United States of America

5th Circuit Strikes Down Surprise Billing Rules

Did this protect patients from rigged surprise billing or did it gut the framework to protect them?

AUG 12·Updated AUG 13

5th Circuit Strikes Down Surprise Billing Rules

Story

Above: Stock photo of the John Minor Wisdom U.S. Court of Appeals Building in New Orleans, Louisiana. Image credit: Marcus Jones/Getty Images

The Facts

The U.S. Court of Appeals for the Fifth Circuit struck down several key provisions of federal rules governing surprise medical billing on Monday, partially siding with the Texas Medical Association and multiple air ambulance operators.
Bloomberg Law
Reuters
The case centered on the No Surprises Act, a 2020 law designed to protect patients from unexpected medical bills by prohibiting surprise balance billing and establishing a process to negotiate reimbursement rates, with unresolved disputes subject to independent resolution.
Trump Department of Labor
American Medical Association
Centers for Medicare & Medicaid Services (CMS)
United States Congress
The court found that federal agencies wrongly calculated the qualifying payment amount (QPA) — a median in-network contracted rate used as a benchmark in billing disputes — by including "ghost rates" (for services providers never performed) and by excluding bonus and incentive payments.
United States Court of Appeals for the Fifth Circuit
The non-negotiated ghost rates, the majority argued, artificially deflated the QPA, noting that the number of arbitrations exceeded agencies' expectations by a factor of 84, arbitrators awarded reimbursements above the QPA in 85% of cases and providers prevailed in over 80% of arbitrations.
United States Court of Appeals for the Fifth Circuit
Six judges, however, partially dissented, arguing that contracted rates should be included in the QPA even when they had not resulted in claims or payments. They also stated that bonus and incentive payments should remain excluded from the calculation.
United States Court of Appeals for the Fifth Circuit
The court nevertheless unanimously upheld the agencies' exclusion of single-case agreements — common in the air ambulance industry — from contracted rates used to calculate the QPA, ruling that one-off emergency arrangements did not constitute "contracted rates" under the statute.
United States Court of Appeals for the Fifth Circuit

Sources Split

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The Spin

Narrative A

Federal agencies don't get to rig the math and without facing legal consequences. Including ghost rates that providers never negotiated and never used artificially tanked the QPA, and the numbers prove it: arbitrators picked a rate higher than the QPA in 85% of cases. Agencies can't bypass notice-and-comment, botch the rule, then patch it with an informal FAQ and expect courts to look the other way.

United States Court of Appeals for the Fifth Circuit

Narrative B

Striking down these QPA rules threatens the entire framework Congress built to protect patients from surprise billing. The agencies reasonably based calculations on contracted rates as they existed, focusing on what was contracted, not how often a service was billed. Vacating the methodology wholesale, rather than remanding, creates massive disruption and ultimately pushes higher costs onto patients.

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