Quick Summary
- The Fifth Circuit struck down key portions of the federal methodology used to calculate the Qualifying Payment Amount (QPA)
- Insurers may no longer include certain “ghost rates” when calculating QPs
- Bonus and incentive payments tied to services cannot be categorically excluded
- The court upheld the exclusion of single-case agreements from QPA calculations
- The decision could affect provider reimbursement and future IDR disputes
Fifth Circuit Sides With Providers
A major federal appeals court ruling could reshape how insurers calculate a key reimbursement benchmark under the No Surprises Act (NSA).
On August 11, the U.S. Court of Appeals for the Fifth Circuit sided with the Texas Medical Association and other provider plaintiffs in their challenge to portions of the federal QPA methodology. The QPA generally represents the median contracted rate for a particular service in a geographic area and plays an important role in the federal Independent Dispute Resolution (IDR) process.
The court determined that federal agencies exceeded the statute by allowing certain rates to be included while excluding other forms of compensation.
Court Rejects “Ghost Rates”
One of the most significant issues involved so-called “ghost rates.” These are contracted rates for services a provider does not actually perform.
Because providers have little reason to negotiate meaningful reimbursement for services they never provide, these rates can be extremely low. Under the challenged methodology, insurers could include these amounts when determining the median contracted rate, potentially lowering the QPA.
The Fifth Circuit concluded that the QPA should reflect rates associated with services actually furnished by providers. The court found that including ghost rates could artificially reduce the benchmark used in the IDR process.
Bonus and Incentive Payments Must Be Considered
The ruling also addressed risk-sharing arrangements, bonuses, penalties, and other incentive-based payment adjustments.
Federal regulations had directed insurers to exclude these payments when calculating QPAs. The Fifth Circuit rejected a categorical exclusion, finding that doing so could leave out compensation that forms part of the total maximum payment available under a provider-insurer contract.
However, providers did not prevail on every issue. The court upheld the exclusion of single-case agreements, which are commonly used for one-time arrangements between insurers and out-of-network providers, including air ambulance services.
Potential Impact on the IDR Process
The ruling arrives as the federal IDR system continues to experience significant growth. Providers prevailed in approximately 85% of the 1.15 million disputes receiving payment determinations during the second half of 2025, with awards exceeding the QPA in about 87% of those cases.
Changing the QPA methodology could have important implications for future reimbursement disputes. If recalculated QPAs are higher, providers may have stronger benchmarks when negotiating out-of-network payments.
The court recognized that recalculating existing QPAs will take time. Federal agencies may exercise enforcement discretion to permit continued use of existing calculations temporarily, helping prevent disruption to the IDR system and patient protections.
What This Means for Healthcare Providers
Providers should closely monitor forthcoming federal guidance regarding QPA recalculations and implementation of the ruling. Organizations using IDR should also consider how revised QPAs may affect existing dispute strategies, reimbursement analysis, and future submissions.
The decision represents another significant development in the ongoing debate over how the No Surprises Act should balance patient protections with fair provider reimbursement.
How Patriot Group Can Help
Changes to QPA calculations can directly affect how providers evaluate and pursue out-of-network reimbursement disputes. Understanding these developments is increasingly important as the federal IDR framework continues to evolve.
Patriot Group helps healthcare providers navigate the IDR process, challenge inadequate reimbursement, and develop strategies for payer disputes. If your organization has questions about how this ruling could affect its claims or IDR opportunities, our team is available to help.
