Are You Ready for Required Downside Risk? Why Every Provider Must Act Now to Protect Revenue and Thrive

The Incoming Changes

The U.S. healthcare system stands on the edge of its most consequential transformation in decades. The Centers for Medicare & Medicaid Services (CMS) and its Center for Medicare and Medicaid Innovation (CMMI) have announced a sweeping new strategy for 2025 and beyond: downside financial risk will become a core requirement across nearly all new and revised payment models. The most urgent and concrete change is the launch of the Transforming Episode Accountability Model (TEAM) on January 1, 2026. This is not a distant policy proposal. It is an immediate, system-wide mandate that will impact hospitals, physician groups, post-acute providers, and care organizations of every size and setting. No provider, regardless of size or setting, is exempt.

CMS’s 2025 strategy makes downside financial risk a reality for every provider. Those who fail to invest in modern care coordination risk penalties, lost contracts, and shrinking margins. The window for preparation is closing fast.

• Universal Downside Risk: CMS is shifting accountability directly onto providers. Conveners and aggregators can no longer shield organizations from risk. Whether you are a hospital, specialty group, ACO, or post-acute provider, you will be required to participate in models that expose you to financial penalties if costs exceed benchmarks or quality targets are missed.
• Mandatory Participation: CMMI is moving away from voluntary models. New models like the Transforming Episode Accountability Model (TEAM) will require mandatory participation, starting with acute care hospitals and expanding to physician practices and post-acute organizations.
• No Exemptions:Even rural and independent providers are included, with only limited transitional support. The message is clear: no one is insulated from downside risk.

The Why

CMS’s new direction is rooted in a statutory mandate to protect taxpayers and drive value. This is about more than cost - it’s about transforming how care is delivered, measured, and paid for. Federal and state budgets are under siege from unsustainable healthcare costs. Medicaid is now the largest single expense for most states, and the Medicare trust fund faces insolvency within a decade. CMS’s 2025 strategy is anchored in its statutory mandate to protect federal taxpayers and drive value-based care through three interconnected pillars:

• Promote Evidence-Based Prevention: Incentivize preventive care at every stage, from primary to tertiary prevention, to reduce costly complications and keep people healthier, longer.
• Empower People to Achieve Their Health Goals: Provide patients with the data, tools, and support they need to make informed decisions and manage their health effectively.
• Drive Choice and Competition: Foster an environment where patients can choose their care setting and provider, and where providers compete on quality and efficiency.

This is not just about cost containment. It is about fundamentally reengineering the system to reward outcomes, not just activity, and to ensure that every dollar spent delivers measurable value.

The Stark Reality

The shift to required downside financial risk is immediate and universal. CMS is moving to mandatory participation, and the timeline for compliance is short. For organizations that fail to act, the operational and financial consequences will be severe:

• Mandatory downside risk applies to all provider types - hospitals, physician groups, post-acute, rural, and independent organizations.
• Participation is no longer optional; models like TEAM and others will require direct accountability for total cost and quality.
• The timeline is compressed, with new models launching as early as January 2026.
• Unprepared organizations face direct financial penalties, lost contracts, and exclusion from preferred networks.

No provider, regardless of size or setting, is exempt. The risks are real, and the window for preparation is closing fast. Now is the time to act to protect your organization’s revenue and future.

What’s Changing?

The Centers for Medicare & Medicaid Services (CMS) and the Center for Medicare and Medicaid Innovation (CMMI) are ushering in a new era of healthcare payment and delivery reform. Their 2025 strategy signals a decisive shift away from fragmented, fee-for-service models toward a unified, value-based system designed to drive better outcomes, lower costs, and empower both patients and providers.

Key changes include:

• TEAM Model as the Immediate Priority: The Transforming Episode Accountability Model (TEAM) is the first mandatory, episode-based payment model, launching January 1, 2026. It will require acute care hospitals to manage costs and quality for defined surgical episodes, with expansion to other provider types on the horizon.
• Site-Neutral Payments: CMS is harmonizing payments across care settings, introducing site-neutral payment models that reduce financial incentives to deliver care in higher-cost settings when lower-cost, clinically appropriate alternatives exist.
• Expanded Downside Risk: All care settings - including hospitals, physician groups, post-acute, and home-based providers - will be required to participate in models that include downside financial risk, with accountability for total cost and quality outcomes.
• Administrative Simplification: The agency is standardizing quality measures, refining benchmarking methodologies, and reducing mid-model changes to lower the administrative burden for participants. This will help organizations focus more on patient care and less on paperwork.
• Data Transparency: CMS is unlocking access to actionable data and increasing transparency around provider cost and quality performance. These efforts are designed to empower patients to make informed decisions and enable providers to coordinate care more effectively.
• Broader Participation and Competition: The new models are designed to include more independent, rural, and community-based providers, leveling the playing field and increasing competition. Advanced shared savings and prospective payments will support participation from a wider range of provider types.

These sweeping changes mean that every organization must be ready to compete on quality, efficiency, and outcomes - not just cost. With the TEAM model’s go-live date rapidly approaching, the window for evaluating, selecting, and implementing a care coordination platform is closing fast.

Note from the Field

As one industry leader experienced firsthand:

“During my tenure as Vice President of Business Development and Managed Care at a major Midwest post-acute organization, I entered into an upside/downside risk arrangement with United Healthcare and Humana. Without real-time analytics, I had no visibility into how our skilled nursing facilities were performing for these payers. Waiting until year-end for performance data—without the ability to make timely adjustments—was extremely stressful and left us exposed to avoidable losses.”
— Troy Reiff, RN, VP Strategic Initiatives, Olio Health

The Hidden Dangers

Failing to prepare for TEAM and the broader CMS strategy without modern care coordination and analytics will place you at a severe disadvantage as the new rules take effect.

• Financial Exposure: Organizations unprepared for downside risk face direct financial penalties, revenue disruption, and exclusion from future contracts or preferred networks.
• Regulatory Non-Compliance: Inadequate documentation and reporting can jeopardize participation in value-based models and trigger audits or legal challenges.
• Operational Inefficiency: Manual processes and fragmented data will no longer suffice. The administrative burden and lack of real-time insight will erode margins and quality.
• Reputational Risk: Poor performance on cost and quality measures will damage relationships with payers, regulators, and patients.

The Cost of Inaction

Failing to act in the face of CMS’s new downside risk requirements will have immediate and lasting business consequences. Organizations that delay preparation or investment will face:

• Lost Revenue: Inefficient care transitions, unmanaged risk, and failure to meet new model requirements will erode shared savings and trigger financial penalties.
• Staff Burnout and Turnover: Teams overwhelmed by manual processes and fragmented communication are more likely to leave, destabilizing operations and increasing costs.
• Missed Contracts and Market Exclusion: Payers and partners will prioritize organizations that demonstrate readiness, compliance, and measurable results - leaving unprepared providers out of future opportunities and preferred networks.
• Competitive Disadvantage: As the market shifts, organizations with advanced care coordination and analytics will outperform their peers, winning contracts and growing market share.

Readiness is no longer optional - it is the key differentiator for securing contracts, protecting revenue, and ensuring your organization’s future in value-based care. The organizations that act now will position themselves for success, while those who wait will find themselves left behind.

A Call to Action

The time to evaluate, select, and implement a care coordination platform is now - not after the rules are finalized. Early adopters will secure contracts and revenue; late movers will scramble to catch up.

• Investing in Technology: Deploy a platform that unify care teams, automate workflows, and deliver actionable insights at the point of care.
• Fostering Accountability: Align incentives, measure outcomes, and empower teams to own results.
• Partnering for Success: Choose a technology partner with a proven track record in supporting downside risk and value-based transformation

The Solution You Need: Olio Health SaaS Care Coordination Platform

Olio Health is the platform designed for this moment - empowering every provider to succeed under required downside risk, protect revenue, and lead in value-based care. Purpose-built for the era of mandatory financial accountability, Olio’s SaaS care coordination platform enables providers, payers, and care teams to thrive by:

• Orchestrating Care Across the Continuum: Connects health systems, post-acute providers, and primary care groups in a single, HIPAA/HiTRUST-compliant platform.
• Enabling Real-Time Collaboration: Secure care coordination, shared care plans, and automated alerts keep all stakeholders aligned and responsive.
• Delivering Actionable Analytics: Provides real-time Olio Insights into performance, risk, and quality.
• Simplifying Compliance: Standardized workflows reduce administrative burden and ensure regulatory compliance.
• Driving Measurable Outcomes: Organizations using Olio report reductions in readmissions, improved quality scores, and enhanced patient satisfaction.

Whether you are a hospital, physician group, ACO, or post-acute provider, Olio delivers the care coordination infrastructure you need to succeed as the federal landscape evolves toward new downside financial risk requirements.

Conclusion: Act Now to Protect Your Revenue and Secure Your Future

Downside risk is no longer a distant possibility - it is now the standard for every provider, payer, and care organization under CMS’s new strategy. With the mandatory TEAM model launching January 1, 2026, the countdown is on. The organizations that recognize this shift and act decisively will be the ones that secure contracts, protect their margins, and thrive in the era of value-based care.

The time to evaluate, select, and implement a modern care coordination platform is now - not after the final rules are published or mandates take effect. Early adopters will be positioned to demonstrate readiness, compliance, and measurable results - key differentiators that payers and partners are already seeking for contract awards and network inclusion.

Don’t wait for the next mandate or penalty to force your hand. Future-proof your organization and deliver on your mission with Olio Health.
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Contact us today to learn how Olio can help you turn risk into opportunity and lead the way in value-based care. The time to act is now - those who move first will win.

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