A federal appeals court has struck down key parts of the formula that determines how much insurers must pay emergency physicians, anesthesiologists, and air ambulance crews when those clinicians are out of network, finding that regulators allowed insurers to build the benchmark partly from rates for services that were never actually performed.
The Fifth Circuit Court of Appeals, sitting en banc with its 17 active judges, issued the decision on August 11, 2026, in Texas Medical Association v. Department of Health and Human Services. The court vacated portions of a July 2021 interim final rule governing how insurers calculate the qualifying payment amount, or QPA, under the No Surprises Act. The case has a long history: a Texas district judge ruled against the government on ghost rates in 2023, a Fifth Circuit panel reversed that ruling the following year, and the full court then agreed to rehear it.
Patients should first understand what the ruling does not touch. The law's core consumer protection is unaffected. Patients remain shielded from balance billing for most emergency services, for out-of-network clinicians at in-network facilities, and for out-of-network air ambulance services. This ruling concerns the money that moves between insurers and providers after the patient's obligation has already been capped.
The Machinery That Decides Whether a Specialty Stays in a Market
The QPA is meant to represent a plan's median contracted rate for a service in a geographic area and market, and it functions as a reference point in the arbitration process that resolves payment disputes between insurers and providers.
At issue were so-called ghost rates. These are rates that appear in a provider's contract with a plan for services the provider does not actually offer. Because neither side has any reason to negotiate them seriously, they can be set extremely low, sometimes as little as a dollar. Regulators told insurers not to include zero-dollar ghost rates in QPA calculations but permitted anything above zero.
A majority of the judges held that the QPA should be built from rates for services actually furnished, concluding that including ghost rates produced artificially low benchmarks and citing providers' outsized win rates in arbitration as evidence. The court also ruled that excluding risk-sharing, bonus, penalty, and other incentive-based compensation from the QPA contravened the statute, since the law requires the benchmark to reflect the highest amount a provider-insurer contract can yield.
The judges sided with the government on one point, agreeing that single-case agreements should be excluded because they do not constitute an actual contract. Those agreements are common in emergency services, particularly air ambulance. The full text of the court's opinion is available on the Fifth Circuit's website.
The Access Question Underneath the Accounting
The reason this belongs in a health publication rather than only a business one is that emergency care is the one service line where patients cannot shop.
A person having a heart attack does not select the anesthesiologist. A rural patient needing air transport does not compare carriers. When those clinicians are paid below what it costs to maintain coverage, the response is not a price increase visible to consumers. It is a staffing or service decision: an emergency department that cannot recruit, an air ambulance base that closes, a hospital that loses anesthesia coverage overnight. Those changes show up in a community as longer transport times and diverted ambulances rather than as a line item.
Texas Medical Association president Dr. Bradford Holland said in a statement that the ruling is "another step in the right direction for both patients and the physicians who care for them," according to reporting by Healthcare Dive.
The counterargument is equally concrete. Insurers say arbitration already favors providers, noting that providers win roughly 85 percent of surprise billing cases and that awards exceed the QPA about 87 percent of the time. Higher benchmarks mean higher payouts, and insurers are expected to pass those costs to employers and patients through premiums. Both things can be true: the formula can have been unlawfully constructed, and correcting it can raise total spending.
Premiums Are the Route to Household Budgets
That premium pathway is the concrete connection between a federal appellate ruling and a family's monthly bill, and it is worth stating without exaggeration.
Nothing changes for a household this month. The court allowed agencies to let insurers keep using existing QPAs while new ones are calculated, so the arbitration system continues operating without interruption. Any effect on premiums would arrive through future rate filings rather than mid-year adjustments, and would be one factor among many rather than the dominant one.
The timing is nonetheless uncomfortable. MedicalDaily has reported that insurers have already proposed substantial increases in marketplace premiums for next year, citing rising medical costs and the expiration of enhanced premium tax credits. A change that increases out-of-network payouts adds to that pressure rather than offsetting it.
Patients who want to protect themselves in the meantime should focus on the protections that already exist. Anyone who receives a bill after emergency care that appears to charge out-of-network rates should not pay it before checking whether the No Surprises Act applies. MedicalDaily has published a guide to price transparency and good faith estimate rights.
The Rulemaking That Comes Next
The immediate next step belongs to federal agencies. A statement posted on the CMS website on August 13 said the agencies are reviewing the court's opinion and judgment and anticipate issuing guidance shortly, according to the American Hospital Association.
The court directed the departments to write new rules consistent with the statute. That process will take months and will determine how much QPAs actually move. HHS and the Labor and Treasury Departments could also appeal.
Several things remain genuinely unknown. No one has published an estimate of how much recalculated QPAs will rise, so claims about the premium effect are projections rather than measurements. It is not yet clear whether insurers will need to recalculate benchmarks retroactively or only prospectively. Whether higher payments actually preserve emergency staffing in underserved areas, which is the health outcome that matters, has not been demonstrated by this or any prior adjustment.
Readers should watch for the agencies' guidance, expected soon, and the proposed rule that follows.
Key Questions Answered
What did the court decide? The Fifth Circuit, sitting en banc, vacated parts of a July 2021 rule governing how insurers calculate the qualifying payment amount under the No Surprises Act.
What are ghost rates? Contracted rates for services a provider does not actually perform. Because they are not meaningfully negotiated, they can be extremely low and pull the benchmark down.
Am I now at risk of a surprise bill? No. The law's patient protections against balance billing for emergency care, out-of-network clinicians at in-network facilities, and air ambulance services are unchanged.
Will my premium go up because of this? Possibly, over time. Insurers say higher benchmarks lead to higher payouts that are passed along. No estimate of the size has been published, and nothing changes mid-year.
Does the arbitration system stop working now? No. The court allowed agencies to permit continued use of existing QPAs until new ones are calculated.
What happens next? Federal agencies said they are reviewing the ruling and anticipate issuing guidance shortly, and will then need to write new rules consistent with the statute.
Why does this affect emergency care specifically? Emergency physicians, anesthesiologists, and air ambulance crews are services patients cannot choose, so payment levels affect whether those services remain staffed and available.
