Texas Medical Association Wins Fifth Circuit QPA Ruling, Pressuring No Surprises Act Payment Formula

Providers won another court fight over the No Surprises Act this week when the U.S. Court of Appeals for the Fifth Circuit struck down key parts of the government’s method for calculating the qualifying payment amount, or QPA. The decision came out of a 2022 Texas Medical Association lawsuit and adds to a series of successful provider challenges to how the law has been implemented since 2022.

The immediate operational effect is limited because the court left the existing QPA formula in place while the Departments of Health and Human Services, Labor and Treasury develop a replacement. But the strategic consequence is clearer: if regulators rewrite the benchmark in line with the ruling, providers could gain leverage in out-of-network payment disputes because the QPA often serves as the anchor in arbitration.

What The Court Changed

The QPA is supposed to reflect the median in-network rate health plans pay for a service in a geographic area. In arbitration under the No Surprises Act, that number carries unusual weight because both sides often negotiate around it.

The Fifth Circuit agreed with the Texas Medical Association on two of three disputed issues. First, it said QPAs should not include so-called “ghost rates,” described in the sources as placeholder or contracted rates for services providers did not actually negotiate or never actually intended to deliver. Providers argued those rates artificially depressed the benchmark, and the court agreed they should not be part of the calculation.

Second, the court found that bonus and incentive payments should be included. Those payments had been excluded from the formula even though they can make up a significant share of contracted provider compensation.

On the third issue, the court sided with the government and rejected the position advanced by air ambulance providers. It held that one-off contracts, such as a single-patient transport price, can continue to be excluded from the rates used to calculate the QPA.

Why It Matters For Payment Disputes

The case matters because changing the QPA changes more than a technical benchmark. If ghost rates come out and bonus and incentive payments go in, the revised QPA is expected to move higher, which in turn could lift arbitration outcomes for providers across the board.

That is the core policy signal from the ruling. The No Surprises Act was designed to protect patients from surprise bills, but the implementation fight has increasingly centered on how payment benchmarks distribute negotiating power between insurers and providers. By backing providers on the structure of the benchmark itself, the court increased pressure on regulators to produce a methodology less favorable to payers than the current version.

The decision also shows how much of the law’s practical economics are still being set through litigation rather than stable rulemaking. This is the Texas Medical Association’s fourth successful legal challenge to the law’s implementation since 2022, according to MedCity News.

What Comes Next

There is no deadline for a replacement methodology. That leaves both providers and payers waiting to see how quickly and how aggressively regulators revise the formula.

For now, the existing QPA framework stays in place. But the longer-term issue is not whether the benchmark will change; it is how far regulators move in translating the court’s instructions into a new payment formula. Texas Medical Association President Bradford Holland said in a statement that the decision is “another step in the right direction for both patients and the physicians who care for them.”