Fifth Circuit Rejects 'Ghost Rates' in No Surprises Act QPA Formula
An en banc panel affirmed that federal agencies cannot require health plans to include non-negotiated 'ghost rates' or exclude incentive bonuses when calculating a key benchmark for out-of-network payment disputes.
The en banc Fifth Circuit affirmed a district court ruling that invalidated key parts of federal rules for calculating the Qualifying Payment Amount (QPA) under the No Surprises Act. In Texas Medical Association v. HHS, the court held that the government's methodology improperly deflated this key statutory benchmark by including non-negotiated "ghost rates" for services that providers do not actually offer and by excluding certain bonus and incentive payments from the calculation.
Counsel for both payors and providers should care because the QPA is a central reference point for patient cost-sharing and for arbitrations over out-of-network bills. The court noted that the flawed, "artificially low" QPA calculation had "upended" the statutory dispute resolution process, citing the massive volume of arbitrations that providers have won. This ruling solidifies a more provider-favorable calculation method, directly impacting negotiation leverage and the financial outcomes of payment disputes nationwide.
The responsible federal departments are expected to issue new guidance on the QPA calculation. For now, they are exercising enforcement discretion, allowing plans to use the old, vacated methodology for services rendered before October 1, 2026, to prevent market disruption.