No More Surprise Medical Bills: Fifth Circuit En Banc Ruling Reshapes QPA Calculations

The decision addresses calculation of the qualifying payment amount (QPA), an insurer-calculated figure that is an important element in independent dispute resolution (IDR) proceedings in which the amount owed by an insurer to an out-of-network provider is adjudicated. 

ArentFox Schiff LLP filed amicus briefs in the case on behalf of the Emergency Department Practice Management Association in support of the Texas Medical Association (TMA).

The En Banc Decision

Under the NSA, the statutory definition of the QPA is “the median of the contracted rates recognized by” an insurance plan as “the total maximum payment” for a service in a geographic area. The US Departments of Health and Human Services, Labor, and Treasury promulgated regulations specifying how insurance plans should calculate QPAs. The TMA challenged those regulations as contrary to the NSA and as unduly favorable to insurers.   

On balance, the Fifth Circuit’s en banc decision substantially favored the out-of-network providers, rejecting two features of the QPA methodology under the Departments’ regulations that artificially depress QPAs. First, the court held that calculation of a plan’s QPA should not count non-negotiated “ghost rates” for services that providers contracting with that insurance plan do not furnish (and so those providers have no incentive to negotiate that rate, though it may be listed in a contract). Second, the court held that the QPA should not categorically exclude provider bonus and incentive payments from the relevant total maximum payment. 

At the same time, the court upheld a third feature of the existing methodology. It ruled that the QPA could exclude one-off single-case agreements, as opposed to broader network contracts, from the calculation. 

This generally favorable result for out-of-network providers follows a district court opinion that held in favor of the providers and then a Fifth Circuit panel reversing that decision and upholding the existing regulations. The en banc decision results in vacatur of the existing QPA calculation methodology regulations. It does not address whether past IDR determinations may be revisited. On August 13, the Departments recognized the decision and alerted stakeholders that they anticipate issuing guidance “shortly.”

Key Takeaways for Out-of-Network Health Care Providers

1. Remind insurers and independent dispute resolution entities (IDREs) that QPA calculations may not include “ghost rates” and must include bonus payments. When calculating QPAs, insurers can no longer use so-called “ghost rates,” i.e., fees listed by an insurer on a default schedule, even when the provider in question did not negotiate those fees, does not bill for the corresponding codes, and is not even equipped to furnish the corresponding services. Further, insurers can no longer categorically exclude bonus and incentive payments. These payments must be considered if they are connected to the services provided. Each of those prior practices likely led to artificially depressed QPAs. Out-of-network providers can emphasize this flaw in the prior methodology when interacting with both insurers and IDREs during the NSA’s dispute resolution process. They should insist upon fair reimbursement rates that are higher than the QPAs calculated by the insurers themselves. 
2. Keep in mind that single-case agreements have no impact on QPA calculations and should be pursued only as a separate strategy. Under the existing QPA methodology, insurers could categorically exclude one-off, single case agreements (which are common in the air ambulance context) as “contracted rates” used to calculate QPAs. On this point, the court agreed with the Departments and upheld the existing methodology. This does not mean that out-of-network providers should shy away from using single-case agreements where appropriate — indeed, the court recognized that single case agreements serve an important purpose in the context of emergency situations. At the same time, providers should treat those agreements as completely distinct from the QPA calculations in the IDR process.
3. Build the IDR record. Out-of-network providers can emphasize in their final offer to IDREs that QPAs were inappropriately driven down by ghost rates and the categorical absence of bonus/incentive payment data. They can also gather any available data regarding rate history, negotiations, bonus or incentive terms, and evidence of services furnished and applicable codes so they are ready to make their best case before an IDRE. Building a strong record for IDR should result in better results for out-of-network providers.
4. Plan for a transition, not an overnight reset. Although the court’s decision vacates the challenged provisions of the existing QPA methodology, the court recognized the practical, operational problem that insurers may face in immediately recalculating QPAs. Insurers and the Departments urged that vacatur of the regulations would cause chaos, but the court pushed back, stating that “administrative agencies cannot survive judicial review simply by making mistakes that are so colossal that the sky will fall if a court reviews them.” The court noted that the Departments can use enforcement discretion to allow continued use of current QPAs to avoid immediate disruption while recalculations proceed. The opinion does not specify a transition timeline, and providers should not expect an immediate reset. Out-of-network providers should monitor agency guidance, preserve objections to suspect QPAs, and be ready to revisit pending or future disputes as new instructions emerge.

Looking Ahead: Rulemaking and Claims Strategy

The immediate question is how the Departments and insurers will operationalize updated QPA calculations, and how IDREs will treat QPAs during the transition period.

Out-of-network providers should watch for further rulemaking and agency guidance and monitor whether this en banc decision is appealed to the US Supreme Court. In the meantime, out-of-network providers should continue to submit claims in a timely manner and preserve all objections to QPA calculations that appear to rely on ghost rates or that categorically exclude bonus/incentive-linked compensation. Overall, the decision is favorable to out-of-network providers, but implementation will determine whether, when, and to what extent it actually results in changes to the reimbursement practices of insurers.

*This alert is part of a series analyzing the No Surprises Act and its implementation. A prior alert summarized the panel’s decision in this case. That alert is available here.