Qualifying Payment Amounts (QPAs) are completely detached from actual in-network rates. Insurers will finally have to drop "ghost rates" and follow Congressional intent.
Yesterday, an en banc panel of the Federal Fifth Circuit Court of Appeals issued a long-awaited ruling in the case colloquially known as “TMA III.” The case, the third in a series of four suits brought by the Texas Medical Association (TMA) against the Biden Administration’s Departments of Health and Human Services (HHS), Labor (DOL), and Treasury, pertains to the regulatory methodology used to calculate the Qualifying Payment Amount (QPA) under the No Surprises Act (NSA). If you can make it past the flood of acronyms, the case (and its decision) is one of the most important legal victories (so far) for the sustainability of medical practices under the NSA.
The QPA has been a leading cause of frustration within the physician community since 2021. The statute passed by Congress described the QPA as “… the median of the contracted rates recognized by the plan or issuer… within the same insurance market… as the total maximum payment… under such plan or coverage… on January 31, 2019, for the same or similar item or service that is provided by a provider in the same or similar specialty and provided in the geographic region in which the item or service is furnished… increased by the percentage increase in the consumer price index for all urban consumers.”
In other words take all of the health plan’s contracts for a given item or service, remove contracts with physicians of unrelated specialties, remove contracts outside of the relevant geographic location, remove contracts from unrelated market types (i.e., group, individual, etc.), align those contracts from smallest to largest, and adjust annually for inflation. The rate in the middle of that line is your QPA.
What concerned the physician community wasn’t this definition, but the Tri-Departments methodology for implementing it.
“Ghost Rates”
When it comes to rulemaking, the job of regulators is to fill in the fine details left open by Congress. If the law is a building, Congress is responsible for drafting the blueprint. They decide what the building is to be used for, whether it’s a stadium or a condo, the square footage, the layout, and the floorplan. Regulators construct the building, but the designs on the blueprint aren’t optional; they can’t decide to leave out the kitchen if the blueprint calls for one. The choice between imported hardwood or shag carpet is theirs to make, however.
It wasn’t the builder grade fixtures that led to yesterday’s result in TMA III, it was the gaping hole where the QPA’s guardrails were supposed to be.
When the first Interim Final Rule implementing the NSA was released in July, 2021, providers were concerned. The statutory requirement to calculate the QPA using contracts with “the same or similar specialty” became optional under the regulatory framework, requiring such a distinction only “if the plan or issuer has contracted rates for a service that vary based on provider specialty.” The Departments then granted even more deference to the plans, allowing them to define “same or similar specialty” in whatever way was “consistent with the plan’s or issuer’s usual business practice.” It was the regulatory equivalent of “do whatever you’d like.”
The predictable result of allowing the insurers to dim the lights inside what was already a black box was the proliferation of QPAs bearing no resemblance whatsoever to the median in-network rates they were meant to approximate. The first meaningful research on this issue was Avalere’s PCP Contracting Practices and Qualified Payment Amount Calculation Under the No Surprises Act, published on August 2, 2022 (sponsored by the American Society of Anesthesiologist (ASA), American College of Radiology (ACR), and the American College of Emergency Physicians(ACEP)). Avalere found that 68% of physicians surveyed had contracts for services they rarely provide and that 57% had contracts for services they never provide. Importantly, most respondents who contract for services they rarely or never provide stated that “they do not actively negotiate the rates for those services, implying they accept the rates offered by insurers.” This research was cited as persuasive in the Fifth Circuit’s decision yesterday in TMA III.
In December 2025, NDP Analytics published an analysis of QPAs in comparison to contracted rates disclosed through Transparency in Coverage (TiC) files, Rate Expectations: Evaluating the Validity of the QPAs Reported Under the No Surprises Act (sponsored by Americans for Fair Healthcare(AFHC)). Further corroborating Avalere’s findings, NDP Analytics found that median in-network rates in the TiC files were higher than QPAs 60.6% of the time. More shocking than the frequency of disagreement between medians was the magnitude; “…on average, [these] median in-network rates were 290.5% higher than reported QPAs.”
The provider community has known for years that QPAs don’t match in-network rates - they’ve lived it on every out-of-network claim since 2022, because initial payments most frequently reflect these deflated QPAs. The Fifth Circuit addressed the issue succinctly when it said:
“The inclusion of ghost rates in the QPA calculation is no minor problem. One survey, for example, found that 68% of primary care professionals have contracts with rates for services they perform fewer than twice annually, and 57% of respondents had contracts with rates for services that they never provide. Indeed, even the agencies acknowledge this practice. In the August FAQs, they reported that some insurers “offer[] most providers the same fee schedule for all covered services, and then it is up to the providers to negotiate increases to the rates for the services that they are most likely to bill. The agencies’ error has upended the NSA’s dispute-resolution process… Because the agencies directed insurers to include non-negotiated ghost rates, the resulting QPAs were artificially low.”
The court’s statements are even more prescient in light of the recently released Q3/Q4 2025 IDR Public Use Files (PUFs), which continue to demonstrate that insurers are driving utilization and outcomes under the NSA’s IDR process. According to CMS’ data, insurers made an offer equal to or less than the QPA in 51% of disputes for CY25. Insurers made offers of $1 or less in 9.5% of disputes over the same time period. They lost by default 24% of the time, failing to make any offer at all.
With QPAs so detached from the median in-network rate (and an embarrassingly frequent failure to even participate in the process), it’s no wonder insurers continue to lose in arbitration.
Why TMA III Matters
We’ve been waiting for clarity on broken QPAs for the better part of six years. With the Fifth Circuit’s decision, new rules will require insurers to actually exclude ghost rates when they calculate QPAs. They’ll also be required to include the total in-network rate, including bonus and incentive payments that are included in those contracts. This should lead to QPAs that are less laughable and more reflective of existing contracts.
In the meantime, audits of QPA calculations have languished. To the public’s knowledge, there are at least 25 pending and partially completed departmental audits of QPAs. With the offending provisions of the QPA methodology vacated, the departments should finalize and release these audits - then they should do more of them. Plans should be required to recalculate QPAs quickly; they are the lynchpin to fair initial reimbursement and have been used to obfuscate plan underpayment for far too long. The sooner the Fifth Circuit’s decision is implemented, the sooner the NSA and the IDR process can get back on track, protecting patients, ensuring the sustainability of medical practices, and leading to durable in-network contracts.
From there, Congress should pass H.R. 4710/S. 2420 and the Tri-Departments should end pervasive and predatory non-compliance with the NSA’s timely payment requirements, cracking down on health plans that choose to ignore binding arbitration awards in knowing and willful violation of the law.