Reed Smith Client Alerts

Key takeaways

  • On May 30, Fifth Circuit granted request for en banc review of TMA III
  • Full Fifth Circuit will reconsider appellate panel decision to reverse district court vacatur of QPA calculation rules
  • Outcome of en banc review will have significant implications for payors

In an adverse development for managed care organizations (MCOs) facing significant administrative burdens, high costs, and compliance challenges associated with the No Surprises Act, the Fifth Circuit will consider vacating qualifying payment amount (QPA) calculation rules. On May 30, 2025, the Circuit granted a request from plaintiffs in Texas Medical Association et al. v. U.S. Department of Health and Human Services et al. (TMA III) to vacate and conduct an en banc review of an appellate panel’s decision to uphold the government’s methodology for determining QPAs and, by extension, compensation for out-of-network providers.

If the Fifth Circuit rules differently, MCOs could again be thrown into limbo regarding how to appropriately calculate QPA rates. Aside from the obvious compliance challenge, this outcome could intensify legal contention with providers over acceptable out-of-network compensation, create regulatory risk in QPA audits given the scant guidance for compliant calculation methods, and exacerbate administrative costs for payors. While a hearing date for the en banc review – which will involve the entire Fifth Circuit judiciary rather than a select panel – has yet to be set, the court has requested that appellate briefs be filed by June 30, 2025.

From district court to the Fifth Circuit: TMA III

TMA III is one of several decisions that shook the No Surprises Act (NSA) implementing regulations. In late November 2022, the Texas Medical Association and several other providers filed a complaint in the Eastern District of Texas, contending that several provisions of the July 2021 interim final rule and subsequent agency guidance conflicted with the plain text of the NSA and were therefore unlawful under the Administrative Procedure Act. The plaintiffs sought to overturn the government’s accepted QPA calculation methodology, requested more detailed payor disclosures regarding QPA calculation methods, and sought to vacate several rules relating specifically to air ambulance compensation.