Last Updated: August 19, 2026 
The U.S. Court of Appeals for the Fifth Circuit has partially upheld a lower court ruling that invalidated portions of federal regulations governing how insurers calculate the qualifying payment amount, or QPA, under the No Surprises Act.
The decision was issued by the full Fifth Circuit after the court reheard the case en banc. A three-judge panel had previously reversed portions of the district court’s ruling in October 2024, but that decision was later vacated after the full court granted rehearing. The August 11, 2026 en banc decision addresses the providers’ challenges to several aspects of the federal QPA methodology.
Fifth Circuit Sides With Providers on Key QPA Rules
The dispute centers on the qualifying payment amount, or QPA. Under the No Surprises Act, the QPA is generally based on the median of contracted rates recognized by an insurance plan for the same or a similar item or service provided by a provider in the same or similar specialty and geographic region.
The QPA can affect patient cost sharing for certain out-of-network services and is also central to the federal independent dispute resolution process used when providers and insurers cannot agree on reimbursement.
The case was brought by the Texas Medical Association, Tyler Regional Hospital, Dr. Adam Corley, and several air ambulance providers. The plaintiffs challenged federal rules governing the calculation of the QPA, arguing that certain provisions did not comply with the No Surprises Act.
One major issue involved so-called “ghost rates.” These are rates appearing in provider-insurer contracts for services that the provider does not actually provide. The Fifth Circuit explained that such rates can sometimes be very low because providers may not negotiate rates for services they do not intend to furnish.
The en banc court agreed with the providers that allowing these ghost rates to be included in the QPA calculation was inconsistent with the No Surprises Act. The court therefore vacated the portions of the federal rule requiring insurers to include those rates in the calculation.
The court also ruled for the providers concerning certain bonus and incentive payments. Federal regulations had instructed insurers to exclude risk-sharing, bonus, penalty, incentive-based, and retrospective payments or adjustments from the QPA calculation.
The en banc court concluded that the No Surprises Act requires the QPA methodology to account for the “total maximum payment” for the relevant item or service. Because certain bonus and incentive payments can form part of that payment, the court held that the agencies could not categorically exclude them through the challenged rule.
The court did not invalidate every challenged QPA provision, however. On the treatment of one-off, case-specific agreements, the Fifth Circuit sided with the federal agencies. The court held that such agreements, including certain arrangements involving air ambulance services, do not constitute “contracted rates” that must be included in the QPA calculation under the No Surprises Act.
What Does the Fifth Circuit Ruling Mean?
The Fifth Circuit’s decision changes specific requirements governing how insurers calculate the QPA. It does not strike down the No Surprises Act or eliminate its protections against certain surprise out-of-network medical bills.
The ruling means that the challenged federal methodology cannot continue to require the inclusion of ghost rates in QPA calculations or categorically exclude certain bonus and incentive payments addressed by the court’s decision. At the same time, insurers may continue excluding qualifying one-off, case-specific agreements from the contracted rates used to calculate the QPA.
The court also rejected arguments that vacating the unlawful portions of the federal methodology would create unacceptable disruption. The Fifth Circuit explained that the agencies could exercise enforcement discretion while insurers calculate new QPAs consistent with the court’s ruling.
The court ultimately affirmed the district court’s judgment in part, reversed it in part, and remanded the case for further proceedings consistent with its opinion.
The decision therefore leaves the broader No Surprises Act in effect while requiring changes to specific aspects of the federal methodology used to calculate qualifying payment amounts.
Disclaimer: This article is for general informational purposes only and reports on federal litigation concerning regulations implementing the No Surprises Act. The Fifth Circuit’s decision addresses specific QPA calculation provisions and does not invalidate the Act itself. Further court proceedings, agency action, or appellate review may affect its implementation. This article does not constitute legal advice.
