A federal appeals court held two key surprise-billing rate rules unlawful - reworking the math health insurers have used since 2021.
On August 11, 2026, the Fifth Circuit Court of Appeals, sitting as a full en banc panel, ruled in a case brought by the Texas Medical Association, a group of air ambulance operators, and three federal agencies - the Departments of Health and Human Services, Labor, and Treasury. The dispute centered on the "qualifying payment amount," or QPA. That is the number that anchors negotiations when an insurer and an out-of-network provider argue over who pays the balance of a patient's bill under the No Surprises Act.
The court found the agencies got the calculation wrong in two ways.
The first involved "ghost rates." Insurers often give providers a form contract with default fees for every service. Providers haggle over the rates they care about and leave the rest untouched, so the contract ends up carrying rates for services the provider never performs - sometimes as low as $0 or $1. A July 2021 rule told insurers to feed all of those rates into the QPA. The court said that broke the No Surprises Act, which ties the QPA to services "provided by a provider." Loading in phantom rates dragged the QPA down, and the fallout was stark: the volume of disputes ran 84 times higher than the agencies expected, providers prevailed in more than 80% of arbitrations, and arbitrators landed on a rate above the QPA in 85% of them.
The second involved bonus and incentive payments. The rule told insurers to leave those out of the QPA. The court disagreed, holding that the statute's "total maximum payment" language captures the whole payment, bonuses included.
The agencies did prevail on one issue. The court said insurers can keep excluding one-off "single-case agreements" - the deals air ambulance companies cut for a single emergency flight - from the QPA. It noted that "provider avoidance of insurance network participation combined with aggressive collection practices has been described as a business strategy of some providers of air ambulance services."
The court affirmed in part, reversed in part, and sent the case back to the district court.
For claims teams, the takeaway is direct: the QPA method they have leaned on since 2021 is being reworked, and the two rejected provisions were the ones holding reimbursement figures down.
