On August 11, 2026, the United States Court of Appeals for the Fifth Circuit, sitting en banc, issued a landmark decision in Texas Medical Association v. HHS, substantially curtailing insurer-friendly methodologies used to calculate the Qualifying Payment Amount (QPA) under the No Surprises Act (NSA). The court held the Department of Health and Human Services (HHS) and the other implementing Departments unlawfully permitted insurers to depress QPA calculations using so-called “ghost rates” and by excluding certain bonus and incentive payments. The court affirmed vacatur of those portions of the regulations and remanded for further proceedings. For out-of-network providers, this may be the most significant NSA reimbursement decision since the series of successful Texas Medical Association challenges to the original Independent Dispute Resolution (IDR) regulations.
Specifically, the Fifth Circuit first held that insurers cannot include reimbursement rates for services that providers do not actually furnish or provide, often referred to as “ghost rates. The court found the NSA requires QPAs to be based on services actually provided by providers and that inclusion of unnegotiated placeholder rates unlawfully depresses QPAs.
The court further held that HHS improperly excluded bonus, incentive, quality, risk-sharing and similar payments from QPA calculations. According to the court, the statute requires inclusion of the provider’s “total maximum payment,” which encompasses these forms of compensation. However, the court upheld HHS’s decision to exclude certain one-off, single-case agreements, particularly in the air ambulance context, from QPA calculations. Finally, the court affirmed vacatur of the challenged portions of the regulations and rejected arguments that practical difficulties justified preserving the unlawful methodology.
This is an important decision because the NSA IDR process revolves around the QPA. Although IDR entities are no longer required to presume that the QPA is the proper payment amount, the QPA remains the starting point for virtually every arbitration and continues to influence insurer initial payments, negotiation strategy and arbitrator decision-making.
The Fifth Circuit just recognized what providers have argued since implementation of the NSA: Insurers frequently use default fee schedules containing thousands of reimbursement rates. Many of those rates relate to services a provider never performs. Those rates often are never negotiated. Some are nominal rates ($0, $1 or similarly artificial amounts). Inclusion of these rates drives down the median contracted rate and therefore suppresses the QPA.
The court specifically referred to the evidence that IDR filings exceeded agency projections by approximately 84 times; providers prevailed in more than 80% of arbitrations; and IDR entities selected amounts above the QPA in approximately 85% of cases as support for the proposition that existing QPAs were systematically understated.
If regulators implement the decision as written, carriers will likely need to recalculate QPAs by: removing ghost rates; removing artificial placeholder rates; including incentive compensation; including quality bonuses; including shared savings payments; and including value-based compensation components where attributable.
The likely result is a material increase in QPAs across many specialties.
This decision may also have a significant impact on existing IDR awards. Given the decision, providers should closely evaluate recently filed IDRs; pending IDRs; reopened negotiations; and payment disputes still within appeal windows because many of the disputed claims in these proceedings may have been evaluated using unlawfully depressed QPAs. Whether previously finalized awards can be revisited will depend on future agency guidance and litigation developments.
Historically, insurers often relied on QPAs as evidence their initial payments approximated market rates. This decision substantially weakens that argument. The Fifth Circuit concluded the challenged methodology itself artificially lowered reimbursement benchmarks. Accordingly, providers should aggressively challenge unsupported QPAs; unexplained QPA calculations; implausibly low median contracted rates; and carrier assertions that QPA necessarily reflects market value.
Key Takeaways
- We recommend providers should no longer assume QPAs are accurate. Accordingly, for every significant IDR matter, providers should request and preserve carrier QPA disclosures; supporting calculations; methodology descriptions; explanations of service code matching; and geographic region calculations. Providers should also generally look for evidence the carrier included rates for services not actually performed by contracting providers. This decision increases the importance of demonstrating true market value. Accordingly, providers should continue assembling historical payer contracts; reimbursement benchmarks; commercial fee schedules; prevailing in-network rates; physician or facility specialty data; and evidence regarding actual negotiated contracts.
- Many provider organizations receive substantial compensation through quality incentive programs; shared savings arrangements; pay-for-performance metrics; and value-based payment arrangements. These payments may now become relevant evidence regarding proper reimbursement benchmarks. Providers accordingly should preserve documentation showing how such payments affect overall reimbursement.
- Where substantial dollars are involved, providers should evaluate whether disputed NSA claims were valued using pre-decision QPAs, ghost-rate-driven calculations, and other methodologies inconsistent with the Fifth Circuit’s interpretation. There may be opportunities to pursue supplemental reimbursement arguments in ongoing disputes.
- The court expressly recognized that recalculation of QPAs will take time and suggested agencies may exercise enforcement discretion while revised methodologies are implemented. Providers accordingly should expect revised FAQ guidance; new rulemaking; updated IDR guidance; additional carrier challenges; and potential Supreme Court review efforts.
In conclusion, the Fifth Circuit’s en banc decision represents a major victory for providers and a substantial setback for insurer-favorable QPA methodologies. The court held that insurers generally may not dilute QPAs through the inclusion of non-negotiated “ghost rates” and must account for bonus and incentive compensation when calculating the statutory benchmark.
For out-of-network providers, the immediate takeaway is clear: QPAs are likely to increase, insurer payment determinations will face greater scrutiny, and providers should aggressively challenge reimbursement positions that rely on legacy QPA methodologies. While regulatory implementation remains uncertain, this decision creates significant new leverage for providers in No Surprises Act negotiations and IDR proceedings and may ultimately result in materially higher reimbursement outcomes for many out-of-network claims.
Harris Beach Murtha’s Health Care Industry Team regularly tracks and supports clients with issues related to the No Surprises Act. If you need help, please reach out to attorney Roy W. Breitenbach at (516) 880-8378 and rbreitenbach@harrisbeachmurtha.com or the Harris Beach Murtha attorney with whom you most frequently work.
This alert is not a substitute for advice of counsel on specific legal issues.
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