Fifth Circuit Tosses Government’s Artificially Low QPA Calculation Method
Fifth Circuit invalidates key government methods lowering the Qualified Payment Amount (QPA).
Why it matters: This ruling changes how insurers and healthcare providers approach out-of-network reimbursements under the No Surprises Act, impacting corporate legal strategies and payment disputes.
- On August 11, 2026, the Fifth Circuit en banc decision rejected use of 'ghost rates' in QPA calculations.
- Bonus and incentive payments must be included in the QPA according to the court ruling.
- Single-case agreements are excluded from QPA calculations as they aren’t considered contracted rates.
- The decision likely increases QPA amounts, affecting reimbursement rates in Independent Dispute Resolution (IDR).
On August 11, 2026, the U.S. Court of Appeals for the Fifth Circuit issued a landmark en banc ruling in Texas Medical Association v. HHS, striking down key components of the government’s methodology for calculating the Qualified Payment Amount (QPA) under the No Surprises Act (NSA). The QPA is the benchmark used in the NSA’s Independent Dispute Resolution (IDR) process to determine reimbursement rates for out-of-network healthcare providers.
The court rejected the inclusion of so-called 'ghost rates'—rates for services not actually provided—which the government used to artificially lower the QPA. The panel emphasized that “the NSA precludes the inclusion of ghost rates in QPA calculations, as they are rates for services that are neither provided nor furnished.”
In addition, the court mandated the inclusion of bonus and incentive payments when calculating the total maximum payment for services, as these are part of the full contracted payment. Conversely, the court agreed with excluding single-case agreements, ruling these one-off transactions do not constitute 'contracted rates' under the NSA because "the word 'rate' connotes a per-unit price for multiple units, not one-off transactions."
This ruling directly impacts insurers and providers by potentially increasing the QPA, which may translate into higher reimbursement rates for providers in IDR disputes. Industry experts note that historically, over 80% of arbitrations favor providers, with about 85% resulting in rates higher than the government-calculated QPA.
While this decision refines how QPAs are calculated across the Fifth Circuit’s jurisdiction, details on implementation timelines and insurer responses remain forthcoming. The Departments of Health and Human Services, Labor, and Treasury have yet to announce their positions or possible appeals.
By the numbers:
- August 11, 2026 — Date of Fifth Circuit's en banc ruling on QPA methodology
- Over 80% — Percentage of NSA arbitrations where providers prevail
- 85% — Proportion of arbitrations awarding reimbursement rates above the QPA
What's next: Watch for government agency responses and potential appeals challenging the Fifth Circuit’s ruling.