Appellate Court Sides with Texas Medical Association in No Surprises Act Lawsuit

August 20, 2026

On August 11, a federal appellate court sided with the Texas Medical Association (TMA) argument that the way the No Surprises Act’s qualifying payment amount (QPA) is calculated has historically favored payers in arbitration. 

The ruling leaves the existing QPA formula in place until the departments of health and human services, labor, and treasury can develop a replacement formula; one that should result in higher payouts for providers. 

The QPA is supposed to reflect the median in-network rate that health plans pay for a certain service in a specific geographic area. The QPA is also the number that providers and payors use when negotiating out-of-network claims. 

The replacement formula will not include ghost rates, which are contracted rates for services that providers never actually intended to deliver. The formula, however, will include bonus and incentive payments. These two changes should result in higher QPA’s, and therefore higher arbitration outcomes for providers.  

This lawsuit is one of four lawsuits that TMA has brought challenging the QPA calculation in the No Suprises Act interim and final rules. 

Since it was signed into law nearly five years ago, the No Surprises Act has been involved in almost constant litigation. The law is supposed to protect patients from surprise out-of-network bills, which it has done. However, the implementation of the Act’s independent dispute resolution (IDR) process – the mechanism developed by Congress for payers and providers to resolve disputes over out-of-network rates – has been plagued with problems. Providers argue that the IDR process protects them from underpayment, while insurers and some lawmakers argue that the IDR process is being exploited for profit and, therefore, needs to be reformed. 

A 2025 data analysis published by Health Affairs shows that the volume of cases submitted, and subsequent costs, continues to far exceed what was expected. The analysis concludes that provider-driven abuse has accelerated as bad actors exploit the arbitration process. The abuse was found to be largely driven by a small number of private-equity backed providers that are gaming the system to extract payouts that can be “three to nine times in-network rates.”