The Qualified Payment Amount (QPA) is a standardized benchmark price used in the United States healthcare system to determine payment for certain out-of-network medical services. Created under federal legislation to protect consumers from unexpected medical bills, the QPA acts as a proxy for what a service would cost if performed by an in-network provider. It is the core metric that dictates the patient’s financial responsibility and serves as the starting point for negotiations between an insurer and a healthcare provider.
The Purpose of the QPA in Surprise Billing Protection
The QPA was established under the federal No Surprises Act (NSA), which took effect in 2022, to address surprise medical bills. This billing typically occurred when a patient received care at an in-network facility but was unknowingly treated by an out-of-network provider, such as an emergency room physician or an anesthesiologist. Because patients could not choose the provider in these emergency or non-elective situations, they received a bill for the difference between the provider’s high charge and the amount the insurer paid.
The No Surprises Act ended this practice by preventing out-of-network providers from sending balance bills to patients for covered services. The QPA sets the maximum amount an insurer can use to calculate a patient’s cost-sharing for these protected services. By mandating a standardized rate, the law removes the patient from the financial dispute, placing the burden of payment negotiation solely on providers and insurers.
Determining the Qualified Payment Amount
The health plan or insurer executes the highly specific method for calculating the QPA. The QPA is defined as the median of the contracted rates the payer negotiated with in-network providers for the same or a similar service. This calculation must be based on rates in effect on a specific historical date: January 31, 2019, which serves as the fixed baseline.
To ensure the QPA remains current, the historical median rate is adjusted annually for inflation using the Consumer Price Index for All Urban Consumers (CPI-U). The calculation must also account for the geographic region where the service was provided, recognizing that medical costs vary significantly. The QPA must also reflect the provider’s specialty and the specific service code (CPT code) to accurately compare like-for-like services.
If an insurer does not have enough data from 2019—at least three contracted rates—to calculate a median for a particular service in a region, an alternative method must be used. The insurer must then use a rate from an eligible database to determine the QPA. This database rate is also adjusted for inflation, maintaining the principle of a standardized, benchmarked rate.
How the QPA Affects Patient Cost-Sharing
The QPA’s primary benefit for consumers is its role in calculating the patient’s out-of-pocket costs, such as deductibles, co-insurance, or co-pays. When a patient receives a service protected by the No Surprises Act, the insurer must use the QPA as the recognized amount to determine financial responsibility. This ensures the patient pays the same amount they would have if the service had been performed by an in-network provider.
For example, if a provider bills $2,000 for a service, but the QPA is $500, the patient’s 20% co-insurance is calculated on the $500 QPA, resulting in a $100 payment. The patient is protected from paying co-insurance on the higher $2,000 billed charge. This eliminates the patient’s liability for any amount exceeding their normal in-network cost-sharing, prohibiting the provider from balance billing the patient.
The insurer is required to send an initial payment to the out-of-network provider based on the QPA. This settles the patient’s portion of the bill immediately, ensuring the patient is not financially entangled in the subsequent payment dispute. The patient’s cost-sharing amount remains fixed, even if the insurer and provider later agree on a higher total payment through arbitration.
The QPA’s Role in Payment Arbitration
The QPA serves as the fundamental starting point in the Independent Dispute Resolution (IDR) process, the binding arbitration system for resolving payment disagreements between providers and insurers. If a provider is unhappy with the initial payment offered by the insurer, which is based on the QPA, they can initiate a negotiation period. If negotiations fail, the IDR process begins.
In the IDR process, both the provider and the insurer submit their final payment offers to an independent third-party arbitrator. The arbitrator must consider the QPA as the primary factor in determining the final payment amount. The QPA acts as a strong anchor, representing a reasonable market-based rate for the service.
The arbitrator also considers other permissible information submitted by both parties, such as:
- The provider’s training and experience.
- The complexity of the case.
- The teaching status of the facility.
- Market share.
The QPA remains the most heavily weighted piece of evidence. The arbitrator must ultimately select one of the two final offers—the insurer’s or the provider’s—based on which amount best represents the value of the service, guided by the QPA.