CMS’s TEAM Bundling Model launched January 1, 2026 — and California is one of the most heavily affected states in the country with 107 participating hospitals. For skilled nursing facilities in California and Hawaii, the referral landscape is shifting in ways that require immediate attention.

Here’s what SNF operators and administrators in California and Hawaii need to understand about TEAM, the 3-day waiver opportunity, and the proposed CJR-X expansion.

What Is SNF Bundling?

Bundling is a Medicare payment model that holds hospitals financially accountable for the total cost of a patient’s care episode — from admission through post-acute recovery, including the SNF stay.

CMS sets a “target price” for each bundled episode covering the hospital stay plus all Medicare Part A and Part B costs through 30 days post-hospital discharge.

• Costs under the target → CMS shares savings with the hospital
• Costs over the target → the hospital may owe CMS the difference or forfeit any bonus
• Hospitals must also meet quality thresholds to receive savings rewards

The financial risk sits with the hospital. The operational pressure flows downstream to SNFs.

The TEAM Model: Active Now

The Transforming Episode Accountability Model (TEAM) is a mandatory CMS bundling program that launched January 1, 2026 and runs through December 31, 2030.

Five Covered Diagnoses

• Coronary Artery Bypass Graft (CABG)
• Major Bowel Procedure
• Lower Extremity Joint Replacement (LEJR)
• Surgical Hip and Femur Fracture Treatment (SHFFT)
• Spinal Fusion

Any patient discharging from a TEAM-participating hospital with one of these diagnoses is automatically in the model. What matters is the location of the discharging hospital — not your SNF.

California and Hawaii Participation

California has 107 TEAM-participating hospitals, one of the highest totals of any state in the country. Across the Bay Area, Los Angeles, San Diego, Sacramento, and the Central Valley, bundled patients are already moving through the post-acute system.

Hawaii has 0 TEAM-participating hospitals in the current mandatory model, however, with CJR-X expansion proposed (see below), Hawaii SNFs should begin preparing now. Additionally, Hawaii SNFs that receive transfers from mainland TEAM-participating hospitals should be aware of how bundling episode costs are tracked.

Check the full participant list at cms.gov/team-model-participant-list.

What This Means for Your SNF

Preferred partner pressure. California hospitals participating in TEAM are actively evaluating SNF partners based on quality outcomes. Five-Star ratings, discharge function scores, and readmission rates are the metrics hospital case managers use when deciding where to send bundled patients.

Length-of-stay expectations. Hospitals will push for shorter SNF stays on the five covered diagnoses. Clinical documentation that clearly supports medical necessity day by day is essential.

Home health diversion. Hospitals may route bundled patients directly to home health to reduce episode costs. SNFs need to be ready to make the case for skilled nursing level of care when it’s clinically appropriate.

The 3-Day Waiver: A Real Opportunity for Qualifying California SNFs

For California SNFs maintaining a 3-star rating or higher, the TEAM model creates a direct Medicare A census opportunity through the 3-day waiver.

• Eligible patients can be admitted under Medicare A with only a 1 or 2-day hospital stay, or no hospital stay at all
• Your SNF must hold a 3+ star rating for at least 7 of the past 12 months
• Billers must enter “A9” in Treatment Authorization Field 63 of the UB04

With 107 TEAM hospitals in California, this is not a theoretical benefit, it’s an active pipeline for qualifying facilities in markets across the state.

Rehab Alliance facilities: A separate payer can be added for these residents in your system upon request. Contact your Rehab Alliance clinical or billing liaison for support.

CJR-X: Coming to Both Markets

CMS is proposing CJR-X, which would extend mandatory bundling for Lower Extremity Joint Replacement (hip and knee) to virtually every eligible acute care hospital in the country — excluding only hospitals already in TEAM and acute care hospitals in Maryland.

For California SNFs, this means bundling dynamics would extend beyond the current 107 TEAM hospitals to cover hip and knee patients from nearly every other hospital in the state.

For Hawaii SNFs, CJR-X would bring bundling to your market for the first time, making now the right time to begin building the quality infrastructure that preferred partner status requires.

How to Prepare

Know your quality scores. Pull your Five-Star rating, discharge function score, and readmission data. These are the metrics California hospital case managers use to evaluate preferred SNF partners.

Map your referral hospitals. Identify which sending facilities are TEAM participants and begin proactive outreach to their discharge planning teams.

Train your billing team. The 3-day waiver is only captured if your billers know the A9 code and UB04 field requirement before an eligible admission arrives.

Hawaii facilities — prepare now. CJR-X would bring mandatory bundling to your market. Use the preparation window to build Five-Star performance and hospital relationships.

Track CJR-X developments. The proposed rule is in comment period. Final rule decisions will shape when and how CJR-X takes effect.

Partner With a Rehab Provider Who Knows Your Market

Rehab Alliance supports skilled nursing facilities in California and Hawaii with therapy services, quality measure expertise, and reimbursement support. Our teams understand the specific pressures SNF operators in these markets face, and help our partner facilities stay ahead of regulatory and market changes.

Contact us to learn how Rehab Alliance can support your facility’s readiness for the evolving bundling landscape.