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Court voids No Surprises Act QPA formula for out-of-network billing
The ruling by the 5th Circuit throws employer plan cost caps into uncertainty and, CMS data show, arbitration awards to out-of-network providers rose to $14.9 billion in 2025 from $4.1 billion in 2024.
A federal appeals court has voided the qualifying payment amount, or QPA, formula used in the No Surprises Act to settle many out-of-network billing disputes, according to a Reuters report cited by Insurance Business.
The full 17-judge 5th U.S. Circuit Court of Appeals in New Orleans ruled on August 12 that the QPA formula was unlawfully calculated, backing healthcare providers including the Texas Medical Association and air ambulance operators that argued the benchmark systematically underpaid them.
The decision cited flaws in how the benchmark was built, including so-called "ghost rates" for services providers never performed, while excluding bonus and incentive payments that are part of real-world contracted compensation. The ruling partially restored an earlier district court decision that had gone against the government after a three-judge 5th Circuit panel had reversed it.
The No Surprises Act, passed in 2020 and effective from January 2022, is intended to shield patients from steep emergency out-of-network bills by requiring arbitration-based reimbursement negotiations between providers and insurers. The ruling lands as the independent dispute resolution process has become a major cost driver in employer health plans, with CMS data showing arbitration awards to out-of-network providers reached $14.9 billion in 2025, up from $4.1 billion in 2024, and providers prevailed in roughly 85 percent of dispute determinations in the second half of 2025.