unit knows the rule exists, knows what it rewards and is willing to say when a discharge plan seems to serve the episode total more than the patient.

References

Barnett, M. L., Wilcock, A., McWilliams, J. M., Epstein, A. M., Joynt Maddox, K. E., Orav, E. J., Grabowski, D. C., & Mehrotra, A. (2019). Two-year evaluation of mandatory bundled payments for joint replacement. New England Journal of Medicine, 380(3), 252-262. https://doi.org/10.1056/NEJMsa1809010

Centers for Medicare & Medicaid Services. (n.d.-b). Transforming Episode Accountability Model (TEAM). Retrieved September 30, 2026, from https://www.cms.gov/priorities/innovation/innovation-models/team-model

Finkelstein, A., Ji, Y., Mahoney, N., & Skinner, J. (2018). Mandatory Medicare bundled payment program for lower extremity joint replacement and discharge to institutional postacute care: Interim analysis of the first year of a 5-year randomized trial. JAMA, 320(9), 892-900. https://doi.org/10.1001/jama.2018.12346