What Is the Qualified Payment Amount (QPA)?

The Qualified Payment Amount (QPA) is a central element of the No Surprises Act, a federal law enacted in December 2020 to shield patients from unexpected medical bills. This legislation went into effect on January 1, 2022. Its primary purpose is to establish a baseline payment rate for out-of-network services, protecting individuals from the financial shock of unforeseen medical charges. By setting a standardized benchmark, the QPA aims to introduce transparency and fairness into healthcare billing practices for services rendered by out-of-network providers.

Defining the Qualified Payment Amount

The QPA is a specific amount calculated by health plans and issuers for particular healthcare services within a defined geographic area. It serves as a benchmark for payments to out-of-network providers for emergency services and certain non-emergency services provided at in-network facilities. This calculation is rooted in the legal framework of the No Surprises Act, which prohibits providers from billing patients for more than their in-network cost-sharing obligations.

The core idea behind the QPA is to prevent “balance billing,” a practice where providers charge patients the difference between their billed amount and what the insurer pays. By establishing a reasonable payment floor, the QPA ensures that patients are not held responsible for these additional amounts when they receive care without having the opportunity to choose an in-network provider. This ensures that health plans manage out-of-network claims as if the services were provided by an in-network provider at an in-network facility.

How the QPA is Determined

Generally, the QPA is based on the median of the contracted rates for the same or similar service in the same geographic region, for similar types of health plans, as of January 31, 2019. Health plans primarily use their historical claims data and existing contracted rates to determine this median. The QPA is then adjusted annually for inflation using the Consumer Price Index for All Urban Consumers (CPI-U).

The QPA is highly specific to the service provided, identified by its Current Procedural Terminology (CPT) or Healthcare Common Procedure Coding System (HCPCS) code. It also varies based on the type of plan, such as a Preferred Provider Organization (PPO) or Health Maintenance Organization (HMO), and the specific geographic rating area. This ensures that the determined amount reflects local market conditions and service categories.

If a plan lacks sufficient historical data from January 31, 2019, to calculate a median contracted rate for a particular service, alternative methods are prescribed. For example, if a plan has fewer than three contracted rates for a service, it may use the median contracted rate from the first subsequent year with sufficient data. In situations where a plan still lacks sufficient information, it must determine the QPA using an eligible database that meets specific criteria for independence and data sufficiency, as determined by the Secretary. Plans are also required to provide information about the QPA upon request.

The QPA’s Role in Surprise Billing Protection

The QPA directly impacts patients and providers by preventing unforeseen medical bills. For out-of-network emergency services and certain non-emergency services provided by out-of-network providers at in-network facilities, a patient’s cost-sharing amount, including deductibles, copayments, and coinsurance, must be based on the QPA. This means patients are only responsible for the same amount they would pay if the services were provided by an in-network provider.

Health plans also base their initial payment to the out-of-network provider on the QPA. Providers are prohibited from balance billing the patient for any difference between their billed charges and the QPA. This protection applies to a range of services including emergency services, non-emergency services provided by out-of-network providers in in-network facilities, and air ambulance services.

This mechanism effectively shields patients from unexpected high costs and removes them from billing disputes between providers and payers. The No Surprises Act, through the QPA, ensures that consumers are protected from unforeseen charges when they have no control over the choice of provider. This shifts the financial responsibility for out-of-network charges away from the patient in these specific scenarios.

The QPA and Independent Dispute Resolution

The QPA plays a central function in the Independent Dispute Resolution (IDR) process, which is established to resolve payment disagreements between out-of-network providers and health plans. When a provider and a health plan cannot agree on the payment amount for services covered by the No Surprises Act, they can initiate this arbitration process. The IDR process provides a structured approach for settling these disputes when direct negotiations fail.

The QPA serves as the primary factor that certified IDR entities must consider when making a payment determination. It is considered the presumptive payment amount, meaning the IDR entity is expected to base its decision largely on the QPA unless other specific factors warrant a deviation.

While the QPA is the main consideration, IDR entities may also take into account other permissible factors. These can include the complexity of the service, the teaching status of the facility, the market share of the provider or facility, and quality and outcome measures. If an IDR entity’s decision deviates from the QPA, they are required to provide a written explanation for their determination.

The general IDR process involves an initial negotiation period, typically around 30 business days, after the health plan makes its initial payment or denies the claim. If an agreement is not reached during this time, either the provider or the plan can initiate the IDR process by notifying the other party and the Secretary of Health and Human Services. The IDR entity then reviews the offers from both parties, along with the QPA and other relevant information, to make a binding payment determination.