No Surprises Act: Developments in litigation and federal reporting, upcoming operational changes

The federal No Surprises Act (NSA) remains a dynamic area with new litigation developments, new sub-regulatory guidance, and technical and operational changes for stakeholders to navigate. Recent months have seen a significant litigation outcome that impacts the qualifying payment amount (QPA) calculation methodology, new federal reports providing greater insight into the federal independent dispute resolution (IDR) process, ongoing compliance complaints, and guidance preparing stakeholders for upcoming procedural changes. This article highlights some of the key developments in the NSA environment.

Fifth Circuit affirms vacatur of QPA regulations

In August 2026, the US Court of Appeals for the Fifth Circuit issued an opinion in Texas Medical Association v. U.S. Dep’t of Health & Hum. Servs. (TMA III) affirming the lower court’s decision to strike certain regulations governing the calculation of the QPA. The QPA is generally defined as the median of the contracted rates recognized by the insurer as the total maximum payment under the applicable plans or coverage for an item or service rendered by a provider in the same or similar specialty and in the geographic region in which the item or service is furnished. (“Insurer” in this article collectively refers to group health plans and health insurance issuers offering group or individual health insurance coverage, although the underlying statute and regulations define these terms separately.) In certain situations, the QPA is used as the basis for determining an individual’s cost-sharing amount for items and services covered by the NSA’s balance billing protections. Under the federal IDR process, certified IDR entities (IDREs) must also consider the QPA, among other factors, when determining which party’s offer to select as the out-of-network payment rate for the disputed item or service.

In TMA III, the Fifth Circuit considered whether insurers may include “ghost rates” (i.e., non-negotiated rates included in a contract even though the provider does not render the services), exclude bonus and incentive payments, and exclude one-off agreements (i.e., single case agreements) when calculating the QPA.

Because insurers calculate the QPA based on the median contracted amount, the decision to include or exclude these amounts can affect the final QPA. The provider plaintiffs challenged rulemaking and guidance from the US Departments of Health and Human Services, Labor, and the Treasury (collectively, the departments) on each of these points.

The Fifth Circuit agreed with the plaintiffs on two points: that the departments erred in instructing insurers to calculate the QPA with non-negotiated ghost rates and to exclude bonus and incentive payments from the QPA calculations. On the other hand, the Fifth Circuit agreed with the departments’ approach to exclude single-case agreements from the calculations.

Following the decision, the departments provided notice that they are reviewing the Fifth Circuit’s opinion and anticipate issuing updated guidance as a result. We expect this will involve some level of enforcement discretion as insurers transition from the existing QPA calculation methodology to utilizing the new QPA calculation methodology consistent with the Fifth Circuit’s interpretation. For more background on the TMA litigation, see our prior client alert.

Activity on the Hill

The NSA continues to attract attention from members of Congress and industry stakeholders seeking to improve the IDR process, raising concerns about eligibility determinations, or advocating for changes to certain aspects of the law governing the IDR process. For example:

• US Energy and Commerce Committee IDRE inquiry. A ranking member of the US Energy and Commerce Committee recently issued letters to six companies that serve as IDREs, requesting information on how the IDREs are conducting the IDR arbitration process and complying with the IDR laws. The letters requested information on the total number of disputes received, the percentage of disputes for which eligibility was challenged, the training provided to individuals making eligibility and payment determinations, the experience and credentials of those working on the IDR process, whether the company uses automated or artificial intelligence tools in IDR, how the company ensures consistent outcomes across different arbitrators, and whether the company has any financial relationships with parties that initiate or respond to the disputes it arbitrates.
• Consumers, unions, employers on IDRE conflicts of interest. Nearly 50 organizations representing patients, consumers, unions, and employers wrote to the departments urging them to investigate potential IDRE conflicts of interest. The letter argued that the NSA’s current structure incentivizes “volume over impartiality,” since IDREs are paid per eligible dispute (i.e., not when a dispute is determined ineligible). The letter also states that, in some cases, the disputing provider and the arbitrator determining the dispute may be financially backed by the same organization, creating potential conflicts of interest.
• Calls to revamp the law. Stakeholders have called on Congress to revise certain aspects of the law, from the benchmark payment methodology to penalties for noncompliance with IDR timelines.

It remains to be seen whether the departments’ final rule on federal IDR operations will address any of these concerns and the degree to which Congress has any interest in revising the law.

Recent federal reports shed light on IDR processing, compliance complaints, and more

In recent months, the departments have published multiple reports on the federal IDR process, ongoing operations, complaints received, and evaluations of different aspects of the NSA, including:

• New federal IDR dispute data. In July 2026, the Centers for Medicare & Medicaid Services (CMS) released the latest Federal IDR Public Use File, including supplemental background covering the period between July 1, 2025, and December 31, 2025. The background file provides an update on federal IDR dispute volume, processing timeframes, and trends in payment determinations. During this period, more than 1.3 million disputes were initiated, IDREs rendered more than 1.1 million payment determinations, and about 62% of determinations were rendered within 30 business days. Providers, facilities, and providers of air ambulance services won roughly 85% of payment determinations, and the prevailing offer was higher than the QPA in about 87% of determinations.
• CMS complaint data and enforcement report. In June 2026, CMS published an updated Complaint Data and Enforcement Report, which quantifies the number and types of complaints CMS received between January 1, 2022, and December 31, 2025. During that period, CMS received nearly 40,000 complaints regarding Title XXVII of the Public Health Service Act, with most complaints relating to alleged violations of the NSA. While the report reflects only complaints within CMS’s jurisdiction and not complaints that were referred to another agency, the data shows that CMS closed about 14,800 NSA compliance complaints during this time. According to the data, the most common complaints were related to the topics below:

These complaints mirror the trends in ongoing litigation between insurers and providers, which is increasingly focused on payments made after a final IDR determination, dispute eligibility, and representations made during the IDR process.

• Interim report to Congress on the “cooling off” period. Under the federal IDR process, when a disputing party receives a final payment determination, it is subject to a 90-day “cooling off” period. During this period, the initiating party cannot initiate a new dispute involving the same party and the same or similar item or service that was the subject of the initial payment determination. According to the departments, the intent of the cooling off period is “to encourage disputing parties to use the rate from the final payment determination to inform open negotiations and settle similar disputes.” The NSA requires the departments to study the impact of the cooling off period on the IDR process. In a recent Interim Report to Congress, the departments reported that “it is not clear whether the cooling off period is having its intended effect.” The interim report states that about 11% of IDR disputes are initiated once the cooling off period expires, indicating that the period does not always result in early resolutions. The volume of disputes has also risen steadily year-over-year, which suggests that the waiting period does not temper the volume of claims moving to IDR. While the departments report that they have not received complaints that the cooling off period is being abused, feedback from stakeholders suggests that the period can sometimes delay access to IDR for more than 90 days and that the period is not always consistently enforced. According to the report, both insurers and providers have reported that the cooling off period has “added confusion, complexity, and administrative burden” to federal IDR.For disputes consisting of multiple items and services batched by patient encounter or CPT code ranges, the departments recently shortened the cooling off period to 30 business days.

Upcoming changes this fall: IDR Gateway, final rule implementation, and IDRE recertification

As the end of the year approaches, stakeholders should be mindful of several operational changes:

• Transitioning to the IDR Gateway. The federal IDR process will transition from single-use web forms to a centralized platform for managing disputes, known as the IDR Gateway. The IDR Gateway will allow parties to initiate and respond to disputes, track disputed information, and monitor ongoing dispute activity. The platform will be rolled out in multiple phases, and organizations and individuals who file, process, or represent parties in disputes must sign up to use the IDR Gateway. Based on the departments’ latest notice, users can begin to create accounts now. For more information, see CMS’s IDR Gateway Administrator User Guide.
• Federal IDR Operations Final Rule implementation. In spring 2026, the departments issued a final rule addressing operational aspects of the IDR process, including dispute eligibility, administrative fees, and bundled payments. Since the requirements in the final rule have varying applicability dates that are, in part, influenced by the readiness of the IDR Gateway, the departments recently issued guidance clarifying applicability dates, including the sample of key dates below. At this point, many dates are still to be determined based on when the functions to support the provisions become available.

See the departments’ timeline guide for a full list of requirements and the applicable dates.

• Recertification of IDREs. IDRE certification lasts for five years. Because the federal IDR process launched in early 2022, some IDREs will soon approach the end of their original certification period and must apply for recertification. The departments issued new guidance on the application and recertification process and have instructed IDREs to submit recertification applications approximately six months before their current certifications expire. Ninety days before an IDRE’s certification expires, the departments will stop assigning the IDRE new disputes. Once certification expires, the entity may no longer resolve any pending disputes, and those disputes will be reassigned to another certified IDRE.

We will be tracking these changes as they are implemented, as well as ongoing litigation challenging insurer, provider, and agency actions. Please reach out to the authors or your regular McDermott Will & Schulte lawyer with any questions.