A federal appeals court has handed doctors yet another victory in the long-running fight over the No Surprises Act, ruling this week that the government miscalculated the benchmark used to settle out-of-network payment disputes, and did so in ways that made the number too low. The Fifth Circuit decision, stemming from a 2022 Texas Medical Association lawsuit, means federal agencies must now recalculate that benchmark, which will likely raise what providers get paid, and, further down the line, could raise what insurers and patients pay.
It sounds like a narrow, technical ruling about a formula. But that formula is where the entire fight now lives, and understanding why reveals something important about what the No Surprises Act actually accomplished, and what it merely relocated.
What the law did, and didn't, do
The No Surprises Act solved a real and cruel problem. Patients were getting stuck with enormous out-of-network bills they never agreed to and could not have avoided: the out-of-network anesthesiologist at an in-network hospital, the emergency room visit, the air ambulance. The law's genuine and often underappreciated achievement was to take the patient out of it. You are no longer the one on the hook for the surprise bill, and that is an unambiguous good that deserves to be stated plainly.
But taking the patient out of the fight did not make the fight go away. Someone still has to pay the out-of-network provider, and the amount is still disputed. What the law did was move the disagreement, from patient-versus-provider, where the patient always lost, to provider-versus-insurer, to be settled through arbitration. The conflict was not resolved. It was handed to two better-matched combatants and pushed out of the patient's sight.
The benchmark is the battleground
That arbitration is anchored to a benchmark called the qualifying payment amount, or QPA, which is meant to represent what insurers typically pay for a given service. And here is the crucial mechanism: because the QPA anchors every arbitration, the entire multi-billion-dollar dispute now turns on the arcane details of how that single number is computed.
Should "ghost rates," placeholder rates that no provider actually negotiated, be included in it? The court just said no, because including them dragged the benchmark down. Should bonus and incentive payments be counted? The court said yes, because leaving them out held the benchmark artificially low. These sound like accounting technicalities, and in a sense they are. But they are also the whole game, because the benchmark decides every case at once. Whoever shapes the formula shapes every outcome anchored to it, which is why the combatants long ago stopped fighting over individual bills and started fighting over the calculation. The individual bill is a skirmish. The formula is the war.
The problem: one side gets to calculate it
Now the structural flaw that ensures this war never ends. The QPA is the insurer's median contracted rate, which means it is a number calculated by insurers, following a government methodology. So the benchmark that governs disputes between insurers and providers is computed by one of the two parties to those very disputes.
That is an inherent conflict of interest, and its logic is not subtle. An insurer has every incentive to calculate the QPA on the low side, because a lower benchmark produces lower arbitration awards, which means the insurer pays less. The ghost rates the court just discarded are a textbook illustration: folding in rates that no one actually negotiated pulled the benchmark downward, which happened to benefit the party doing the calculating. Whether or not any particular choice was deliberate, the structure itself, one interested party computing a supposedly neutral number, practically invites a downward tilt. And that is precisely why providers keep suing and keep winning. Court after court has found that the referee's number was bent toward the player who got to compute it.
The cost didn't vanish; it moved
Step back to follow where the money actually goes, because it reframes what is at stake. The No Surprises Act shielded patients from the acute harm of a specific surprise bill, and that matters enormously, because such a bill is catastrophic and falls with brutal unfairness on one unlucky individual. But the underlying cost did not disappear when the patient stopped paying it. It is still there, being fought over by providers and insurers, and wherever it finally lands, it flows back to everyone, diffusely, through premiums.
If providers win a higher benchmark, insurers pay more, and those higher payments pass through into the premiums that all policyholders share. So the patient is protected from the specific bill but not from the aggregate cost, which returns quietly and collectively rather than suddenly and personally. Seen this way, the QPA fight is not really just providers against insurers. It is a fight over how much the entire system pays for out-of-network care, and the bill for that is footed, in the end, by everyone who buys insurance.
Both sides have a real case
It is worth being fair to both parties here, because this is a genuine dispute rather than a story with obvious villains, and this analysis takes no position on where the benchmark should ultimately land. The doctors' case is real. A benchmark calculated by insurers, using a methodology that courts have now repeatedly found flawed, understated their payments, and that threatens the financial viability of exactly the specialties most exposed to out-of-network billing: emergency medicine, anesthesiology, radiology.
The insurers' case is also real. The QPA is a cost-control mechanism, higher benchmarks push up premiums for everyone, and some of the providers pressing hardest for higher payments are private-equity-backed staffing firms whose aggressive out-of-network billing helped create the surprise-billing crisis in the first place, which means higher benchmarks can end up rewarding the very behavior the law was written to curb. Both concerns are legitimate. Reasonable people weigh cost control against fair provider payment differently, and the "right" number is genuinely contested rather than obvious.
Why the fight won't end
What can be said without taking a side is that the current structure guarantees the litigation continues. Any benchmark computed by one interested party will be suspected, frequently with good reason, of bias by the other, so each government recalculation simply sets up the next lawsuit. The providers have won repeatedly not because the government is incompetent but because the arrangement is built to produce exactly this: a contested number, computed by one combatant, challenged by the other, revised, and challenged again.
A more durable resolution would require a genuinely neutral benchmark, one independently calculated or built on transparent all-payer data that neither side controls. That is a policy choice with its own tradeoffs, far from simple, and not within a court's power to impose. But as long as the number that settles the fight is produced by one of the parties to the fight, the fight over that number is effectively permanent.
In the end, the No Surprises Act did something genuinely good and easy to lose sight of: it pulled patients out of a battle they never chose and always lost. But it did not end the battle. It relocated it, and handed the two remaining sides a benchmark to fight over, a benchmark that one of them gets to calculate. So the war moved from the hospital bill to the formula, and it will keep being fought there, ruling by ruling, because a settling number computed by one of the players will never be accepted as fair by the other. The broader lesson is that resolving a dispute by anchoring it to a benchmark does not dissolve the dispute; it concentrates it into the benchmark, until the contest over an arcane calculation becomes the entire contest. For patients, both halves of the news are true and worth holding together. You are no longer the one stuck with the surprise bill, which is a real and humane victory. And the cost that bill once represented is still out there, being argued over in a courtroom, and it will find its way back to you all the same, quietly, in next year's premium.
Primary sources
- STAT, in reporting by Tara Bannow, for the Fifth Circuit's ruling that the government erred in calculating the qualifying payment amount used in No Surprises Act arbitration, the origin of the case in a 2022 Texas Medical Association lawsuit, the QPA's role as a figure representing insurers' contracted rates, the providers' argument that the methodology yielded unfairly low numbers, the court's decision siding with providers on two of three points, that QPAs should exclude "ghost rates," or placeholder rates providers do not actually negotiate, and should include bonus and incentive payments, while ruling against air-ambulance providers on a third, the requirement that federal agencies revisit the calculation, and the observation that the change could raise costs for insurers and patients though its full impact is uncertain.
- The underlying Fifth Circuit opinion referenced in that reporting.
- General, well-established background on the No Surprises Act, including its protection of patients from surprise out-of-network bills, its independent dispute resolution arbitration process, the definition and role of the QPA, the series of Texas Medical Association challenges to the implementing rules, the role of private-equity-backed staffing firms in out-of-network billing, and the pass-through of insurer costs into premiums.