CMS seeks physician-owned hospital input
- CMS used its FY 2027 inpatient hospital payment rule to ask how physician-owned hospitals could join the TEAM Medicare model, reopening a long-shut policy door. - TEAM began January 1, 2026, covers five surgical episode categories, and CMS is taking comments through June 9 on whether physician-owned hospitals fit. - That matters because ACA-era limits largely froze these hospitals after 2010, so even a narrow CMS opening could reshape competition.
Hospital payment policy is usually dry until one buried paragraph hints at a bigger fight. That is what happened here. CMS used its proposed FY 2027 inpatient payment rule, released in April, to ask whether physician-owned hospitals should be allowed into TEAM — Medicare’s new episode-based payment model for surgery. That sounds narrow, but it touches one of the oldest battles in hospital policy: whether doctors should be allowed to own hospitals and refer patients there. (federalregister.gov) ### What did CMS actually do? CMS did not announce a broad rollback of physician-ownership restrictions. It issued a request for information inside the proposed inpatient rule and asked for public comment on whether physician-owned hospitals could participate in TEAM, and if so, under what guardrails. Comments on the proposed rule are due June 9, 2026. (federalregister.gov) ### What is TEAM? TEAM — short for Transforming Episode Accountability Model — is a Medicare payment model that makes selected acute care hospitals responsible for the cost and quality of care around certain surgeries, not just the hospital stay itself. The episode runs through 30 day(federalregister.gov)ypass graft, and major bowel procedures. The model started January 1, 2026, and runs through December 31, 2030. (cms.gov) ### Why are physician-owned hospitals a special case? Because federal law has treated them as a special case for years. Section 6001 of the Affordable Care Act largely froze growth in physician-owned hospitals after 2010 by tightening Stark self-referral rules and limiting expansion, with only narrow exceptions. So this is not just about joining one payment model — it is CMS signaling (cms.gov)e in Medicare innovation. (medicaleconomics.com) ### Why is CMS even considering this? Turns out CMS itself nodded to evidence that physician-owned hospitals may help control costs, maintain or improve outcomes, and reduce consolidation pressure. That is the striking part. The agency did not just ask a procedural question. It cited research suggesting these hospitals can perform w(medicaleconomics.com)billion in Medicare savings in 2019. (medicaleconomics.com) ### So is CMS opening the floodgates? Not really. The opening is narrow. TEAM is a specific model, and CMS is openly worried about selection effects — basically, whether letting physician-owned hospitals opt in voluntarily would skew results or let hospitals join only when the math looks favorable. The agency is asking about issues like all-category participation, limits on voluntary exit, and how any temporary waivers would unwind after the model ends. (medicaleconomics.com) ### Why do supporters care so much? Supporters see this as a proof-of-concept fight. If physician-owned hospitals can show they work inside a Medicare accountability model, they gain a stronger case that they are not just profitable niche facilities but viable players in value-based care. That matters politically because the long-running criticism has been that these hospitals cherry-pick lucrative service lines and healthier patients. (medicaleconomics.com) ### Why do other hospitals care? Because local market dynamics could change fast. If physician-owned hospitals get even limited access to Medicare payment models, they become more credible partners for surgeons, post-acute providers, and payers. Nonprofit systems and incumbent hospitals would face more pressure on referrals, orthope(medicaleconomics.com)e policy shift, but it follows directly from how TEAM assigns accountability around high-value surgical episodes. (cms.gov) ### Bottom line? This is still just a request for input. But it is the first meaningful sign in years that CMS may be willing to test physician-owned hospitals inside mainstream Medicare payment reform instead of treating them as a category to wall off. If that changes, the effect will reach beyond one model and into the structure of hospital competition itself. (cms.gov)spital-inpatient-prospective-payment-systems-for-acute-care-hospitals-ipps-and))
