Fifth Circuit Strikes Down Federal Rules Inflating Insurance Payment Gaps

In an en banc decision issued August 11, the court sided with the Texas Medical Association, determining that current agency rules governing the Qualifying Payment Amount (QPA) were inconsistent with federal law. Under the invalidated framework, insurers were permitted to include nominal, unnegotiated placeholder rates—sometimes as low as one dollar—in their calculations while simultaneously excluding performance-based bonuses and incentives. The court found no statutory justification for distinguishing between zero-dollar rates and these near-zero placeholders, nor for ignoring the total maximum payment standards intended by the legislature.

For health systems like Houston-based Nutex Health, the decision offers a path toward more equitable compensation. Since the No Surprises Act took effect in 2022, providers frequently turned to the costly Independent Dispute Resolution process to challenge depressed payments. Data indicates that arbitrators have historically sided with providers in roughly 85 percent of cases, often awarding amounts higher than the insurer-calculated benchmarks. While the ruling does not alter patient cost-sharing protections, it forces federal agencies to overhaul how QPAs are determined. Insurers may continue using existing methodologies for services rendered before October 1, 2026, but the long-term impact remains subject to upcoming regulatory guidance and potential further appeals.