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The Internal Revenue Service (IRS) has issued a notice providing the indexing factors that group health plans and health insurance issuers must use to calculate the qualifying payment amount (QPA) under the No Surprises Act (NSA). These factors apply to all items or services provided from January 1, 2026, through December 31, 2026, for purposes of sections 9816 and 9817 of the Internal Revenue Code (IRC), sections 716 and 717 of the Employee Retirement Income Security Act (ERISA), and sections 2799A-1 and 2799A-2 of the Public Health Service Act (PHS Act).
The NSA is designed to provide consumer protections against unexpected medical bills in certain circumstances. The QPA serves as the basis for individual patient cost-sharing items or services falling under the circumstances outlined in the NSA. Furthermore, the QPA applies to the federal independent dispute resolution (IDR) process established by the NSA. When parties submit two offers in a payment dispute, the QPA is one of the factors that the certified IDR entity uses to decide which offer best represents the value of the item or service at issue at the out-of-network rate.
In any calendar year, the QPA is based on data involving median rates for certain items and services from previous years. More specifically, the QPA is the median contracted rate the plan or issuer used on January 31, 2019, for a provider in the same or similar specialty or facility in the geographic region where the item or service was furnished. The QPA is also adjusted along with changes to the consumer price index (CPI) to account for inflation.
The regulations interpreting the NSA first required plans and issuers to calculate the QPA for items and services in 2022. As a result, 2019 is the base year for 2022 items and services, a figure that increases every year thereafter. The median contracted rate is based on all plans of the plan sponsor or all coverage an issuer provides in the same insurance market.
Therefore, for years after 2022, plans and issuers must calculate the QPA using annual guidance that specifies a percentage increase from the preceding year's figure. If the initial QPA was not determined until after 2019, the increase is adjusted annually based on the first year the QPA was determined.
The percentage increase each year is calculated from the average CPI for the previous two years, as determined by the Bureau of Labor Statistics of the U.S. Department of Labor. For 2026, the percentage increase is 1.0265311701, but the IRS also provides cumulative percentage increases to simplify the QPA calculation. A plan or issuer can either use the percentage increase or the cumulative percentage increase, so long as it uses the same method consistently.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
