The No Surprises Act (NSA), enacted in December 2020, was designed to protect patients from unexpected medical bills for emergency services and certain non-emergency services provided by out-of-network providers. A central component of the NSA is the Qualified Payment Amount (QPA), which serves as a benchmark and is one of several factors for determining reimbursement rates for out-of-network providers. The Texas Medical Association (TMA), along with other healthcare organizations, has been actively involved in challenging various rules issued by the Federal Departments related to the implementation of the NSA including the QPA calculation methodology.
The Most Recent Appellate Case
In October 2024, the Fifth Circuit Court of Appeals issued a ruling in the case Texas Medical Association v. United States Department of Health and Human Services, Case No. 23-40605. This case addressed the methodology used by federal agencies to calculate the QPA under the NSA. The TMA contended that the agencies’ approach resulted in QPAs that were artificially deflated, thereby disadvantaging out-of-network providers.
Key Issues in the Dispute
- Inclusion of “Ghost Rates”: The TMA argued that the QPA calculation included rates for services that providers did not actually offer, referred to as “ghost rates.” These rates were often part of standard contracts but were not services the provider delivered. The TMA contended that including such rates deflated the QPA, as providers had no incentive to negotiate rates for services they did not provide.
- Exclusion of Bonuses and Incentives: Another point of contention was the exclusion of bonuses and incentive payments from the QPA calculation. The TMA argued that these payments, which are often tied to quality benchmarks, should be included in the QPA to accurately reflect the total compensation for services rendered.
Court’s Ruling
The Fifth Circuit Court of Appeals upheld the federal agencies’ methodology for calculating the QPA. The court reasoned that the NSA does not require a service to have been previously performed by a provider for its rate to be included in the QPA. Additionally, the court found that the exclusion of bonuses and incentive payments from the QPA calculation was consistent with the NSA, as the Act grants the Department discretion on whether to include such adjustments.
Implications for Healthcare Providers
This ruling has significant implications for out-of-network providers. By upholding the inclusion of “ghost rates” and the exclusion of bonuses from the QPA calculation, the court’s decision may result in lower reimbursement rates for providers. Providers may receive payments that do not fully reflect the market value of their services.
Next Steps and Considerations
Following the Fifth Circuit’s decision, the TMA and support organizations have filed a motion for a rehearing, seeking to overturn the appellate court’s ruling. Healthcare providers should closely monitor developments in this case, as changes in the QPA calculation methodology could affect initial reimbursement rates and the broader landscape of out-of-network billing.
Cohen Howard and its affiliate, CH Revenue Management Solutions are committed to staying ahead of the regulatory issues surrounding out-of-network reimbursements on behalf of our clients.
