Fifth Circuit ruling mandates accurate QPA calculations under No Surprises Act, targeting insurer use of artificially low 'ghost rates'
Executive summary: The Fifth Circuit Court of Appeals ruled that insurers must exclude artificially low 'ghost rates' when calculating Qualifying Payment Amounts (QPAs) under the No Surprises Act, declaring such practices unlawful. The ruling addresses a core driver of payment disputes under the No Surprises Act, potentially increasing out-of-network payments to providers and forcing insurers to revise their payment algorithms.
Who is involved: Texas Medical Association (plaintiff), U.S. Department of Health and Human Services (defendant), health insurers, healthcare providers, and the Fifth Circuit Court of Appeals.
Likely next: Insurers will need to update QPA calculation methodologies; providers may see adjusted payments; HHS could issue guidance or appeal the decision; legal challenges to other aspects of the No Surprises Act may follow.
The Fifth Circuit Court of Appeals has ruled that insurers must calculate Qualifying Payment Amounts (QPAs) accurately under the No Surprises Act, specifically prohibiting the inclusion of artificially low 'ghost rates' that distort median in-network payment amounts. The decision, issued in Texas Medical Association v. HHS (TMA III), responds to persistent complaints from providers about underpayment due to flawed QPA methodologies. By requiring exclusion of misleading data points, the ruling aims to increase transparency and fairness in out-of-network payment calculations, directly affecting how insurers negotiate and reimburse for emergency and non-emergency services.
Timeline
- — Fifth Circuit Cites Unlawfully Calculated QPAs as Key Driver of No Surprises Act Problems (PR Newswire)
Analysis — what this means
Likely next events
- Insurers to revise QPA calculation models by Q4 2026 to exclude ghost rates
- Possible HHS appeal or issuance of clarifying guidance on QPA methodology within 60 days
- Providers to audit recent payments for potential underpayments due to prior QPA miscalculations
- Increased likelihood of provider-led audits or litigation against insurers using outdated QPA models
Sectors affected
- Health insurance
- Healthcare provider services
- Healthcare revenue cycle management
- Health IT and claims processing
Regulatory implications
- Strengthened enforcement of No Surprises Act QPA accuracy requirements
- Potential for HHS to issue binding guidance on excluding outliers in median calculations
- Increased scrutiny on actuarial methods used in federal rate-setting under surprise billing protections