On October 30, 2024, the U.S. Fifth Circuit Court of Appeals ruled in favor of the federal government finding the Departments had the authority through the rulemaking process to define the methodology allowing carriers to include “ghost rates” –- contracted rates for services never actually performed by a given provider –- when calculating Qualifying Payment Amounts (QPAs) under the Federal No Surprises Act (NSA). In an earlier ruling, the District Court of Texas had ordered this provision to be vacated siding with the plaintiff’s argument that it unfairly advantaged the insurance companies.
Ghost rates, among other issues, were challenged as part of the Texas Medical Association’s third lawsuit in a series of four, all aimed at correcting portions of the rules that created a significant tilt in favor of the carriers within the NSA independent dispute resolution (IDR) process for under-reimbursed claims.
The argument in TMA III asserted that including ghost rates in the QPA calculation can unfairly lower the payment benchmarks used in arbitrations, benefiting insurers. This provision had initially been vacated by the District Court of Texas which found merit in the claim. However, on appeal, the Fifth Circuit Court ultimately upheld the Departments’ authority and methodology for including ghost rates under the NSA, reversing the prior ruling.
The Court also reversed the lower court holding that the Department rules excluding single case agreement and bonus payments from the QPA were valid and did not exceed their authority under the NSA.
As regulations for handling claims subject to the NSA continue to evolve, our team remains agile in our analysis and ability to implement any processing changes required to operate and deliver the same level of results.