The problem the law was built to solve

A patient schedules a knee replacement. She checks the hospital. In network. She checks the surgeon. In network. She checks her deductible, arranges time away from work, and shows up.

Then an anesthesiologist she has never met walks into the room, and six weeks later she receives a bill for four thousand dollars, because that anesthesiologist does not participate in her plan.

There was no decision she could have made differently. She did not select the anesthesiologist. She could not have interviewed one. She was unconscious for the portion of the encounter in which that physician did the work. This was the single most indefensible feature of American healthcare pricing, and it was entirely ordinary.

The No Surprises Act ended it. Enacted on December 27, 2020 inside the Consolidated Appropriations Act and effective January 1, 2022, the law says that in an emergency, or when an out-of-network clinician treats a patient at an in-network facility, the patient owes only in-network cost sharing. The balance cannot be billed. By most estimates, roughly one million surprise bills a month have stopped arriving since.

That part worked. It is the rare healthcare intervention that did exactly what it promised, and no serious party is proposing to undo it.

But removing the patient from the transaction does not resolve the transaction. Someone still has to decide what the plan owes the anesthesiologist. And that is where the law made a choice whose consequences are only now fully visible.

The bargain

The fight in 2019 and 2020 was never about whether to protect patients. Nobody defended surprise bills on the merits. The fight was about who sets the price once the patient is out of the room.

Insurers, employers, and most health economists wanted a benchmark. Tie the out-of-network payment to a fixed reference, usually the median in-network rate, and the price becomes predictable and exerts downward pressure on negotiated rates generally.

Physician groups wanted arbitration, because arbitration preserves leverage.

A campaign called Doctor Patient Unity spent close to fifty-four million dollars fighting benchmark legislation beginning in July 2019. It was later revealed to be funded principally by two private equity backed physician staffing companies. A benchmark bill that had bipartisan support and appeared headed for the 2019 omnibus was derailed. When the law finally passed a year later, it contained arbitration, and the arbitration contained no ceiling.

The mechanism Congress built is baseball-style. Each side submits one offer. The arbitrator selects one or the other. No splitting the difference. The arbitrator is directed to consider a benchmark called the Qualifying Payment Amount, or QPA, which is the plan’s own median contracted in-network rate for that service in that geography. But the QPA is a factor, not a cap.

Anyone who has sat on either side of a rate negotiation can see what happens next. If one party can submit any number it likes, and the arbitrator must pick one of the two numbers on the table, and the losing party pays the arbitrator’s fee, then the disciplined strategy is to submit high and file often.

What the numbers did

Federal officials projected roughly twenty-two thousand disputes a year.

More than six million have been filed since April 2022, including 1.4 million in the first five months of 2026 alone. The Fifth Circuit put the miss at a factor of eighty-four.

Providers won eighty-five percent of the determinations decided in the second half of 2025, after winning eighty-eight percent in the first half. Awards exceeded the QPA in eighty-seven percent of decisions. The median winning offer now sits at roughly four times the QPA, while plan offers have stayed anchored at the QPA. Total payouts reached nearly fifteen billion dollars in 2025, more than triple the year before. Anesthesia is consistently among the top five specialties by dispute volume, running just under ten percent of the highest-volume categories.

An industry formed around the mechanism. Billing intermediaries now file disputes on behalf of provider groups and take a percentage of the awards. The largest of them filed more arbitration cases than any other entity in the first half of 2025.

The Congressional Budget Office originally scored the law as reducing commercial premiums by roughly one percent and cutting the federal deficit by seventeen billion dollars over ten years. On June 15, 2026, CBO published a formal call for new research, writing that emerging evidence suggests the law may not have the effects it anticipated, and that if providers can systematically secure large payments through arbitration, they have every incentive to remain out of network or to demand higher in-network rates. Roughly eighty percent of the projected savings had come from expected reductions in in-network rates. That is a budget agency saying, in institutional language, that the assumption underneath the score has failed.

What the court decided, and how narrowly

On August 11, 2026, the Fifth Circuit, sitting en banc with all seventeen active judges, decided Texas Medical Association v. HHS and vacated portions of the July 2021 interim final rule that governs how QPAs are calculated.

The central holding concerns what the record calls ghost rates. When a plan contracts with a physician, it typically presents a form fee schedule covering every service code. The physician negotiates the codes she actually bills and leaves the rest untouched. Those untouched codes carry unnegotiated rates, sometimes as low as a dollar, for services she has never performed and never will. Under the vacated rule, plans were instructed to include those rates in the median.

The effect is arithmetic. Load a median with rates nobody bargained for, and the median falls. One survey in the record found that sixty-eight percent of primary care professionals hold contracts containing rates for services they perform fewer than twice a year, and fifty-seven percent hold contracts containing rates for services they never provide at all. The court held that including those rates contradicts the statute, which limits the QPA to services actually provided and furnished, and that the practice had upended the dispute resolution process Congress designed. The court also held that bonus and incentive payments, which the rule excluded, must be counted, because the statute specifies the total maximum payment. On a third question, whether one-off single-case agreements may be excluded, the agencies prevailed.

The vote deserves attention, because it is being reported as a rout and it was not one.

The opinion is unsigned. Nine judges joined it in full. Judge Southwick joined only the ghost rate and single-case portions. Judge Oldham concurred in part, agreeing the agencies acted unlawfully but resting entirely on procedure, holding that the departments could not amend a legislative rule through an informal FAQ document without notice and comment. Judge Haynes, joined by five colleagues, concurred in part and dissented in part.

The bonus and incentive holding is the piece with the largest forward arithmetic effect on every QPA in the country, and it carried nine votes out of seventeen. One vote from a different result. Judge Haynes would have reversed on both points and, on remedy, would have remanded rather than vacate.

The court declined to let practical difficulty govern the remedy, observing that the Administrative Procedure Act contains no too-big-to-vacate principle. But it also declined to create chaos. The departments may exercise enforcement discretion and permit existing QPAs to remain in use until new ones are calculated. The balance billing protection is untouched.

The number that binds both sides

Here is the fact that almost nobody is discussing, and it is the reason this ruling is not simply a provider win.

The QPA is not only the arbitration benchmark. It is also the basis for the patient’s cost sharing wherever the balance billing protections apply.