The Fifth Circuit has delivered a major victory for healthcare providers by striking down the government’s methodology for calculating qualifying payment amounts under the No Surprises Act.
The court’s en banc decision, issued on August 11, 2026, rejected rules established by the Departments of Labor, Treasury, and Health and Human Services that providers argued artificially depressed payment figures.
The qualifying payment amount, or QPA, plays a central role in the No Surprises Act’s independent dispute resolution process, which determines how much an insurer owes an out-of-network provider.
The Fifth Circuit defined the QPA as “the median of the total maximum rates in an insurer’s contract for an item or service that a provider provides and furnishes.”
Providers had challenged the government’s July 2021 interim-final rule on three grounds, arguing the methodology unfairly favoured insurers by keeping QPAs artificially low.
The most significant element of the ruling was the court’s decision to exclude so-called ghost rates from QPA calculations, as these are contract rates for items or services that providers do not actually deliver.
The Fifth Circuit held that if an item or service was neither “provided by a provider” nor “furnished,” then the No Surprises Act precludes the inclusion of ghost rates in QPA calculations.
Insurers had been incentivised to keep QPAs low partly by including these ghost rates, which minimised their cost-sharing obligations in dispute resolution proceedings.
The court also ruled that bonus and incentive payments must be included in QPA calculations, overturning the Departments’ position that insurers could exclude such payments from their figures.
On the question of single-case agreements, the Fifth Circuit sided with the Departments, agreeing that one-off arrangements, particularly common in the air ambulance sector, are properly excluded from contracted rates used to calculate the QPA.
The court reasoned that “the word ‘rate’ connotes a per-unit price for multiple units,” distinguishing ongoing contracted rates from isolated, one-off transactional agreements.
The combined effect of excluding ghost rates and requiring bonus payment inclusion means insurers can expect significantly higher QPAs when participating in the independent dispute resolution process going forward.
Providers and payors have been advised to monitor further agency guidance as regulators respond to the ruling and potentially revise their approach to QPA calculations.
The decision represents a notable shift in the balance of the No Surprises Act framework, strengthening the position of out-of-network providers in payment disputes with insurers.