No Surprises Act QPA calculations set to change after appeals court ruling

An appeals court sided with providers in a case about the No Surprises Act’s qualifying payment amount (QPA), a key benchmark in out-of-network payment determinations.

The U.S. Court of Appeals for the Fifth Circuit issued a ruling that QPA calculations must not include ghost rates, referring to non-negotiated rates listed in contracts for services a provider does not furnish. The court said the inclusion of those rates artificially lowers the QPA, which is defined as an insurer’s median contracted rate for the same (or a similar) item or service, involving providers in the same (or a similar) specialty and geographic region.  

Another issue that the court said must be rectified was the exclusion of contracted bonus and incentive payments in the QPA formula. Such payments instead should factor into QPA determinations when affecting the maximum payment for the relevant item or service.

HHS and the three other federal agencies that were defendants in the case prevailed on one point: The court said they can exclude one-off agreements from QPA calculations. Those agreements often apply to air ambulance companies.

The formula changes are not expected be implemented immediately, with the court stipulating that the agencies don’t have to enforce the required changes while insurers calculate new QPAs in accordance with the statute. The opinion does not prescribe a transition timeline.

Enforcement discretion can ensure that vacatur of the established regulations “will not result in all-out chaos” amid a scramble by insurers to generate new QPAs, according to the ruling.

Why the QPA methodology matters for IDR

Because the QPA is a key factor in how arbitrators rule on payment disputes under the No Surprises Act, the plaintiffs argued that regulations that improperly lower the QPA are harmful to providers engaging in the independent dispute resolution (IDR) process.

The Fifth Circuit, which likely has the decisive word on the matter unless the Trump administration successfully petitions the Supreme Court to hear the case, gave credence to that argument.

“The inclusion of ghost rates in the QPA calculation is no minor problem,” the court wrote, citing a survey that found 68% of primary care physicians have contracts that include rates for services they provide fewer than two times annually.

IDR decisions have been heavily weighted toward providers, the court’s decision notes, with arbitrators ruling for providers more than 80% of the time and selecting a rate higher than the QPA in 85% of cases since the portal opened in April 2022.

The court cited those metrics as indications that the inclusion of artificially low rates has distorted IDR, writing, “The agencies’ error has upended the NSA’s dispute-resolution process.”

Litigation has produced shifting QPA requirements

The litigation combined complaints brought by the Texas Medical Association, Tyler (Texas) Regional Hospital, a physician and several air ambulance companies. Since being filed in November 2022, the case has taken a winding road.

A Texas federal district court ruled in favor of the plaintiffs and vacated the disputed provisions in August 2023, leading the federal agencies to temporarily shut down the already-backlogged IDR portal while they made changes.

In October 2024, a three-judge panel at the Fifth Circuit overturned parts of that decision, including by ruling that QPA calculations should include all contracted rates, even for items and services that the providers did not actually furnish.

The plaintiffs then appealed for an en banc hearing before the full 17-judge circuit court. Once granted, the petition prevented the appellate panel’s decision from being implemented while the matter was pending, meaning the district court’s ruling continued to hold.

In the wake of the district court’s decision, and with their appeal looming, the federal agencies had exercised enforcement discretion that allowed insurers to continue basing their QPAs on initial regulations issued in 2021.

As a result, there has been a patchwork of QPAs based on two different methodologies. In vacating the 2021 regulatory language involving ghost rates and incentive clauses, the Fifth Circuit’s new ruling is expected to spur the agencies to issue a uniform set of regulations.

Higher QPAs could reshape negotiations and IDR

If the court ruling leads to higher QPAs, one result could be that providers observe a greater benefit than previously in utilizing the 30-day negotiating period that precedes IDR.

“QPAs reflecting accurate median in-network rates should lead to decreased volume of IDR arbitrations,” the American College of Radiology wrote in an update.

“QPAs have been completely detached from reality since the earliest days of the No Surprises Act,” Alla LaRoque, president of HaloMD, a healthcare technology company that negotiates on behalf of out-of-network providers, said in a written statement.

HaloMD is a frequent initiator of IDR cases, accounting for almost one in five (19%) of all disputes filed during the final six months of 2025.

“More honest and transparent QPA calculations will lead to durable networking agreements and sustainable access to care in communities across the country,” LaRoque added.

The impact of the ruling on IDR is uncertain in part because insurers do not have to stick closely to the QPA when submitting a payment proposal for arbitrators to consider. According to federal data, insurers submitted an IDR offer that was equal to or less than the QPA in roughly 47% of disputes in 2024.

What providers should monitor as agencies rewrite the rules

In anticipation of new QPA regulations, providers should “continue to submit claims in a timely manner and preserve all objections to QPA calculations that appear to rely on ghost rates or that categorically exclude bonus/incentive-linked compensation,” according to an analysis by ArentFox Schiff.

As they issue guidance or regulations to implement the court’s recent decision, the agencies could incorporate additional IDR-related requirements, perhaps as a way to constrain heavy traffic in the portal. The Trump administration recently signaled that it wants to curb what CMS has described as misuse of the IDR process amid rapidly rising volumes and payments.

One issue for stakeholders to consider is that the QPA is also used to determine patient cost-sharing amounts in scenarios where the No Surprises Act’s balance-billing protections apply (generally all emergency care, plus nonemergency care furnished by an out-of-network provider at an in-network facility).

Thus, higher QPAs could result in higher out-of-pocket burdens for patients at a time when they already face significant increases in premiums.