Fifth Circuit Upholds Major Changes in No Surprises Act QPA Calculations

In a landmark decision, the U.S. Court of Appeals for the Fifth Circuit has largely upheld a lower court's ruling against significant portions of federal regulations that determine how insurers calculate the "qualifying payment amount" (QPA) under the No Surprises Act (NSA).

This ruling, delivered on August 11, 2026, affects how insurers determine the benchmark rate integral to the NSA's independent dispute resolution (IDR) process. The NSA, implemented on January 1, 2022, seeks to prevent unexpected medical charges from out-of-network services by requiring a structured resolution process between insurers and providers, thereby shielding patients from direct billing upon disputes.

Regulatory Background and Legal Challenge

The QPA is the centerpiece of the IDR process, representing the median contracted rates recognized by insurers as payment for specific services, categorized by provider specialty and geographic region. The Departments of Health and Human Services, Labor, and Treasury initially introduced guidelines in July 2021 for calculating the QPA, which included all contractual rates, even those without rendered services. This approach faced legal challenges, prompting a subsequent revision in August 2022 to exclude $0 rates but to retain all non-negotiated rates.

The Texas Medical Association, along with other medical organizations, contested these guidelines, claiming they were inconsistent with the NSA and were formulated arbitrary. While an appeals panel initially overturned a district court decision siding with the plaintiffs, the en banc court's ruling eventually nullified this position, showing support for the plaintiffs’ arguments.

Impact on QPA Calculations

The court's decision specifically targets "ghost rates," or rates for services never performed, claiming their inclusion wrongly expanded beyond the NSA’s intent, which focuses on actual service rates per geographic region. This ruling mandates the exclusion of non-negotiated, low rates from QPA calculations, which may elevate provider success rates in arbitration.

The decision also emphasizes that bonus and incentive payments must be fully reflected in the QPA to accurately represent total contracted payment values. Excluding these payments could lead to an understatement of the benchmark rate, thus failing the NSA's purpose.

Specific Rulings and Ongoing Implications

In sectors like air ambulance services, the court upheld excluding single-case agreements from QPA, as they arise independently of standard contracted rates. The court's stance insists on reflecting the median market-specific rates rather than sporadic out-of-network pricing.

The ruling nullifies unlawful parts of the existing rule and FAQ guidance under the Administrative Procedure Act, although interim QPA applications will continue to prevent disruption of the NSA's consumer protections. Judges expressed differing methodologies in reaching their conclusions, acknowledging alternative interpretation possibilities.

What's Next for Insurance Professionals

Insurance professionals need to prepare for recalculated QPAs that might result in higher figures following the exclusion of services not supplied and inclusion of comprehensive financial terms. Firms like Troutman Pepper Locke, boasting over 1,600 legal experts, remain instrumental in guiding stakeholders through evolving compliance and litigation landscapes in this domain.

To stay compliant with these recalibrated standards, insurers must reassess their calculations and processes to align with the court's decision, ensuring fair arbitration outcomes and continued adherence to NSA protocols.